By Evelyn Leopold

UNITED NATIONS, July 5 (Reuters) - Republicans in the U.S. Congress are accusing the U.N. Development Program of firing a whistle-blower connected with the agency's North Korea program, a target of the Bush administration.

Sen. Norm Coleman of Minnesota, who last week sent a letter to U.N. Secretary-General Ban Ki-moon, said Artjon Shkurtaj, chief of operations in North Korea in 2005 to 2006, was dismissed for criticizing the UNDP.

On Thursday, Rep. Ileana Ros-Lehtinen of Florida also sent a letter to Ban, urging him to intervene to protect Shkurtaj, who she said had uncovered "significant irregularities."

The Bush administration accuses the agency of sloppy accounting, handing over cash to North Korean bodies without proper documentation and hiring government-picked staff.

Shkurtaj, an Albanian, reportedly discovered in 2005 a stack of counterfeit dollars from North Korea that UNDP had put in a safe after they were handed to the agency 10 years earlier by an Egyptian consultant who had discovered they were fake.

The UNDP said it tried to return the notes to the North Koreans in 1995 but they refused to accept them and proper receipts were lacking from the Egyptian. The agency apparently put them in a safe and forgot about the notes until this year when they contacted U.S. officials.

Ros-Lehtinen said Shkurtaj attempted to raise the issue with UNDP in 2005 but instead had been relieved of his duties. He applied to the U.N. for whistle-blower status.

"This request is being reviewed by the Ethics Office, and that is where the status is, right now," U.N. Deputy spokeswoman Marie Okabe told reporters.

According to UNDP officials, Shkurtaj left North Korea in August 2006 and left the program in March 2007, after fulfilling several short-term contracts.

FUNDING CUT

Ros-Lehtinen, the ranking Republican on the House Foreign Affairs Committee, was successful in getting the House last week to cut $20 million of funding to UNDP. The Senate still has to vote.

UNDP pulled out of North Korea in March after Pyongyang refused to accept changes ordered by its board of directors. A U.N. audit published on June 1 said rule breaches had occurred but did not find systematic major diversion of U.N. funding.

David Morrison, UNDP spokesman, said the agency had taken the U.S. allegations very seriously and investigated them.

"The information supplied to UNDP by the U.S. mission meant to substantiate the allegations does not tally with UNDP's own financial records," he said.

But U.S. Ambassador Zalmay Khalilzad told reporters last week: "I'm advised by our people that they have a variety of sources pointing in the same direction with regard to potential abuses."

U.S. officials insist their investigation is not political, The former UNDP administrator, Mark Malloch Brown, clashed with former U.S. United Nations ambassador John Bolton.

The current deputy UNDP administrator, Ad Melkert, headed the World Bank's ethics committee that contributed to the downfall of former bank president Paul Wolfowitz, a former Bush administration official.

Khalilzad and other U.S. officials, however, have praised the current administrator, Kemal Dervis, for his handling of the controversy.

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