The Pentagon has been paying the INC's Information Collection Program $340,000 a month since October 2002, primarily to identify and hand over potential sources and documents. The program has been overseen by the Defense Intelligence Agency since 2002. Prior to that, it was handled by the U.S. State Department, which funded the group out of a $200 million appropriation set aside for the Iraq Liberation Act of 1998.
"We felt it was no longer appropriate to continue funding it in that fashion," Wolfowitz told the Senate Foreign Relations Committee Tuesday. "There has been some very valuable intelligence that's been gathered through that process that's been very important for our forces, but we will seek to obtain that in the future through normal intelligence channels."
He declined to say whether the CIA will pick up funding of the group.
The INC has been under scrutiny on Capitol Hill for its central prewar role in producing questionable intelligence on Iraq's alleged weapons of mass destruction.
The DIA has since at least January been grappling with whether to continue funding the ICP as it became clear Iraq would reassume its sovereignty June 30, posing legal difficulties for the military spy agency.
If the ICP continues after Iraqi sovereignty, it is unclear exactly what form it would take. President George W. Bush has directed the CIA to create a new Iraqi intelligence service, an administration official said. If the ICP is not embraced by the new Iraqi government and the U.S. government wants to maintain its support, the Pentagon may face legal hurdles in continuing to sponsor and fund it.
The CIA has more latitude than the Department of Defense to fund foreign interest groups and intelligence operations in other countries, so the program could be transferred there.
However, a government official told United Press International the CIA is not interested, as it and the State Department have long regarded the INC and Chalabi -- now on the Iraqi Governing Council -- with suspicion.
Government officials tell UPI there is no doubt that since the war ended the ICP has proven extremely valuable. ICP members -- who generally speak Arabic as their first language -- conduct a large portion of interviews of Iraqi prisoners that have yielded actionable intelligence about Iraqi insurgents fighting U.S. troops. Approximately one-fifth of the verbal debriefings of sources in Iraq are carried out by the ICP, say administration officials and military documents.
"The INC/ICP provided the entire personnel list for the Iraqi Intelligence Service," a government official told UPI. "There's enough data that puts to rest the lie this program is not productive."
Moreover, the group has turned over reams of Iraqi government documents, a higher proportion of which turn out to be more valuable than those provided by other sources in Iraq, say U.S. intelligence sources. Several of the most interesting documents regarding prewar intelligence and connections between al-Qaida and Iraq still are being analyzed for authenticity and accuracy.
The relationship goes both ways: The INC has access to the information revealed in debriefings by the DIA with ICP-generated sources. Initial debriefing are handled jointly. If the DIA deems the source to be of value, it takes over handling of the source.
But the INC's prewar work is raising serious questions on Capitol Hill. The Senate Select Committee on Intelligence in January expanded its investigation into the accuracy of prewar intelligence specifically to look at the use of information provided by the INC. At issue is whether the intelligence community checked the information for accuracy or accepted it at face value.
An administration official said the INC produced three defectors with information about Iraq's weapons programs before the war. One of them was the source of so-far unsubstantiated prewar intelligence reports that Saddam Hussein had created mobile biological-weapons labs, one of the main rationales for the war cited by U.S. Secretary of State Colin Powell.
An administration official said the defector initially was believed to be credible but later was discredited by the DIA. That news did not make it up to Powell's level until after his speech, and into the public domain until after the war.
"This isn't to say they (the ICP) aren't getting some good stuff now, because it's being vetted much more carefully as it should have been before," a government official told UPI.
It is also possible Saddam planted some Iraqi defectors to spread disinformation and to discredit other sources.
The Senate Intelligence Committee also is trying to determine whether anyone in the Bush administration pressured the intelligence community to generate information specifically to support the case for war and whether prewar public statements by U.S. officials were substantiated by intelligence information.