BAGHDAD, Nov 22 (Reuters) - U.S. forces released an Iranian construction official seized in Baghdad on suspicion of belonging to Iran's Revolutionary Guards and smuggling weapons to Iraqi militias, an Iraqi official said on Saturday.

U.S. forces arrested Nader Qorbani at Baghdad airport on Tuesday and put out a statement the following day saying a man had been arrested who was a member of Iran's Qods Force, a unit of the Revolutionary Guards.

They said he was wanted for smuggling weapons to militias but did not specify whether Iraqi or U.S. forces had seized him.

The statement said he was operating under the cover of an organisation that repairs Shi'ite holy sites and that he had also been seized with an "unspecified quantity of cocaine."

The United States has long accused Iran of arming, training and funding small Shi'ite militia units which attack U.S. troops and Iraqi forces. Tehran denies the charge and blames the U.S. military presence for Iraq's instability.

U.S. forces released Qorbani on Friday after Iraq's foreign ministry intervened, Deputy Foreign Minister Labeed Abbawi said.

"The Americans detained him. We called them and asked them to release him and we can confirm that the arrest was unlawful," Abbawi told Reuters. "He's working here on a contract and he's been working here for some time."

The U.S. military did not confirm or deny that U.S. forces who had arrested him nor that he had been released.

"Coalition Forces have long recognised Iraq's sovereignty in making decisions concerning their own legal affairs," a U.S. military spokesman said, referring any further questions to the Iraqi government.

An official at Iran's embassy in Baghdad, Sayed Shikuri, confirmed the U.S. military had released Qorbani.

"The Americans released him and he has left for Iran to be with his family. He will return in a few days to continue his work," Shikuri said.

He said claims that Qorbani was caught with cocaine were false. Another source at the Iranian embassy, who declined to be named, said Qorbani had a packet of salt in his luggage that the arresting forces had confused for cocaine. (Reporting by Khalid al-Ansary and Wisam Mohammed; Writing by Tim Cocks; Editing by Sami Aboudi)

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