BAGHDAD, Iraq -- The Iraqi Red Crescent, the country's leading humanitarian organization, has been crippled by allegations of embezzlement and mismanagement, including what Iraqi officials call the inappropriate expenditure of more than $1 million on Washington lobbying firms in an unsuccessful effort to win U.S. funding.

The group's former president, Said I. Hakki, an Iraqi-American urologist recruited by Bush administration officials to resuscitate Iraq's health-care system, left the country this summer after the issuance of arrest warrants for him and his deputies. He and his aides deny the allegations and call them politically motivated.

The Red Crescent oversees the largest humanitarian operation in the country, with thousands of employees and an annual budget of $60 million funded in large part by the Iraqi government. The group has ceased nearly all its humanitarian work in recent months after the government froze its assets. The agency, which distributed more than 35,000 emergency food packages in June, handed out just 2,000 in July.

The crisis at the Red Crescent -- detailed in interviews, internal agency documents and investigative reports -- illustrates many of the challenges Iraq faces as its leaders seek to assert more control over security, reconstruction and humanitarian work. Iraqi officials point to Dr. Hakki and other former exiles brought to Iraq by the U.S. government as one reason that key institutions remain inefficient and corrupt.

"We are supposed to be an organization that helps people, and instead we have been infected by a culture of corruption," said Abdul Kareem Aboud al-Humeidi, a critic of Dr. Hakki who was elected interim president of the Red Crescent this summer.

In several telephone interviews from Beirut, Dr. Hakki said his expansion of the organization's size and budget has helped millions of Iraqis. He called the probes a ploy by Prime Minister Nouri al-Maliki to purge him and other allies of former Prime Minister Ibrahim al-Jafari from top jobs in the country.

A former adviser to Saddam Hussein's Health Ministry, Dr. Hakki fled the country in 1983 and eventually settled in Florida, where he became a U.S. citizen. He developed a urology practice, taught at the University of South Florida and became known for his patented work on prosthetic penile implants.

Just before the 2003 invasion of Iraq, the Bush administration asked Dr. Hakki to return to Baghdad. At the time, the administration sought to fill positions in Iraq with Republican supporters; Dr. Hakki has donated $13,800 to Republican candidates and party organizations since 1988. Mr. Jafari, Iraq's premier from mid-2005 to mid-2006, appointed Dr. Hakki to lead the Red Crescent. Mr. Jafari declined to comment for this article.

"We were impressed with him at the beginning. He was an American and an academic," said Mr. Humeidi, then a member of the board of directors.

But Dr. Hakki soon clashed with the head of the society's accounting division, Faiza Fadhil Whayeb, who insisted that Dr. Hakki and his deputies put out all contracts for competitive bidding, according to Mr. Humeidi and other agency officials. Dr. Hakki refused, they said.

Another confrontation came over a 2005 government grant for the Red Crescent to build camps for Iraqis making the Muslim pilgrimage to Mecca, in Saudi Arabia. After the society spent the money, Dr. Hakki told Ms. Whayeb that the grant was a loan that needed to be repaid to the government, and directed her to transfer the money to him, which she did, according to Mr. Humeidi and other agency officials.

An Iraqi judge issued an arrest warrant for Dr. Hakki in 2005 on corruption charges related to the controversy, though the warrant was later rescinded. Iraq's public integrity commission is still reviewing the matter. Dr. Hakki said that he has no recollection of the project and that he has never embezzled money.

Under Dr. Hakki's leadership, the Red Crescent expanded rapidly. Its budget over the past five years has swelled from about $3 million to $60 million and its staff from 50 employees to 3,500, according to Mazin A. Salloum, the group's secretary general.

But several humanitarian organizations grew concerned over what they considered the Red Crescent's lack of transparency with funds, and some, including UNICEF, stopped working with the organization.

Dr. Hakki alienated some of his colleagues by employing Washington lobbying firms to help the Red Crescent seek U.S. government funding and to arrange for Dr. Hakki to meet U.S. officials. The arrangement is highly unusual for foreign humanitarian groups.

Since last year, the Red Crescent has paid $1.1 million to Cassidy & Associates and the Carmen Group. The lobbying has not resulted in any U.S. government funding for the Red Crescent, but Dr. Hakki defended the expenditure. "If we end up receiving millions of dollars for the Iraqi Red Crescent, then it is worth it," he said.

The Red Crescent retained both firms in February 2007 and ended its contract with Cassidy in March; the Carmen account remains active. Cassidy said it helped raise awareness of the humanitarian crisis; Carmen said it helped to improve the Red Crescent's relationship with the U.S. government and develop a refugee resettlement program.

Raheem Hassen al-Igeeli, the head of Iraq's Commission on Integrity, called the hiring of the firms "unacceptable" and said it was an improper use of government funds. "This money should be spent on humanitarian issues inside Iraq," he said.

Mr. Humeidi and other officials said the Red Crescent contracted to buy emergency aid packages from a company owned by a relative of one of Dr. Hakki's deputies for about $50 each -- even though the packages are worth only $10. Dr. Hakki said he could not recall the cost of the packages, which contain basic food items including rice and cooking oil, but said the agency worked hard to procure goods at the lowest price. He said he was not aware of the owner's connection to any Red Crescent employee.