Al-Naqib's comments came after the country's defence minister warned that Chalabi would be jailed for slandering the government.

"I didn't receive any warrants of this sort," al-Naqib said on Saturday.

The denial of a warrant came after Defence Minister Hazim al-Shaalan said the Baghdad government would shortly arrest one-time Pentagon favourite Chalabi for staining his ministry's reputation.

"We will arrest him and hand him to Interpol. He sought to tarnish (the image) of the defence ministry and the reputation of the defence minister," Shaalan told Aljazeera late on Friday.

Defamation claims

Shaalan did not say how Chalabi had tried to defame him, but a spokesman for Chalabi's Iraqi National Congress (INC) said the outburst dealt with allegations Chalabi made about the secret transfer of millions of dollars out of the country.

Hazim Shaalan (R) has waged a
war of words with Chalabi on TV

Shaalan's comments put an unwanted spotlight on the financial dealings of Prime Minister Iyad Allawi's government, raising questions about its conduct.

Adding fuel to the fire, The New York Times reported that Allawi, Shaalan and a small circle of council members sent $300 million to a bank in Lebanon last week.

Iraqi officials told the newspaper the money had been sent out to buy tanks and other weapons from arms dealers for the Iraqi army, but the covert nature of the deal had raised eyebrows.

Ironically, Chalabi, a candidate for prime minister in the next government, has long been dogged by allegations of corruption and was convicted by a Jordanian court for embezzling funds from the collapsed Petra bank.