Colombian gov't infiltrated by 'paras'-witness

(Adds official reaction, paragraph 6)

By Hugh Bronstein

BOGOTA, April 18 (Reuters) - Colombian government ministries and other state institutions are infiltrated by outlawed right-wing militias, a witness told judges in testimony on Friday that could further imperil a U.S. trade deal.

More than 60 members of Congress, most from President Alvaro Uribe's conservative coalition, are being investigated for possible links to drug-running paramilitaries who have terrorized Colombia for years in the name of combating left-wing rebels.

The probe's star witness, former intelligence official Rafael Garcia, now in jail for erasing the criminal histories of paramilitary leaders from a government database, told the Supreme Court the armed forces, government ministries and other institutions were also rife with "paras."

"Congress is not the only institution penetrated by the paramilitaries," he said while testifying against a senator caught in the scandal.

The allegation could increase resistance in Washington to a U.S.-Colombia free trade deal, blocked by House of Representatives Democrats concerned that Uribe is not doing enough to protect labor union members who are often targeted by the paramilitaries.

Trade Minister Luis Guillermo Plata, the Colombian official in charge of getting the deal passed, said Garcia lacked credibility and did not back up his statements with evidence.

Uribe's former intelligence chief, Jorge Noguera, is jailed and awaiting trial on charges he provided a death list of union officials and human rights workers to the illegal groups.

The president remains popular for cutting common crime and spurring the economy with his crackdown on Marxist rebels.

Since 2003, he has negotiated the demobilization of more than 30,000 paramilitary fighters who committed some of the worst atrocities of Colombia's four-decade-old guerrilla war.

The militias were formed in the 1980s to protect drug traffickers, cattle ranchers and other rich Colombians from the rebels, who are also funded by cocaine.

Authorities said earlier this week they were investigating an army colonel and six soldiers for colluding with violent paramilitary drug smugglers. Public corruption is widespread in Colombia, the world's biggest cocaine producer.

The country has received billions of dollars in U.S. aid to help bolster security. But cocaine exports remain above 600 tonnes a year, according to the United Nations. (Reporting by Hugh Bronstein; Editing by Peter Cooney)