CAIRO Libya's rebel national council has asked Egypt to stop Libyans based there from trying to destabilize rebel-held eastern Libya and funding Muammar Gaddafi's government, the head of the council said on Sunday.
Mustafa Abdel Jalil said he had contacted Egypt's interim government and asked it to prevent Gaddafi's cousin Ahmed Gaddaf al-Dam and his aides from selling Libyan assets in Egypt to raise money for the Tripoli government, which is subject to U.N. financial and economic sanctions.
He also told Al Jazeera television Gaddaf al-Dam had paid Egyptians to enter eastern Libya and stir up opposition to its rebel leaders.
Gaddaf al-Dam denied the accusation: "I am astonished at this report which is devoid of truth and I remind our brother Abdel Jalil that the sons of the desert never were nor will be anyone's mercenaries or agents," he said in a statement.
Egypt's ruling military council also said Jalil's statements were wrong.
"The military council stresses that what the media has lately picked up about Ahmed Gaddaf al-Dam recruiting Egyptians to work as mercenaries in Libya is false," it said in a statement on its official Facebook page.
Earlier on Sunday, Abdel Jalil said a delegation of east Libyan sheikhs were heading for Egypt to try to thwart an attempt by Gaddafi's followers to turn tribal elders in border regions against the rebel leadership.
"First of all, we have confirmed information that Ahmed Gaddaf al-Dam and some of his aides from Gaddafi's group are operating in Egypt through big investments," Abdel Jalil told Al Jazeera by telephone.
"They send cash to Tripoli and also into the pockets of some Egyptians ... to enter through Libya's eastern border and sow discord and chaos inside Libya," said Abdel Jalil, who was speaking from Kuwait.
He said some 15 Egyptians had been arrested, but gave no details.
Gaddaf al-Dam backed up media reports from late February, which said he had split from Gaddafi in protest at his cousin's bloody crackdown on civilians rebelling against his rule.
"Our brother Abdel Jalil knows that since I announced my resignation at the beginning of the events I have not taken sides in this struggle, which I condemned from the outset."
Gaddaf al-Dam, a rarely-seen figure with a strong likeness to Gaddafi, was born in Egypt to a Libyan father and an Egyptian mother and has spent many years acting as a go-between for Cairo and Tripoli.
Economic ties between the North African neighbours deepened after the West began lifting sanctions on Libya more than a decade ago. Gaddafi has diverted part of Libya's growing oil revenues into investment projects in Egypt.
Since the Libyan rebellion began, Egypt's military rulers have avoided publicly taking sides but have kept the border with Libya open, ensuring that supplies of food and aid can reach the rebel-held east.
(Reporting by Isabel Coles; Writing by Tom Pfeiffer)