Abdullah b Abbas returned from Kufa and assumed the office of the Governor of Basra. Although the government of Ali had succeeded in regaining the control of Basra, yet that was not the end of the troubles in Basra. Most of the people who had repudiated the oath of allegiance of Ali, and had taken the oath of allegiance to Muawiyah once again recanted and took the oath of allegiance to Ali. Under the circumstances the process of oath taking lost its solemnity and became a farce. The people came to change their allegiance as they would change their clothes. That bred discontentment and a sense of insecurity among the people.
Things on the Basra front acquired a sinister hue when Abdullah b Abbas the Governor of Basra defalcated the state funds. Abul Aswad in charge of the Baitul Mal at Basra brought to the notice of Ali that heavy amounts had been received in the state treasury as "Kharaj", but these amounts had been defalcated by the Governor. Without disclosing the source of his information, Ali wrote to Abdullah b Abbas that it had come to his notice that he had defalcated heavy amounts from the state treasury. Ali pointed out that the Government was merely a trustee of the state fund and according to the injunctions of Islam, such funds could not be diverted to serve personal ends. Abdullah b Abbas wrote in reply that the report that had been made to Ali was false. He added that he was fully conscious of his duties and obligations as the Governor, and the Caliph should have no anxiety or misgiving on that score. This reply did not satisfy Ali and he asked Abdullah b Abbas to furnish detailed accounts as to the receipts and expenditure out of the state funds. Abdullah b Abbas took offense at the order of Ali requiring him to furnish accounts. He did not furnish any accounts, but instead resigned from his office, and proceeded to Makkah taking away all the state treasury with him. Abdullah had been the right hand man of Ali. He was closely related to him, and was his chief counselor. Such defalcation and desertion by his close relation and best friend came as a great blow to Ali. With the ill gotten money Abdullah b Abbas purchased some beautiful slave girls. When Ali came to know of these purchases he wrote a letter to Abdullah b Abbas bringing home to him the gravity of his crime. Abdullah b Abbas wrote back to say that if what he had done was a crime, it was not as heinous as the crime committed by Ali himself in causing the bloodshed of thousands of Muslims for the sake of personal power. That broke the heart of Ali. Such shafts of ingratitude from a close associate and dear friend made Ali feel bitter. That was a betrayal which made Ali lose faith in human character.
In most of the source books that have come down to us an account of the defalcation and betrayal of Abdullah b Abbas is given in terms what has been narrated above. There is, however, some controversy on the point.
According to some accounts when Abdullah b Abbas saw that the days of the rule of Ali were numbered and Muawiyah was likely to capture power he took away all that was in the state treasury to prevent it from falling into the bands of Muawiyah. What he did was precedented. When Ali deposed the Othmanite Governor of Yemen, and appointed Abdullah b Abbas as the Governor, the previous Governor had taken away all the state treasury with him to Makkah.
According to one account the entire story of the defalcation and desertion of Ibn Abbas is fictitious. According to this account it is held that Abdullah b Abbas was the Governor of Basra when Ali was assassinated. He held the office during the caliphate of Imam Hasan and relinquished the office only when Imam Hasan abdicated the caliphate in favor of Muawiyah. It is alleged that when the Abbasids came to power and differences developed between the Abbasids and the Alids, some Shia writers invented the story of the defalcation of Abdullah b Abbas to cast aspersions on the character of the Abbasids.