WASHINGTON - Investigators are looking into the giveaway of millions of dollars worth of U.S. military equipment left behind when Americans pulled out of the Panama Canal a year ago.
In one bizarre twist to the distribution of an estimated $7.7 million in property, a surplus military boat given to a charity in Honduras was confiscated in an alleged cocaine-running scheme.
The property - including $1.5 million in firearms, communications equipment and gun parts - cannot be accounted for because of sloppy bookkeeping, congressional investigators report.
Also, an estimated $3 million worth of equipment, including a tractor, crane and trucks, has been taken back. The pieces are impounded and rusting in warehouses in Panama, accumulating more than $300,000 in storage fees.
The giveaways were part of $137 million in furniture, food, medical supplies, appliances and other property that was sold, traded, donated to charities or abandoned, some of it in a rush, as troops prepared to end America's 90-year presence and return control of the canal to Panama by Dec. 31, 1999.
''There were some people around here who were red-faced, not just from embarrassment but from out-and-out anger,'' said Steve Lucas, spokesman for the Southern Command, which oversees U.S. military operations in Central and South America.
''We really thought we had some good ideas: Get out of Panama, do it reasonably. And it turns out that we may have been hoodwinked,'' he said.
Still, he said, the problems were small, given the massive task of moving out of more than 4,800 buildings and relocating 10,000 service members under the 1977 treaty America signed to give back the waterway at the end of the century.
Rather than spending money to ship used goods out of Panama, the U.S. military planned to give them to other government agencies and humanitarian organizations that work in many of the region's poor nations.
Some items, however, began showing up on Panama's black market, authorities said.
Also, some recipients were suspected of using the goods for commercial rather than humanitarian purposes. In an investigation criticized by some in the military as too slow, the Army's Criminal Investigation Command has been reviewing that aspect of the giveaway since July 1999; no charges have been announced.
A separate Southern Command inquiry board in September ordered one charity to return equipment. The governments of Panama and Honduras also are investigating. The General Accounting Office, the investigative arm of Congress, found weak points in the disposal system but said that overall, the giveaway went OK.
The GAO said that because there was too much property for the military to handle, an authorized contractor disburse about a third of the $137 million in goods disposed of in 1998-99.
About 28 percent of the total was sold, 30 percent given away, 29 percent sent to other military units or government agencies and the rest scrapped, destroyed or traded for Panama services such as traffic police.
''Most excess property in Panama was disposed of properly, but some control weakness existed,'' the GAO said. The agency said it limited its investigation to ''the process'' so as not to interfere with the Army's separate criminal investigation.
Part of that investigation focuses on the charity Corazon a Corazon, Spanish for Heart to Heart, which got some $3 million in equipment, including three U.S. landing craft from Panama. It was started by Steven Foster of Dalton, Ga., to help Hondurans suffering from the devastation of Hurricane Mitch.
Four workers for the charity were arrested in September and another was being sought on charges they used one of the vessels to smuggle cocaine.
The boat was confiscated and the military board of inquiry declared in September that Corazon a Corazon had gotten the property under ''false pretenses'' and had to give it back.
Foster says he has never made a profit and is being made a scapegoat for a bad system in which the military undervalued property and gave it away helter-skelter late in 1999 just to unload it in time for the withdrawal deadline.
''It was like a madhouse down there with them trying to get the stuff out,'' Foster said. ''They brought in first sergeants from the National Guard who didn't know what they were doing and their job was to go from piece of equipment to piece of equipment and put a value on it.''
Foster says his Honduran employees were framed because the government wanted the boat back. The case is pending in Honduran courts.
The GAO said it found no evidence property was undervalued and believes it was widely distributed, going to 29 countries in the Southern Command's area of responsibility.
The GAO also said the command could not account for about $700,000 worth of property, the contractor could not account for $443,000 worth and the contractor had no written approval on 45 percent of the $42 million in goods it handled for the military - which the GAO said it saw as mainly an accounting problem.
''More importantly,'' the GAO said, sloppy paperwork by untrained personnel made it impossible to know what had happened to $6.5 million in goods, including $1.5 million in property ''that required special handling such as firearms, communication equipment and gun parts.''
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On the Net:
Panama Canal Authority site: http://www.pancanal.com/eng/index.html
General Accounting Office: http://www.gao.gov/
Southern Command site: http://www.southcom.mil/home/index.htm
Corazon a Corazon site: http://www.corazonacorazon.net/
