KABUL (Reuters) - Afghan President Hamid Karzai said on Monday his office receives cash in bags from Iran, but said it is a transparent form of aid that helps cover expenses at the presidential palace, and that the United States makes similar 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 $6 million in a single payment -- which neighboring Iran sends in a bid to secure influence and loyalty.
The New York Times, citing an unnamed Afghan official, said that millions of dollars in cash channeled from Iran have been used to pay Afghan lawmakers, tribal elders and Taliban commanders.
White House spokesman Bill Burton said the international community should have "every reason to be concerned about Iran trying to have a negative influence on Afghanistan."
Karzai said he gets money from several "friendly countries" but named only the United States and Iran, the latter contributing up to 700,000 euros ($976,500) twice a year.
He will continue to ask for Iranian money, he added.
"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 (former) President George (W.) Bush, nothing is hidden, the United States is doing the same thing ... it does give bags of money, yes, it's all the same."
Karzai said the money was used for palace expenses, salaries and for "people outside," but gave no further details.
"Cash payments are done by various friendly countries to help the presidential office to help expenses in various ways to help the employees around here, and people outside," Karzai said. "We will continue to ask for cash from Iran."
In Tehran, the semi-official Fars news agency said Iran's embassy in Afghanistan denied the New York Times report.
"Such baseless rumors are spread by some Western media with the aim of harming growing relations between the two neighbor 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.
Afghanistan and its Western allies are dangerously underestimating Iran's destabilizing influence on the country, a former governor of a border province who claims he was ousted for his criticisms of Tehran told Reuters this week.
U.S. State Department spokesman P.J. Crowley said Washington did not question Iran's right to provide aid to Afghanistan, but it was skeptical of Tehran's motives "given its history of playing a destabilizing role with its neighbors."
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."
Iran has wide and growing influence in Afghanistan, especially in the west of the country where it has important economic ties. U.S. envoy Richard Holbrooke has said the United States recognizes that Iran has a role to play in resolving the Afghan conflict.
Tehran denies supporting militant groups in Afghanistan and blames the instability on the presence of Western troops.