A showcase foreign aid program in Cambodia-run by the Vietnam Veterans of

America Foundation-is the subject of an inquiry into its finances.

VVAF's

Cambodian project has been wracked by personal acrimony, conflicting

allegations, and sackings or resignations of senior managers for months.

The project has just lost both its director and one deputy. Two previous

managers-one a lawyer disbarred in the United States-were earlier asked to

resign.

The organization's Kien Khleang center just outside Phnom Penh-which

manufactures artificial limbs and wheelchairs-was closed for two days last week.

The reason for the closure is itself a matter of dispute.

The situation has grown increasingly bitter and extraordinary in recent

weeks, with allegations of death and bomb threats, mismanagement or theft of

money, personal misbehavior and more.

Serious allegations and counter allegations have been made to the US Embassy

and the US government's USAID agency, which has granted $4.5 million to VVAF in

Cambodia.

Allegations of misuse of money have been passed to the office of the US

Inspector-General, a watchdog on state spending. Investigations by the office

are said to be mandatory in such cases.

VVAF's executive-director, Bobby Muller, along with its financial controller,

Dick Howard, arrived in Phnom Penh on Feb 17 from Washington DC.

They held talks with US Ambassador Charles Twining and USAID staff.

Representatives of the Inspector-General, from either Washington or the office's

Singapore office, were expected to be present.

US Embassy spokesman Frank Hoffman confirmed that "there have been charges

and counter-charges" made to the embassy by former and current VVAF staff.

"I'm sure [US]AID will be interested in discussions with Mr. Muller but ...

no decisions have been made pending further clarification.

"You may be sure that if there's evidence of misuse of funds, USAID will be

most concerned at that.

Bitter allegations fly between American vets

"I'm sure that [an investigation] is what they will proceed to do, but at

this point we don't know the truth of the allegations."

Huffman said he could not say what the nature of the inquiry, or whether it

would entail a full audit, would be.

Muller, VVAF's head, said he had been informed that an inquiry by the

Inspector-General would be held because it was "obligatory".

Describing the allegations as "unfounded", "reckless", "insane" and

"slander", he said they were the work of "disgruntled former employees".

"I welcome the opportunity to have AID, the Inspector-General, [or] whoever

... put to us more formerly the concerns [which have been raised]."

He said he was happy for anyone "to come in, sit down and review the

finances".

VVAF-which began its Cambodian project in 1991 and has operations at Kien

Khleang, Prey Veng and Steung Treng-has been granted $4.5 million of USAID

funding for the period Sept. 1992-June 1996. Further funding has been

mooted.

Its Cambodian work, and particularly its Kien Khleang facility, has long been

a much-vaunted example of foreign aid.

US Deputy Secretary of State Strobe Talbot went to Kien Khleang - the only

non-political event on his itinerary - during his recent Cambodian visit.

However, VVAF's first Cambodian director, Ron Podlaski - who resigned when

asked to last April - has now gone public to the Post with a series of

allegations of misuse of program funds dating back years.

Other allegations, and VVAF internal documents, have been formally given to

US officials from other sources.

It is reliably understood that concerns about the project were raised with

USAID officials as long as six months ago, though formal allegations were filed

more recently.

Some of the allegations - most of which cannot be published for legal reasons

- relate to Thomas Leckinger, a former VVAF Cambodian director who took over

from Ron Podlaski in July 1993.

Leckinger, a former Rochester, New York lawyer, was disbarred in April 1994

for his handling of a dead women's estate before he came to Cambodia. He has not

been convicted of any crime.

Leckinger, in an interview with the Post, categorically denied any misuse of

funds by him. He said he had requested a full USAID audit of the project, to

settle the allegations, as long ago as November.

"This has been a nightmare," he said. "Since this started I have gone through

[records of] every single dime that came into the country that was under my

control - there isn't ten cents missing."

Leckinger said his disbarring related to a complaint made about him while

several people involved in a real estate deal were suing each other.

He said he accepted his disbarring, and did not contest it, because the

dispute led him to have "absolutely no interest in practicing law [again]".

Podlaski, in interviews with the Post, maintained that VVAF's employment of a

lawyer facing disciplinary action at the time he was sent to Cambodia was

unconscionable.

Muller acknowledged that he was aware of the disciplinary action when he sent

Leckinger here.

He said he made no apologies for that. He said Leckinger, who

had been his legal counsel for years, had an exemplary record in dealing with

veterans' affairs.

Some of Podlaski's allegations relate to Leckinger's spending of $22,000 on a

VVAF credit card while on a trip to the US in late 1993-early 1994. According to

a credit card statement, the bills included $740 on clothes, $900 on tapes and

records, $200 on jewelry and cosmetics and $540 visiting Universal Studios and

Disneyland

Leckinger said some $1500 of the total bill related to personal purchases

which had been repaid from money owed to him by VVAF.

Muller agreed, rejecting the suggestion the situation was unusual for a

charity.

"I personally have no problem in having people out in this part of the

world... incurring in their travels charges which can be put on their card on

the understanding that it's a debt they can pay back. I don't share your

sensitivities on that."

Both Leckinger and Muller said that, unrelated to he $22,000 credit card

bill, they had differences over outstanding debts.

"There are accounts between us that are still [in need of] further

examination ... that's one of the reasons we needed to come here," said

Muller.

Leckinger was asked to resign as director last August for reasons he and

Muller say were to do with internal conflicts.

Three weeks ago, his replacement, Bill Herod was also asked to resign after

he refused to sack his deputy, Phil Brady.

Both Herod and Brady declined Post invitations to comment.

Herod's departure meant that all of VVAF's Cambodian directors since the

project started have now resigned in the face of being sacked.

Ed Miles - a senior VVAF official who helped to found the project and

returned to Cambodia some time ago to sort out problems - told the Post some 9

or 10 expatriate staff had been sacked or asked to resign in the past six

months.

He was unrepentant, saying "they didn't do anything" and declaring that he

would "love to fire Brady again".

Miles acknowledged past mismanagement of the program. "There was

mismanagement ... people were replaced and possibly the people who replaced them

weren't aggressive enough in changing these things".

Both he and Muller said management problems had largely started when the

program quickly expanded with the influx of AID money. They also referred to

personality conflicts they said were still being caused by Podlaski as an

over-riding factor.

Muller - who said that on previous visits he had found the program to be a

"shambles" and a "disaster" - said he was "not unmindful" of the high staff

turnover.

On the question of misappropriation of funds, he said: "We can tell you where

the money went. Whether the money was wisely spent is another whole issue.

"Endemic in this country is padding the bill and that sort of thing... "

Some allegations understood to have been made from various quarters center on

the construction of a new building - costing between $190,000 to more than

$300,000, according to differing accounts - at Kien Khleang.

Miles acknowledged there had been problems with the construction, which he

said was a reason why some staff had been removed.

The disputes have shattered old friendships among some of the protagonists.

Muller and Miles, both in wheelchairs because of war wounds, and Leckinger and

Podlaski, are all Vietnam veterans who have worked together in the past.

Others closely involved with the project say it has been in a state of

virtual warfare for more than a year, and that the program's purpose is in

danger of being lost.

"This is supposed to be about putting artificial limbs on people. I don't

know about these guys, whether they're still fighting the war or what," said one

insider.