WASHINGTON – The former Iraqi defense minister, handpicked by the United Nations and the Americans after Saddam Hussein’s ouster, is now wanted for arrest in Baghdad on charges that he misspent funds allotted for Iraq’s military.

An Iraqi government official yesterday confirmed a report in the Times of London that Iraq’s Higher Committee for Integrity has issued a warrant for the arrest of Hazem Shaalan for his role in misappropriating about $1.3 billion provided to the Defense Ministry. The money was supposed to be used for building the security services and Iraqi national guard that President Bush has said he hopes will replace American soldiers now fighting the terrorists.

The warrant stems in part from an audit released in May and commissioned by the current Iraqi government. The audit, which examined Defense Ministry procurements from June 28, 2004, to February 2005, was stymied by Mr. Shaalan and others who refused to hand over contracts for military parts later deemed useless.

For example, the Defense Ministry purchased Russian military helicopters from Poland for $403 million. The helicopters were in such disrepair that Iraqi pilots refused to ship them to Baghdad. Other boondoggles included a shipment of trucks from Pakistan designed with steering wheels on the right-hand side. In Iraq, drivers sit on the left-hand side of the car.

Mr. Shaalan, for his part, has denied the charges against him. On September 30,eight days before the warrant for his arrest was announced, he told reporters in Warsaw that the claim he siphoned money from the Polish contract was a “lie.”

“We chose Polish weaponry because it is of good quality and could be supplied quickly,” Mr. Shaalan was quoted as saying in the Arabic press. He added that the focus on his dealings was political.

The committee’s probe of Mr. Shaalan, led by an Iraqi judge, Rahdi al-Rahdi, could widen and implicate other high officials in the government of a former prime minister, Ayad Allawi. According to the Times of London, Judge al-Rahdi is also seeking the arrest of four other former government ministers. The scandal also could cripple Mr. Allawi’s campaign to become prime minister in elections scheduled for December. Mr. Allawi’s supporters have said he is becoming more popular as Prime Minister Jaafari’s government has failed to deliver basic services or curb the rising insurgency.

In an interview yesterday, Iraq’s deputy defense attache in Washington said the scandal of the missing dollars was a stain on the country.

“These reports of corruption are appalling and unacceptable, and they have caused the weakening of the Iraqi military and security forces, and it is endangering the lives of Iraqi and American soldiers,” Entifadh Qanbar, who is a close aide to Ahmad Chalabi, a political rival of Mr. Allawi excluded from his government in 2004, told the Sun. “The perpetrators of these acts have to be dealt with and punished by law, and the monies must be returned to the Iraqi state as soon as possible. It also shows that the previous government lacked any reasonable measures of monitoring and protecting the monies of the Iraqi people.”

Judge al-Rahdi was quoted in the Times of London story as saying that the money wasted for helicopters seriously undermined Iraq’s war against the former Baathists and Al Qaeda.

“What amazes me is that there were foreign experts there at the time,” he told the British paper. “Why did they turn a blind eye and say nothing? If they were serious and honest, it would have limited the number of both Iraqis and Americans who have been killed.”

Mr. Shaalan worked for many years in the London office of Mr. Chalabi’s Iraqi National Congress. INC officials told the Sun that they believed he was spying on the group for Saddam Hussein’s intelligence service when he was working for the organization.

After the fall of Saddam, Mr. Shaalan became close with a committee of military advisers sent from the Pentagon to help establish the new Defense Ministry in 2003. In 2004, he was selected as the defense minister in the interim government that replaced the Coalition Provisional Authority. While in power, he gave several press conferences accusing Iran of working with elements of the insurgency.

Before the national assembly elections in January, Mr. Chalabi first publicly accused Mr. Shaalan of flying planeloads of Iraqi currency out of Baghdad to Lebanon. Mr. Shaalan at the time pledged to send Mr. Chalabi to Jordan, which has accused Mr. Chalabi of bank fraud in a case that Mr. Chalabi, in an American lawsuit, has alleged is politically motivated.