What was the Bush administration thinking when it adopted Ahmed Chalabi, head of the Iraqi National Congress, as its chief ally against Saddam Hussein? Ignore the latest allegations of blackmail, corruption and espionage. His misnamed intelligence helped mislead America and its allies into war.

Washington originally planned to install Chalabi to run occupied Iraq and recently considered turning control of the interim government over to him. But last week U.S. troops and Iraqi police raided his home and office looking for evidence of wrongdoing.

If the war and occupation belong to anyone, it is Ahmed Chalabi. He left Iraq in 1957 and became a leading Iraqi exile voice as head of the INC, which received some $40 million from Washington over the years.

He forged close ties with a number of influential American neoconservatives. The Pentagon relied on Chalabi for intelligence before the war and flew him, plus 700 retainers, into Iraq after the fall of Baghdad.

Chalabi only ended up as one of 25 members of the Iraqi Governing Council. Nevertheless, he accumulated a host of important positions for himself and his allies, even though he had no political constituency and was widely distrusted by Iraqis. Power would come only at the point of an American gun or in alliance with influential domestic interests. The former was his original modus operandi. But after falling out with the Coalition Provisional Authority’s Paul Bremer, Chalabi began pursuing the second path.

Although he described himself as “America’s best friend in Iraq,” he devoted increasing attention to leading Shiites, including militant cleric Moktada al-Sadr, whose followers are now in open revolt against the U.S. Chalabi pushed to increase the role of Islam in the draft constitution.

Chalabi has been a regular in Iran. Newsweek reported that some U.S. officials believe he has turned sensitive information over to Tehran, material that could “get people killed,” according to one source.

Another claim, cited by Newsday, is that the INC reflected Iranian disinformation back at Washington “to provoke the United States into getting rid of Saddam Hussein.”

Even if Chalabi did not stretch cooperation to include espionage, he put his interest before that of the United States. In early April when the Marines surrounded Fallujah and al-Sadr’s militia seized control of several cities, Chalabi said nothing. He finally opined that the United States should stay out.

Chalabi renewed his criticism of U.S. military operations in mid-May. When Bremer decided to reverse de-Baathification, Chalabi denounced the move as akin to “allowing Nazis” into the post-World War II German government.

After Iraq’s liberation, the INC gained control of Saddam’s files, leading to charges that the organization blackmailed those with influence to deploy and contracts to give.

Money also fueled Chalabi’s ambitions. Whitley Bruner, a CIA agent who worked with him in the early 1990s, notes that Chalabi always had “to spend money to gain loyalty — to rent loyalty.” Washington’s contributions to the INC ran to $4 million annually. More recently, Iraq became his bank.

Columnist Arnaud de Borchgrave writes that Chalabi has “a say in which companies get the nod for some of the $18.4 billion earmarked for reconstruction.” And, adds de Borchgrave, a generous commission is reportedly required.

Moreover, Sabah Nouri, chosen by Chalabi to be the Finance Ministry’s top anti-corruption official, was recently arrested for financial improprieties.

So far, Chalabi’s culpability amid the miasma of allegations remains unclear. Incontrovertible, however, is the fact that he helped mislead America into war.

Much of the erroneous “intelligence” pointing to Iraq’s possession of WMD came from INC informants. Chalabi and company also assured Washington that the occupation as well as the war would be a cakewalk.

Entifadh Qanbar, the INC’s Director of Communications, denounces “a sustained smear campaign” against his organization, and after the coalition raid Chalabi blamed the CIA.

However, in February Chalabi essentially admitted that he had misled the Bush administration. In an interview with Britain’s Daily Telegraph, he declared, “We are heroes in error. As far as we’re concerned we’ve been entirely successful.” Never mind the truth. “What was said before is not important.”

Actually, it is. Washington was continuing to pay the INC $340,000 a month for “intelligence collection.”

Yet, notes Ken Pollack, a former CIA employee who backed the war, “Chalabi had a track record. We knew that this guy was not telling us the truth, the whole truth, and nothing but the truth.”

Finally, in mid-May the administration cut off the INC, after spending years relying on someone who the government now suspects of being a corrupt Iranian spy.

Ahmed Chalabi symbolizes administration policy in Iraq gone awry. His lies have cost America and its coalition partners money, prestige and lives.