* US report says UN construction shoddy, accounting lax

* UN admits lapses, will refund money and discipline fraud

By Patrick Worsnip

UNITED NATIONS, April 14 (Reuters) - The United Nations said on Tuesday it was working to resolve quickly a row with the U.S. government's aid agency over infrastructure projects in Afghanistan and would refund any money in dispute.

The U.N. Development Program (UNDP) admitted to "lapses" in its reports back to the U.S. Agency for International Development (USAID) on how it was carrying out the projects and wanted anyone involved in fraud to be disciplined.

The agency was reacting to an article in the newspaper USA Today on a USAID report alleging that several construction projects entrusted to the United Nations were shoddily carried out and that there were irregularities in U.N. accounting.

The newspaper's website carried a link to the USAID report, which was dated last June and marked "sensitive but unclassified."

The dispute centers on a $25.6 million agreement USAID reached with UNDP to build small "quick impact" projects from 2003-2006 and provide jobs in remote areas of Afghanistan where Taliban influence was strong. UNDP subcontracted the work to another agency, the U.N. Office for Project Services (UNOPS).

The report alleged faults in some of the projects including "life-threatening oversights" in a bridge, drainage problems at an airstrip that made it unusable in the rain, and a failure to provide electricity or plumbing for a bank building.

It also complained of a failure to get adequate accounting from UNDP and UNOPS of how money was being spent, and quoted witnesses as saying some funds were diverted to U.N. projects in other countries such as Sudan, Haiti, Sri Lanka and Dubai.

UNDP spokesman Stephane Dujarric told reporters that while most of the projects were completed successfully, the agency was "very disturbed" by issues raised in the report.

He said UNDP and USAID had met several times to discuss money for which he said the U.S. agency had issued a bill of collection.

"We will be going through the vouchers with USAID to ensure that they are satisfied as to the validity of the expenses," Dujarric said. "Any money that remains in dispute at the end of this process will be refunded by UNDP to USAID."

He said this was expected to amount to a maximum of $1.5 million.

"We recognize the lapses in the timing and quality of certain reports back to USAID, but we have been working for months to resolve any disputes ... and we expect to fully resolve these matters very soon," Dujarric added.

He said UNDP hoped anyone found to have acted fraudulently would be dealt with by the U.N. system, but that such a case could also come to court in Afghanistan or in New York.

(Editing by Eric Beech)

AlertNet news is provided by