Pubdate: Fri, 26 May 2000 Source: New York Times (NY) Copyright: 2000 The New York Times Company Contact: 229 West 43rd Street, New York, NY 10036 Fax: (212) 556-3622 Website: http://www.nytimes.com/ Forum: http://www10.nytimes.com/comment/ MAJOR AUDIT FIRMS REJECT COLOMBIA CONTRACTS, FEARING REPRISAL WASHINGTON (AP) Two big accounting firms, fearing "potential reprisals," rejected contracts to review Colombian national police records for possible misuse of drug-fighting funds provided by the United States, so State Department auditors have taken over the job themselves, records show. The audit is being performed as Congress considers a Clinton administration proposal to send Colombia $1.6 billion in fresh drug-fighting aid. The State Department inspector general was already auditing United States anti-drug aid to Colombia as part of the office's routine oversight duties, but it stepped up the review of police funding in April after being notified of the problems with the private auditors. State Department officials sought the audit after a top Colombian National Police official was accused of embezzling American money intended for the force's air wing. The audit involves a cash fund for fuel, aircraft parts and other supplies -- which in 1998 totaled $1.2 million, said Rand Beers, an assistant secretary of state. He said most future aid would not be cash, but equipment and services. "It will not involve direct transfers of money to the government of Colombia," said Mr. Beers, who heads State's Bureau of International Narcotics and Law Enforcement Affairs. Correspondence obtained by The Associated Press shows American Embassy officials in Bogota, Colombia, began seeking an audit more than a year ago after allegations surfaced that the fund had been misused and that much of it is missing. "Two well-known accounting firms with offices in Bogota have declined to accept contracts for the work for fear of potential reprisals against their local employees," Wendy Chamberlin of Mr. Beers' office wrote the inspector general on Feb. 4. Her letter did not identify the firms. But a Dec. 1, 1999, letter discloses that the accounting giant KPMG was one of the two. KPMG wrote the State Department saying it "will not be able to proceed with our engagement" involving an audit of the Colombian National Police. The firm wrote Louis Moreno, a State Department drug official at the embassy, that the work could be risky and "we are concerned about the repercussions from the individuals in Colombia against our firm and/or employees." John Hummel, a KPMG partner, said in an interview that his company hadn't received threats. He said KPMG officials from the United States began preliminary work on an audit, working with low-level staff from Colombia. When higher-level company officials in Bogota found out about the audit, "they didn't want to do it," Mr. Hummel said. The allegations involve Colombian National Police Major Oscar Pimienta, who was accused by a subordinate of embezzling American funds that were supposed to be used for aircraft fuel, motor vehicle parts and other supplies. Mr. Pimienta's attorney, Hector Arcadio Pulido, said his client has denied wrongdoing and is free while a Colombian court considers the case. Colombian National Police, under the leadership of Gen. Rosso Jose Serrano, has been widely praised for its integrity and effectiveness, even when Colombia's government and military have been under fire for corruption and human rights violations. American aid to Colombia has risen sharply from $29.6 million in 1995 to $360.9 million last year, according to the Congressional Research Service. Most is intended for anti-drug efforts. - --- MAP posted-by: Allan Wilkinson