(Updates with U.N. comments paragraphs 15-17) By Joe Bavier KINSHASA, May 23 (Reuters) - U.N. peacekeepers from Pakistan trafficked arms for gold with a militia in Democratic Republic of Congo, human rights groups said on Wednesday, adding a U.N. inquiry into the affair was deliberately slowed. The United Nations denied any arms were handed over and said an inquiry under way for more than a year would be completed in three weeks. Pakistan rejected the accusations as malicious and distorted but said it was investigating. The allegations threaten to strike another blow to the image of the 17,000-member peacekeeping mission in Congo, credited with guiding the vast central African country to historic polls last year but repeatedly plagued by scandal. The accusations are from late 2005, when Pakistani peacekeepers were stationed in the mining town of Mongbwalu in the eastern Ituri district, where fighting between ethnic militias continued after the official end of a 1998-2003 war. "Pakistani officers were involved in illegal smuggling of between $2-5 million in gold out of Ituri. We have very solid information on this," said Anneke Van Woudenberg, a senior researcher with U.S.-based Human Rights Watch. She said the peacekeepers colluded with Congolese military, local armed groups and Indian businessmen. "They all became part of one group," she said. Joel Bisubu, a researcher with Congolese human rights group Justice Plus, said the peacekeepers -- meant to help disarm thousands of militia members -- returned weapons to the Front of Nationalists and Integrationalists, an armed group accused by the Congolese government of war crimes. "There was cooperation between the Pakistanis and the FNI," Bisubu said. "The weapons were meant to be surrendered. But there was a shady operation whereby the Pakistanis handed the weapons back." PAKISTANI, U.N. DENIAL The Pakistani Foreign Ministry said it had only been informed of the allegations on Tuesday and relevant authorities were looking into them. Military spokesman Maj.-Gen. Waheed Arshad dismissed reports as distorted. Kemal Saiki, spokesman for Congo's U.N. peacekeeping mission, known by its French acronym MONUC, denied peacekeepers rearmed the fighters, but said the matter was handed over to U.N. internal investigators in late 2005. "The moment we heard about these allegations, we ordered an investigation. It is being conducted independently of MONUC," he said. "Any matters that have a legal impact, they must go about them very deliberately with attention to due process." Van Woudenberg said U.N. officials stifled an inquiry by the world body's Office for Internal Oversight Services as its findings became more politically sensitive. "They never completely shut it down, but they took the resources away from it," she said. "Here's a situation where the U.N. got lots of information from Human Rights Watch and others, and, 18 months later, nothing has been done. It appears as if it has been swept under the carpet." In New York, U.N. spokeswoman Michele Montas said the investigation, which began in early 2006, would be finished in about three weeks. She said Secretary-General Ban Ki-moon "will act upon its findings expeditiously and transparently. If wrongdoing is found to have occurred he will hold those responsible accountable." Montas admitted the investigation had taken a long time but blamed it on "the difficulty of working in that part of the world, where a large number of witnesses have to be interviewed and in difficult security circumstances." Despite its successes in bolstering security in Congo aftera conflict that killed an estimated 4 million people, the U.N.'s largest peacekeeping operation has been dogged by allegations of misconduct. Most charges relate to sexual abuse, including rape, prostitution and paedophilia. U.N. officials say they have investigated and taken disciplinary action where necessary. Any punishment of the peacekeepers themselves is left to the troop contributing nations. (Additional reporting by Augustine Anthony in Islamabad and Patrick Worsnip at the United Nations)