Politicians in Iraq have called for the permanent exile of the Iraqi defector, codenamed Curveball by his US and German handlers, who admitted to the Guardian he lied about Iraq having weapons of mass destruction (WMD).

Rafid Ahmed Alwan al-Janabi said he invented stories about Saddam Hussein's non-existent bioweapons programme in order to "liberate" Iraq.

But if he thought that his mea culpa would make him a hero, it seems he was wrong. "He is a liar, he will not serve his country," one Iraqi politician said in response to Curveball's claim to want to build a political career in his motherland.

In his adopted home of Germany, politicians are demanding to know why the German secret service, the Bundesnachrichtendienst (BND), paid Curveball €3,000 (£2,500) a month for at least five years after they knew he had lied.

In the US, questions are being asked of the CIA's handling of Curveball, 43, and specifically why the then head of the intelligence agency, George Tenet, did not pass on warnings from the Germans about Curveball's reliability.

But the harshest criticism of Curveball is coming from Iraq.

Jamal Al Battikh, the country's minister for tribes' affairs, said: "Honestly, this man led Iraq to a catastrophe and a disaster. Iraqis paid a heavy price for his lies – the invasion of 2003 destroyed Iraqi basic infrastructure and after eight years we cannot fix electricity. Plus thousands of Iraqis have died.

"This man is not welcome back. In fact, Iraqis should complain against him and sue him for his lies."

Others poured scorn on Curveball's plan to return to Iraq and enter politics.

Intefadh Qanber, spokesman for the Iraqi National Congress (INC), led by Ahmed Chalabi, said: "He is a liar, he will not serve his country. He fabricated the story about WMD and that story gave the USA a suitable pretext to lead the 2003 invasion, which hurt Iraq. For most Iraqis, it was obvious that Saddam was a dictator, but they wanted to see him ousted on the basis of his crimes against human rights, not a fabricated story about weapons of mass destruction."

In the US, a pressure group representing veterans of the Iraq war demanded the justice department open an investigation into the INC's relationship to Curveball.

Chalabi, who was very close to the former US vice-president Dick Cheney in the decade leading up to the 2003 invasion, has often been accused of being the man behind Curveball. It has long been known that Chalabi provided the CIA with three other sources who lied about Saddam's WMD capability. But when asked by the Guardian, al-Janabi and Chalabi denied knowing each other.

A spokesman for Iraq Veterans Against the War (IVAW) said: "There must be accountability. Mr Janabi manipulated the United States government in a self-confessed effort to precipitate US military action in Iraq. IVAW calls for the justice department to investigate whether he acted alone or in concert with others who now occupy senior positions in the Iraqi government."

In Germany, politicians are demanding an open parliamentary inquiry into the BND's handling of the Curveball case.

Hans-Ulrich Sckerl, a Green MP in Baden-Württemberg, where Curveball now lives, said Germany's interior ministry had never given a satisfactory explanation for why the BND continued to support Curveball financially until 2008, when he was given a German passport.

He said: "We asked about this matter in the local parliament and the ministry of the interior gave us a very guarded response. They deny knowing anything about Curveball being given German citizenship – with the help of the BND – or being involved with it in any way. Still now, we don't quite believe it ... We will keep asking questions."

Another MP, Hans-Christian Ströbele, who represents the Green Party in the parliamentary control panel on the work of the intelligence services, has already said the Bundestag should investigate why the BND provided support payments to Curveball for so long.

On Wednesday, the BND answered "no comment" to all of the Guardian's questions about Curveball.

In the US, Lawrence Wilkerson, who was chief of staff to the US secretary of state Colin Powell in the build-up to the invasion, said Curveball's lies raised questions about how the CIA had briefed Powell ahead of his crucial speech to the UN security council presenting the case for war.

Tyler Drumheller, the head of the CIA's Europe division in the run-up to the 2003 invasion, said he welcomed Curveball's confession because he had always warned Tenet that Curveball may have been a fabricator.

On the streets of Baghdad today, some ordinary Iraqis said they were grateful for Curveball's lies.

Salem Ahmed, 55, a businessman, said: "I would welcome Rafid back. His lies helped Iraqis get rid of Saddam and now we can travel everywhere. On a personal level, my business has improved, too. I wish Iraqi politicians had lied earlier than 2003 so that we could have got a free country sooner."