The money was supposed to buy tanks and other weapons from international arms dealers to create an armored division for the fledgling Iraqi Army, the New York Times reported Saturday.
But somehow the deals were done outside U.S. financial controls, intended to ensure transparency and accountability as arms contracts are publicly bid, and the deal was never approved by the entire 33-member Iraqi cabinet.
All that is known is that $300 million was flown out of the country on a private jet to Jordan.
Defense Minister Hazim Shalaan, faced with corruption allegations by political rival Ahmed Chalabi threatened to extradite Chalabi from Iraq to face his own corruption charges. Jordan has issued an arrest warrant for Chalabi in a 1992 bank collapse.
"We will arrest him and hand him over to Interpol," said Shalaan, who also said Chalabi could be charged with defaming Iraq's defense ministry.
Both Chalabi and Shalaan are candidates in Iraq's Jan. 30 election.
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