By Evelyn Leopold

UNITED NATIONS, July 6 (Reuters) - The U.N. Development Program, in a growing dispute with Washington over its North Korean operations, denied on Friday it fired an employee for trying to expose the agency's alleged wrongdoing in Pyongyang.

The United States contends the UNDP broke rules by providing North Korea with hard currency under a program it ran there and violated its own rules by hiring staff reviewed by Pyongyang.

UNDP spokesman David Morrison told a news conference that the former employee, earlier identified as Artjon Shkurtaj, had met with senior U.N. officials this year, including the head of UNDP, Kemal Dervis.

"He has been invited to submit substantiating information and documentation, but has so far not done so," Morrison said. "We would wish to see this evidence."

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.

The anti-poverty agency says its programs in North Korea cost some $2 million a year.

But Shkurtaj, who has applied for U.N. whistle-blower status, said the UNDP in North Korea violated "multiple rules and regulations" and engaged in "criminal conduct," according to his published reports. He said he informed UNDP in writing in July 2005, including that a batch of counterfeit dollars from North Korea were in a safe and forgotten for a decade.

Shkurtaj, a native of Albania with Italian citizenship, has charged that his contract was not renewed because of his complaints. Morrison said it had expired in March.

"If there is evidence of retaliation, we would like to see it," Morrison said.

U.S. officials also contend that UNDP paid North Koreans in hard currency without proper documentation, and at times, in cash without receipts. UNDP officials said they had not received proof from the United States, which also charged that some of the money may have helped Pyongyang's nuclear program.

"U.S. documentation did not tally with our own financial records," Morrison said, adding that audits were not yet complete.

Morrison said that UNDP's documents were stored with the World Food Program in Pyongyang and that auditors had been invited to visit North Korea to analyze them. If they could not go, the papers would be shipped to New York.

U.S. officials deny any political motive in accusing the UNDP and have avoided criticizing Dervis.

Dervis, a Turk, assumed control of the agency in August 2005 from Briton Mark Malloch Brown, who had clashed frequently with former U.S. Ambassador John Bolton.

Much of the criticism has centered on Dutchman Ad Melkert, who joined the UNDP as deputy head in March 2006 after leading the World Bank's ethics committee. His later testimony contributed to the downfall of the former World Bank president, Paul Wolfowitz.

U.S. officials say they will be producing more information on the UNDP's North Korea operations and Mark Wallace, a U.S. deputy ambassador, has said millions of dollars may have been diverted to benefit the Communist leadership.

Morrison said, however, UNDP did bar Shkurtaj from entering the U.N. compound in New York after his contract, although not his U.N. pass had expired.

AlertNet news is provided by