BY ANDRES OPPENHEIMER

 BUENOS AIRES -- Argentine President Fernando de la Rúa appointed a new
 intelligence chief Monday in an effort to surmount a political scandal over his
 former spy master, who said he became a political target when he axed former
 agents and corrupt journalists from his agency's payroll.

 Outgoing intelligence chief Fernando de Santibáñez, a wealthy banker and one of
 de la Rúa's closest friends, had been publicly accused by former Vice President
 Carlos ``Chacho'' Alvarez of having paid up to $10 million in bribes to opposition
 legislators to pass a government-backed labor law. Both Santibáñez and de la
 Rúa have denied the charge.

 But in his resignation letter Friday, Santibáñez said he was the target of political
 attacks by some of the more than 1,000 spies he had laid off as part of a major
 reform of the State Intelligence Service, which resulted in a 45 percent cut in the
 agency's overall budget.

 Since the de la Rúa government took office nearly a year ago, the intelligence
 service ``is no longer used as a political tool and has become a professional
 institution'' aimed at fighting drug trafficking, terrorism, money laundering and
 organized crime, he said. Many of the ousted spies ``worked breathlessly against
 the reforms,'' he said.

 Although he did not mention it in his resignation letter, Santibáñez told reporters
 privately that part of the attacks against him had come from up to 30 corrupt
 journalists who had been receiving money from the agency before the budget
 cuts.

 According to Santibáñez, the money for the journalists came from the intelligence
 service's secret funds. A September 2000 confidential report from the spy agency
 obtained by The Herald shows that the service's ``strictly secret'' funds were cut
 from $174 million in 1999 -- the last year of President Carlos Menem's
 administration -- to $30.7 million during the first year of de la Rúa's government.

 Santibáñez told The Herald that he would not publicly name the journalists who
 he says received money from the intelligence service. Although there were
 witnesses who allegedly saw the journalists come once a month to get their
 money, it would be hard to prove that in court, he said.

 Santibáñez was replaced by Carlos Becerra, a long-time activist of de la Rúa's
 centrist political party. Political analysts interpreted the change as a boost for
 political leaders of the left wing of de la Rúa's ruling coalition, including former
 Vice President Alvarez and former President Raul Alfonsin, who had also
 criticized Santibáñez's free-market economic proposals.