LONDON, Aug 10: President Pervez Musharraf has been dealt his latest and most serious blow with the accusation from co-chairman of the ruling party Asif Ali Zardari that he misappropriated hundreds of millions of dollars of American aid given for supporting the war on terror.

Mr Zardari made the charge in an interview with The Sunday Times correspondent Christina Lamb. He also detailed for the first time President Musharraf’s attempts to sabotage his government which, he said, forced him to take the drastic step of demanding his impeachment.

“Our grand old Musharraf has not been passing on all the $1 billion a year that the Americans have been giving for the armed forces,” he claimed. “The army has been getting $250m-$300m reimbursement for what they do, but where’s the rest? “They claim it’s been going in budget support but that’s not the answer. We’re talking about $700m a year missing. The rest has been taken by ‘Mush’ for some scheme or other and we’ve got to find it.”

Mr Zardari claimed the American aid might have gone to fund rogue members of the military intelligence, the ISI, who were last week accused by Washington of assisting Taliban and other groups rather than rooting them out.

“We’re looking for the money,” he said. “I think he (Musharraf) has a slush fund being used for this and for some activity for the future.” Mr Zardari also accused the president of economic sabotage and fomenting conflict in Balochistan and the tribal areas.

“They spent all the money so we would have to borrow; they didn’t pass on the increased price of oil; nor added a single extra megawatt of power in the last 10 years. All these things were deliberately thought out so at the end of day they can turn round and tell the world. ‘Look, democracy doesn’t deliver’, and step back in.”

“I know I’m in danger,” he said. “Whoever killed her (Benazir Bhutto) wants to kill me.”

“To say we’re responsible for the country, yes we are, but first get your role model out of the way, remove your most allied of allies,” said Mr Zardari. “They’ve had Musharraf there 10 years, instead of bringing these issues up with him they are trying to bring them up with us today.”

Mr Zardari warned against a possible sacking of parliament by Musharraf, saying: “If he does it, it will be his last verdict against the people, the people’s mandate and against Pakistan.”