A multi-billion dollar mystery is unfolding in Iraq, and it may reach to the highest levels of the Iraqi government.

It involves what the New York Times calls an “extremist Shiite group” that has now reconciled with Prime Minister Maliki and his regime. The group is responsible for the kidnapping and murder of five British contractors who, according to the Guardian, were installing a sophisticated financial tracking system in Iraq’s ministry of finance in 2007.

The story so far:

Today, the Times reports:

“An extremist Shiite group that has boasted of killing five American soldiers and of kidnapping five British contractors has agreed to renounce violence against fellow Iraqis, after meeting with Iraq’s prime minister.

“The prime minister, Nuri Kamal al-Maliki, met with members of the group, Asa’ib al-Haq, or the League of the Righteous, over the weekend, said Ali al-Dabbagh, a spokesman for the prime minister, confirming reports. ‘They decided they are no longer using violence, and we welcome them,’ he said in a telephone interview.

“Mr. Dabbagh first revealed the negotiations in remarks on Monday to Al Iraqiya, the state television network. ‘We have reached an agreement to resolve all problems, especially regarding detainees who do not have Iraqi blood on their hands,’ he said. He did not say anything about British victims of the group.”

In other words, Maliki met with a bunch of Shiite terrorists, welcomed them with open arms. Why would he do that?

In addition, the Times reports, the terrorists have a “liaison to the government.” By coincidence, his name is also Maliki, and he wants to get into the government’s favor and take part in the “political process”:

“Salam al-Maliki, the insurgent group’s liaison to the government, said in a telephone interview that the group had not renounced fighting the Americans. ‘Of course we want to get into the political process, because circumstances have improved, and the United States is out right now,’ said Mr. Maliki, who is not related to the prime minister. ‘We told the government anyone who has Iraqi blood on their hands, you should keep him in jail. We are only fighting the United States.'”

The Guardian, in a related story, suggests that the kidnapping of the five Britons was carried out with government collusion by a team of 80 to 100 men, dressed as Interior Ministry police officials and driving a convoy of 19 white SUVs. Here’s the Guardian story:

“An investigation into the kidnapping of five British men in Iraq has uncovered evidence of possible collusion by Iraqi government officials in their abduction, and a possible motive – to keep secret the whereabouts of billions of dollars in embezzled funds.

“A former high-level Iraqi intelligence operative and a current senior government minister, who has been negotiating directly with the hostage takers, have told the Guardian that the kidnapping of IT specialist Peter Moore and his four bodyguards in 2007 was not a simple snatch by a band of militants but a sophisticated operation, almost certainly with inside help. Only Moore is thought still to be alive.

“Witnesses to the extraordinary operation which led to the abductions have also told us that they have been warned by superiors to keep quiet.”

And this crucial piece:

“Moore was employed to install a new computer tracking system which would have followed billions of dollars of oil and foreign aid money through the ministry of finance. The ‘Iraq Financial Management Information System’ was nearly complete and about to go online at the time of the kidnap.

“The senior intelligence source said: ‘Many people don’t want a high level of corruption to be revealed. Remember this is the information technology centre [at the ministry of finance], this is the place where all the money to do with Iraq and all Iraq’s financial matters are housed.'”

The Times story, which notes that the terrorist group also killed five US soldiers, says that the five British contractors were seized in retaliation for the detention of some of the group’s leaders, after the killing of the Americans. But that makes no sense. Why would they organize and carry out a 19-SUV, 80-person raid on the finance ministry just as retaliation? And could this group have done so? As the Guardian points out, only a government agency could have pulled off the attack.

You can watch a 12-minute video on the case at the Guardian site.

Curiously, the Times report adds: “American military officials say the group is supported by Iran.”

I tried getting some background on the League of the Righteous, and I found a posting on the Long War Journal about them, including alleged ties to Iran’s Qods Force, the arm of the Revolutionary Guards.

There’s more background here, too, at the Long War Journal.