U.S. military leaders said Afghan Col. Mohammed Wasil is suspected of providing information about U.S. troop movements to the Taliban and selling military supplies illegally.
U.S. Army Lt. Col. James Salome was quoted by Stars and Stripes, the official newspaper of the U.S. military, as saying incidents like these were problematic for an Afghan military set to take on more responsibility as international forces draw down.
"The corruption is embedded like a tumor and it isn't easy to remove," he said.
The newspaper reports that although Wasil lost his position as a result of a recent arrest, he could still take control of another Afghan battalion.
A series of attacks by Afghan troops against U.S. and NATO personnel prompted a high-level meeting of Western commanders in August. U.S. Defense Secretary Leon Panetta spoke by phone with Afghan President Hamid Karzai to express concern about the increasing number of attacks.
International forces are expected to hand security responsibility over to their Afghan counterparts by 2014.
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