Saddam Hussein has been seen north of Baghdad and is paying a bounty for every American soldier killed, the leader of an Iraqi exile group said Tuesday.

Saddam has $1.3 billion in cash taken from the Central Bank on March 18, is bent on revenge and believes he can "sit it out and get the Americans going," said Ahmed Chalabi (search), head of the Iraqi National Congress (search).

In Washington, Pentagon officials said Tuesday they had no information that Saddam was alive and offering bounties for killing U.S. troops.

Chalabi said Saddam also bought suicide vests for himself and his secretary on April 1 from the mukhabarat (search), the Iraqi secret police, citing "very credible information."

The ousted Iraqi leader has been sighted on several recent occasions moving in an arc from Diyala, northeast of Baghdad, around the Tigris River toward his hometown of Tikrit (search) and into the Dulaimi areas to the west of the Tigris, Chalabi said.

The latest sighting was about two weeks before Chalabi left on his current U.S. trip -- and the best sighting was three days old.

"Now, he's put a price on American soldiers. He will pay bounty for every American soldier killed in Iraq now. This has been spread around in the western part of the country," Chalabi told the Council on Foreign Relations (search).

He said the casualty rate for American soldiers "is close to one a day, which is not good."

Chalabi, 58, who left Iraq as a teenager, has been mentioned widely as a future Iraqi leader -- though he denies any ambitions to lead the country. He also has many critics who are opposed to anyone ruling Iraq after spending so many years abroad and who oppose his business dealings in Jordan.

Chalabi was critical of U.S. efforts to restore security and public services.

He said the Iraqi National Congress asked the United States to train Iraqi military police to go in with American forces to control the country and stop any looting, but this wasn't done.

Now, there are between 150,000 and 200,000 U.S. troops in Iraq, including about 55,000 in Baghdad, and there is still high insecurity and lawlessness, he said.

The United States has been trying to deal with the killing of U.S. soldiers by putting more troops into areas where they have been attacked, but Chalabi said the Americans were "sitting ducks for terrorists."

Instead, he said, the United States should move quickly to create an Iraqi security force that is armed, paid and under U.S. command. The ratio should be about one American to 10 Iraqis, he said.

This can be done in six weeks with help from community leaders to weed out criminals and members of Saddam's Baath Party, Chalabi said.

"They can actually provide order quickly," he said, and also restore water, electricity and other public services.

If the United States establishes an Iraqi security force, Chalabi said, it could then substantially reduce the number of American troops in Iraq.

"My own view is the United States should stay in Iraq by treaty -- have military bases," and keep between 25,000 and 50,000 troops in the country, he said.

Chalabi said U.S. troops didn't move quickly and aggressively enough to seek out key scientists involved in weapons programs, and "some have left for the gulf," he said.

"The weapons of mass destruction are in Iraq," he said. Finding Saddam, his son Qusai and "the concealment teams" hold the key to finding the weapons, Chalabi said.