ely to earn the favour of the United States which has for years been threatening Lebanon with financial sanctions if it allows dirty money to cross its frontiers.

But an astonishing series of revelations - including a faxed message from the American-appointed Iraqi 'interior ministry' in Baghdad - suggests that the cash was being sent to Beirut with the full permission of US military authorities to be transferred by a Lebanese exchange dealer - and then used to buy armoured vehicles for the American army from a British company. The three men aboard the cargo jet - which had been stripped of seats to enable the 21 boxes of new banknotes to be put aboard - have told the Lebanese authorities that they were cleared to leave Iraq by American officials at the tightly controlled US base at Baghdad airport.

Nevertheless, the Lebanese state prosecutor Adnan Addoum - Lebanese law is modelled on French Napoleonic law - refused to believe the story, arrested the three men and a Beirut exchange dealer who is a relative of former Lebanese president Amin Gemayel, and demanded an explanation from Iraq's Charge d'affaires in Beirut, Tahseen Aina.

Mr Aina immediately told Mr Addoum that the Iraqi Central Bank governor was unaware of any such money transfer. So the four men, Mohamed Issam Bu Darwish - who stated openly that he was undertaking business operations on behalf of the US authorities in Iraq - Richard Jreisati, a former Phalangist militia official in Lebanon, Mazen Bsat, the owner of the plane, and Michel Mukattaf, the relative of ex-president Gemayel who runs an exchange company in Lebanon, were all held by the authorities.

Then, the Iraqi "ministry of interior" - effectively run by American officials working for the US proconsul in Iraq, Paul Bremer - sent a fax to the Lebanese government stating that the money was being legally transferred for the "urgent purchase" from a British company of armoured vehicles and "sophisticated equipment intended to confront the dangerous security situation in Iraq."

All four men arrested by the Lebanese protested their innocence and were freed, although the Beirut authorities have ordered the three men on the plane to surrender their passports until they receive an official letter from the Iraqi 'ministry of foreign affairs' explaining why so large an amount of money was being sent to Britain via Lebanon. The British company was not named.

In Baghdad, several hundred Iraqis protested in front of Bremer's occupation offices to demand the resignation of the US-appointed 'interior minister', Nouri Badrane, accusing him of "corruption" for allowing 19 billion Iraqi dinars to be transferred out of the country.

The money has just replaced the old dinar notes which carried a portrait of Saddam Hussein's head and have now been declared worthless by the American-run occupation powers in Iraq. American security guards forced the Iraqis away from the ministry gates at gunpoint.

Mr Jreisati told the Beirut newspaper 'L'Orient Le Jour' that when he boarded the aircraft he did not know there was any money aboard. The other men said they would await the result of Lebanon's official enquiry into the case.

All declared their innocence of any wrong-doing. In Iraq, however, there have been widespread claims from western businessmen that the American authorities and the Iraqi officials who work for them - not the businessmen with whom they deal - are guilty of fraud. Several have said that Iraqi sub-contractors are being asked to give cash commissions of between five and 10 per cent of any contract awarded them to one of five Americans working in the city.

In Iran, meanwhile, the authorities have been trying to find out how up to 200 earth-moving vehicles, many of them Caterpillar bulldozers, have turned up for sale in Abadan and other southern Iranian cities. The vehicles all appear to have been sent across the border from Iraq and were originally intended to be part of Iraq's rebuilding programme.

Several non-governmental organizations in Iraq have complained for months that millions of dollars of aid intended to help rebuild the country have gone missing.

Dawn has acquired exclusive rights in Pakistan to publish Robert Fisk's writings

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