|Karzai insists that the cash transfers are legitimate and used to cover important costs [AFP]
Hamid Karzai, the Afghan president, has said that his office receives cash in bags from Iran.
The Afghan leader said on Monday that this method of aid distribution is transparent and helps cover government expenses. He also said that the US makes similar cash payments.
The comments came after a report on Sunday that Karzai's chief of staff, Omar Dawoodzai, receives covert bagfuls of money - possibly as much as $6m in a single payment - sent by neighbouring Iran in a bid to secure influence.
Karzai said the money was used for palace expenses, salaries and for "people outside", but gave no further details.
The New York Times, citing an unnamed Afghan official, said that millions of dollars in cash channelled from Iran are used to pay Afghan parliamentarians, tribal elders and Taliban commanders.
Bill Burton, a White House spokesman, said world leaders should have "every reason to be concerned about Iran trying to have a negative influence on Afghanistan".
He added Iran had a responsibility to exert "a positive influence on the formation of a government there, and to ensure that Afghanistan is not a country where terrorists can find safe harbour, or where attacks can be planned on their soil".
Karzai said he gets money from several "friendly countries" but named only the US and Iran, the latter
contributing almost $1m twice per year. Karzai said he will continue to ask for Iranian money.
"The government of Iran assists (my) office with five or six or seven hundred thousand euros once or twice a year, which is official aid," Karzai told reporters at a joint news conference in Kabul with visiting Tajik President Imomali Rakhmon.
"This is transparent, this is something that I have discussed even with President George Bush,
nothing is hidden, the United States is doing the same thing."
PJ Crowley, US state department spokesman, said Washington did not question Iran's right to provide aid to Afghanistan but that it was sceptical of Tehran's motives "given its history of playing a destabilising role with its neighbours".
Asked about Karzai's assertion that the United States had also in the past provided cash in bags, Crowley said this had happened but was not taking place now.
"Going back a number of years, because of the nature of the Afghan financial system, there have been times where assistance has come into Afghanistan in the form of cash," Crowley said.
"That's not the form that our assistance takes today."
Denial by Iran
In Tehran, the semi-official Fars news agency said Iran's embassy in Afghanistan denied The New York Times report.
"Such baseless rumours are spread by some Western media with the aim of harming growing relations between the two neighbour and friendly countries," Fars quoted the embassy as saying in a statement.
The insurgency raging in Afghanistan is now the bloodiest it has been since the 2001 ouster of the Taliban, despite the presence of 150,000 foreign troops.
Iran has wide and growing influence in Afghanistan, especially in the west of the country, where it has important economic ties.
US envoy Richard Holbrooke has said the United States recognises that Iran has a role to play in resolving the Afghan conflict.
But Tehran denies supporting armed groups in Afghanistan and blames the instability on the presence of Western troops.