The U.S. Embassy had considered her a model employe. Her salary of $14,024 a year was among the highest paid to a Salvadoran citizen at the mission, and she received a "superior performance" award in 1984 for her work as an agriculture specialist for the Agency for International Development.

But everything changed for Graciela Menendez de Iglesias on Sept. 16, when two embassy security agents appeared at her office to talk to her.

The embassy accused Iglesias of slipping information to left-wing guerrillas that could have helped them to track and assassinate U.S. military and diplomatic personnel. It handed her over to El Salvador's Treasury Police, just outside the embassy gate.

That was the start, Iglesias now says, of a 15-day ordeal that still gives her nightmares "every night." During her detention at Treasury Police headquarters, she says, she was raped "numerous times," was kept nude and blindfolded for most of her stay, and was forced to stand for hours, holding her arms in the air with a strong jet of cold water running down on her.

"I can still feel it [the water]," she said, pointing to the top of her head during a 2 1/2-hour interview in Mexico City during which she repeatedly broke down and sobbed.

A military judge released Iglesias on Oct. 8, saying there was not enough evidence to hold her, and she flew to Mexico two days later. Now she plans to emigrate to Sweden with her husband and their two sons.

Iglesias' account of her time with the Treasury Police is a particularly dramatic example of persistent allegations that El Salvador's military security forces continue to mistreat prisoners in their effort to obtain confessions.

As is frequently the case in allegations of torture, there were no known witnesses to corroborate Iglesias' story. Her account was considered credible by diplomats of two West European countries that have taken an interest in the case and by two other reliable sources who are familiar with it.

The Treasury Police and the U.S. government say that they remain convinced that Iglesias was a left-wing guerrilla collaborator and that she made up the story about being mistreated to embarrass the U.S. and Salvadoran governments.

The Treasury Police director, Col. Rinaldo Golcher, said Iglesias was identified as a spy by two guerrilla intelligence chiefs, Carlos Zepeda and Amadeo Cortes, who were captured in September and had become informers.

Both said they had a source, codenamed "Veronica," in the rural development section of the embassy, Golcher said. He added that Cortes had met her several times and had identified her as Iglesias when shown a set of photographs of embassy personnel.

The two captured guerrillas said "Veronica" had provided them with unclassified documents, including copies of the embassy's chatty internal newsletter, lists of home phone numbers and addresses of embassy personnel, and photos taken at embassy parties, Golcher said.

When asked about Iglesias' allegations of being abused at police headquarters, Golcher said, "This is the kind of statement that any important terrorist makes. They thus have an excuse, that they were tortured, if they said anything that compromises their comrades." He said prisoners sometimes are blindfolded or questioned for up to 24 hours without sleep to press for a confession. But he denied that interrogation methods went beyond that.

Elliott Abrams, U.S. assistant secretary of state for inter-American affairs, called Iglesias a woman who was "believed to have lived a lie over the last several years . . . . I believe her story to be a fabrication." But Abrams, like other U.S. officials, was careful to say only that he "believed" that the Treasury Police did not abuse Iglesias.

Another U.S. official said, "There was not some member of the U.S. government watching her 24 hours a day. I can't swear to you that that [the mistreatment] didn't happen, but I don't believe it happened."

The account by Iglesias, who denied all charges that she was a spy, was similar to that of others who have charged mistreatment by Salvadoran security forces. The State Department said in its annual human rights report issued Feb. 13 that "there are still credible reports of prisoners being subjected to abuse by government officials" in El Salvador. It emphasized, though, that the situation has improved since President Jose Napoleon Duarte came to power in 1984.

"What I can't understand is, knowing what the Treasury Police are like, how could the embassy hand her over?" one of the West European diplomats asked. "Nobody should be treated like that, regardless of what she had been doing," he added.

The embassy said that it could not have prevented the Treasury Police from arresting Iglesias even if it wanted to. As a Salvadoran citizen, she did not enjoy diplomatic protection.

Iglesias said she was not physically abused during her first two days at the Treasury Police's sprawling barracks in San Salvador's eastern outskirts. But her jailers warned her that things would get worse if she did not cooperate.

"They said if I didn't collaborate with them, then my treatment was going to change. They said they were going to bring in my husband, but they would only bring his head. They repeated this over and over," she said.

The police changed tactics on her second night, Iglesias said. She was blindfolded, put in a vehicle, and driven around for several hours.

"They said they were going to throw me out. One would say, 'Where are we going to throw her?' and the other would say, 'No, not here.' The terror I felt then was the worst," she said.

Iglesias said they returned to the barracks, she was placed in a less comfortable cell, and the police took all of her clothes and left her blindfolded. She said that was the night that the rapes began.

Iglesias said she was interrogated repeatedly while being forced to stand under the water jet.

"If I let down my arms, there was always somebody to say, lift them up again," she said. "They told me my father and mother were going to die, but everything could be different if I collaborated." Embassy representatives questioned Iglesias three times while she was at the Treasury Police barracks, and gave her a lie detector test that a U.S. official said she flunked.

Abrams and other U.S. officials noted that Iglesias did not complain of mistreatment in those talks, nor to a representative of the government's human rights commission, who also visited her at the barracks.

"How can you say it if you're still there inside?" she replies. She did talk to a representative of the International Committee of the Red Cross, but said she asked him not to publicize her protests because of fears for her family.

Iglesias signed an unofficial confession while at the Treasury Police barracks. She says now that it was written for her, and that she was forced to sign it while blindfolded.

After 15 days at the barracks, the maximum amount of time that a suspect legally can be held there, Iglesias was transferred to the Ilopango jail for women, accused of politically related crimes. Eight days later, a military judge freed her on grounds that the two Treasury policemen who were witnesses to her confession had not actually heard her make the statements attributed to her.

The two West European diplomats said they believed Iglesias's story because she seemed credible in conversations early on says bob ld END NOTES and because of two factors:

Iglesias did not seek to publicize her story after she was released, as one would expect if she were interested in a public relations coup. She refused to speak to any reporter until December and declined to be quoted until this interview.

The diplomats helped persuade Iglesias to speak to the press, and she said that she had become willing to do so in part because weekly psychiatric treatments in Mexico City gradually are helping her.

The military judge ruled unusually quickly that there was insufficient evidence to hold Iglesias. The diplomats said they thus doubted that the evidence against her could have been very strong.

Golcher said he believes that the judge either had been bribed or had received death threats, although he offered no evidence of that. The West European diplomats said they did not want to be identified because their relations with their U.S. counterparts could be damaged.

The embassy is said not to believe that Iglesias provided information that helped a guerrilla attack on a sidewalk restaurant last June that left four U.S. Marine embassy guards, two private U.S. citizens, and seven other persons dead.