Outcry Over $236m Contract to House Hurricane Survivors in Cruise Liners

Millions of dollars of emergency aid have been wasted on housing evacuees from Hurricane Katrina in half empty cruise liners, it emerged yesterday.

The Federal Emergency Management Agency (Fema) agreed to pay $236m (£133.6m) to a cruise firm for three ships to provide accommodation for survivors of the hurricane. It would have cost half that much to send them on a Caribbean cruise, Senate critics of the arrangement said on Tuesday.

The outcry over the deal with Carnival cruise lines came as Michael Brown, Fema's former director, tried to deflect criticism of his role and the agency's performance at a congressional committee.

A more complete picture of the impact of Hurricanes Katrina and Rita emerged yesterday as officials produced figures showing that 500,000 people had been left homeless by the storms. About 300,000 of these people are out of work, and 70,000 are living in shelters. Up to 200,000 homes have been destroyed. With a full toll still not available, 885 residents of Louisiana are known to have died, as well as 40,000 head of cattle.

In New Orleans, the fallout from Katrina continued as the city's police chief unexpectedly resigned. Eddie Compass, who assumed a high-profile role after the storm struck, told a news conference he felt it was time for him to move on, after 26 years on the police force.

His performance came under scrutiny after he appeared on television to allege that babies were being raped inside the Louisiana Superdome, allegations that now appear unfounded. Some 300 members of the New Orleans police department did not report for duty when Katrina struck. More than 250 officers now face investigation.

Three liners owned by Carnival were hired by Fema in the aftermath of Katrina. The ships had a capacity of 7,116 beds, at a cost of $1,275 per person per week. The cost of a Caribbean cruise from Texas is $559 per week. "When the federal government would actually save millions of dollars by forgoing the status quo and actually sending evacuees on a luxurious six-month cruise it is time to rethink how we are conducting oversight," said senators Tom Coburn and Barack Obama.

The director of contracts at Sealift Command, which is part of Fema, defended the agreement. "They were the market," said Captain Joe Manna. "Under the circumstances, I'd say we're getting a pretty good value."

The deal attracted further criticism when it emerged that Carnival, although based in Miami, is registered in Panama and is exempt from most US taxes. The company had also sought assurances from Fema that the relief contract would also be tax exempt.

Appearing before a congressional committee, Mr Brown said he had warned the White House that Katrina would be severe. His comments were not critical of George Bush, but suggested that Washington could have been more aggressive in its response and that the agency had been undermined by its absorption into the department of homeland security. He reserved his harshest criticism for state officials, telling the committee that he had been unable to persuade the governor of Louisiana, Kathleen Blanco, to order an evacuation of New Orleans before the storm.