Katrina Relief Contracts Come Under Investigation

Billions of dollars of reconstruction contracts awarded in the aftermath of Hurricane Katrina are being investigated amid concerns of cronyism and abuse.

More than 80% of the $1.5bn (£850m) in contracts signed by the Federal Emergency Management Agency (Fema) were awarded without bidding or with only limited competition, including enormous deals with Kellogg Brown and Root, a subsidiary of Halliburton - the former employer of vice-president Dick Cheney - and the Shaw Group. The lobbyist Joe Allbaugh, George Bush's former campaign manager and a former head of Fema, has represented both companies.

Richard Skinner, the inspector general for the department of homeland security, told the New York Times that 60 members of his staff were examining Hurricane Katrina contracts. "We are very apprehensive about what we are seeing," he said. "When you do something like this you do increase the vulnerability for fraud, plain waste, abuse and mismanagement."

Congressman Bennie Thompson of Mississippi, the most senior Democrat on the house homeland security committee, told the newspaper that Fema and other federal agencies were delivering too much of the work to corporations with political connections instead of local companies. "There is just more of the good old-boy system taking care of its political allies," Mr Thompson said. "Fema and others have put out these contracts in such a haphazard manner, I don't know how they can come up with anything that is accountable to the taxpayer."

Contracts signed so far include more than 15 that exceed $100m, including five of $500m or more, mostly for debris removal along the Gulf coast devastated by the hurricane four weeks ago. Congressional investigators are looking into a $568m contract awarded to AshBritt, a Florida company that was a client of the former lobbying firm of Haley Barbour, the governor of Mississippi.

Meanwhile, helicopters continued to scour flood waters in Louisiana looking for anybody trapped in the aftermath of Hurricane Rita, which struck the Gulf coast at the weekend with less force than had been predicted. But several towns along the Texas-Louisiana border were destroyed. Officials credited the epic - albeit chaotic - evacuation of 3 million people for saving countless lives. "As bad as it could have been, we came out of this in pretty good shape," said the governor of Texas, Rick Perry.

The fresh flooding in New Orleans from levee breaks was mostly restricted to areas already destroyed, and the authorities said they estimated it would take less than a week to pump the city dry.