The envoy, John Negroponte, said that he did not know if the money was missing or if it had been used to buy weapons, as some Iraqi officials have said.

Negroponte, in a taped interview from Baghdad on CNN's "Late Edition," said no U.S. government money was involved. He linked the issue to political rivalry related to national elections scheduled for next Sunday.

"So what we may be seeing, at least in part at least here, is just part of the wind-up of a political campaign. In any case, we are looking into it," he said.

The New York Times, which reported the incident on Saturday, cited unidentified Iraqi officials as saying the cash had been used to buy tanks and other arms from international dealers in a rush to put together an armored division for the fledgling Iraqi army.

Iraqi Defense Minister Hazim al-Shaalan and Iraqi National Congress leader Ahmed Chalabi have traded charges regarding the cash transfer, with Chalabi accusing Shaalan of sending the cash abroad without cabinet authorization, and Shaalan threatening Chalabi with extradition to Jordan, where he is wanted in connection with the collapse of Petra Bank.