Argentina Set To Revamp Intelligence Agency In Wake Of Prosecutor's Death

BUENOS AIRES (Reuters) - The revamp of Argentina's intelligence service faced its final legislative hurdle on Wednesday, with Congress poised to create a new agency after the government said a renegade spy was linked to the death of a star prosecutor.

State investigator Alberto Nisman was found with a bullet in his head and gun by his side on Jan. 18, four days after accusing President Cristina Fernandez of trying to cover up Iran's alleged role in the 1994 bombing of the AMIA Jewish community center in Buenos Aires.

The mysterious death shocked the country and has highlighted long-standing worries about Argentina's intelligence services.

Expected to be signed into law after passage by the Chamber of Deputies, the measure replaces the SI Intelligence Secretariat with a new service to be called the Federal Intelligence Agency. The Senate approved the bill earlier this month.

Fernandez has said counterintelligence chief Antonio Stiuso manipulated Nisman into making the allegations against her and was then involved in his death. Stiuso has also been accused by the government of operating a smuggling ring from SI headquarters.

Fernandez has said Argentine intelligence has not evolved since the deadly role it played in the 1976-83 military dictatorship, and must become more accountable.

Opposition lawmakers have said her bill does nothing to keep the new agency from committing the same irregularities that took place at the SI.

"The most important issue is the lack of oversight," said opposition lawmaker Manuel Garrido.

"What worries us is that there has not been, nor will there be proper control" over a range of areas including wiretaps.

Garrido said he offered an alternative bill that included heavier controls, but it was blocked by the ruling coalition.

The SI was spotlighted on Tuesday when the government accused former counterintelligence boss Stiuso of importing tonnes of contraband in 2013 and 2014. Stiuso, who has left the country, was forced out of the SI in December and the unidentified contraband has disappeared. [ID:nE6N0QS00K]

Nisman died hours before he was scheduled to brief Congress on his accusation that Fernandez entered a criminal conspiracy with Iran to whitewash the 1994 bombing in order to put through a grains-for-oil deal with Tehran.

She has called the accusation "absurd", and Iran has denied involvement in the bombing, which killed 85 people.