As far as I understand, Newsweek was told by an anonymous official that these allegations would surface in an internal military investigation report. But the Pentagon has vehemently denied that there are any documented instances of such behavior (specifically, putting Korans on, or down, toilets). (The fact that the Pentagon is denying this based on a review of its interrogation logs does not somehow reassure me -- am I the only one who think that some things might get forgotten off the log?)
And in the same breath US officials are saying that such allegations should _never_ be believed, because they are "standard terrorist tactics.""If you read the al Qaeda training manual, they are trained to make allegations against the infidels,"Army Col. Brad Blackner reportedly told Newsweek.
Newsweek has apologized for any inaccuracies in the piece and for the violence, but not fully retracted. The Pentagon meanwhile is playing the wildly indignant card. How dare we doubt the propriety of US military interrogation techniques? Uhm...Ok, we torture people, but flushing Koran down the toilet is where _we draw the line_.
The New York Times, interestingly, points out that at first Pentagon officials didn't think the riots were even directly linked to the article; they only reached that conclusion after several days.
You can read about this here and here.