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Hamid Karzai said the cash was used to maintain the presidential palace and run his office
The US has voiced concern about Iran's "negative influence" on Afghanistan, after Afghan President Hamid Karzai admitted receiving cash from Tehran.
White House spokesman Bill Burton urged Iran to play a more positive role.
Mr Karzai has denied any wrongdoing, saying the cash was part of a "transparent" process to help to run the president's office.
He was responding to a report that Iran had been passing bags stuffed full of cash to his aides.
Mr Burton told reporters that the American people and the global community had "every reason" to be concerned about Iran trying to have a "negative influence" on Afghanistan.
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Analysis
Quentin Sommerville
BBC News, Kabul
Cash is king in Afghanistan and so, in many respects, the news that Iran handed over hard currency is unsurprising.
But President Karzai's admission will do little to reassure some of his foreign supporters who have been concerned at corruption within his government, and Tehran's growing influence in the country.
And his lack of precision didn't help matters - "once or twice in a year, Iran has given five hundred, or six hundred, or seven hundred thousand euros," he said, leaving some to ask - where did the money go, and did all of it make its way into the finance ministry's coffers?
Despite receiving billions of dollars in aid, Afghanistan remains one of the poorest countries in the world.
"[Iranian officials] have a responsibility just like all their neighbours to try to have a positive influence on the formation of a government there, and to ensure that Afghanistan is not a country where terrorists can find safe harbour, or where attacks can be planned on their soil."
The White House spokesman added that Barack Obama's administration had seen the reports about Iran's payments, but declined to give any further details.
His comments come just hours after Mr Karzai admitted that his chief of staff, Umar Daudzai, had received cash.
"The government of Iran has been assisting us with five or six or seven hundred thousand euros once or twice every year, that is an official aid," he said.
He said he had discussed the issue with former US President George W Bush.
"This is nothing hidden. We are grateful for the Iranian help in this regard. The United States is doing the same thing, they're providing cash to some of our offices."
'Slush fund'
The story came to light in a New York Times report which claimed that a large bag of euro notes had been passed to Mr Daudzai at the end of an official visit to Iran by Mr Karzai.
The report quoted officials as saying a stream of payments totalling millions of dollars had been used to secure their loyalty of Afghan politicians, tribal elders and even Taliban commanders.
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Iranian-Afghan relations
Iran opposed Taliban government 1996-2001; backed opposition Northern Alliance
Taliban killed eight Iranian diplomats and an Iranian reporter in 1998
Iran concerned about drug trafficking across shared border
More than one million Afghan refugees and many illegal migrants still in Iran
Iran says it is a major investor in Afghanistan. It has built roads, bridges, power lines and border stations
Iranian influence in Afghan affairs is a growing concern to the US and its allies
Cash and control in Afghanistan
The Iranian embassy in Kabul strongly denied the report, describing the claims as "ridiculous and insulting".
"Such baseless speculations are being spread by some Western media outlets in order to confuse public opinion and damage the strong ties between the governments and nations of the Islamic republics of Afghanistan and Iran," a statement said.
But Francesc Vendrell, a former EU envoy to Afghanistan, said the practice of receiving cash donations was far from unusual.
"Many governments that hope to court influence are paying and providing money to the president's office in what I would call a slush fund," he told the BBC.
"This has been going on since the very beginning, and the Americans are very much in the vanguard. So I'm not surprised the Iranians are doing it."
He added that the payments were symptomatic of the West's failure to establish a proper government in the country.
Meanwhile, Nato said on Monday that at least 15 militants had been killed in an overnight air strike in southern Helmand province.
Some unconfirmed reports said civilians had died in the attack. The Helmand governor's office told the BBC they could neither confirm or deny whether those who died in the incident were civilians, and an investigation was under way.
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Subject: Iran's cash to Kabul worries US 
Tue Oct 26, 2010 8:28 am
