The US government has sought to counter the allegations by insisting that the deals were too urgent to be put out to tender and that there will be close scrutiny of the billions of dollars to be spent in Louisiana, Texas, Alabama and Mississippi.

According to The New York Times, 80% of the $1.5 billion worth of contracts awarded by the Federal Emergency Management Agency (Fema) in the days after Hurricane Katrina did not involve a general tender.

The Washington Post on Wednesday highlighted a $236 million contract with Carnival Cruise Lines to house evacuees for six months in three cruise ships.

Overpriced

The ships currently lay half empty in the Mississippi river and off Mobile bay in Alabama.

Even if the vessels were full with 7116 refugees for six months, the price would be $1275 dollars per person, according to calculations by aides to Senator Tom Coburn, a Republican, quoted by the Post.

The US Gulf Coast was battered by
two hurricanes in close succession

A week-long cruise can be bought for $599.

"A short term temporary solution has turned into a long-term grossly overpriced sweetheart deal for a cruiseline," said Coburn and Democratic counterpart Barack Obama in a joint statement condemning the government oversight of the huge sums involved.

Political connections

Critics have also stressed a $568 million deal secured by Florida company AshBritt to help clean up debris. The company has close links to the Republican governor of Mississippi Haley Barbour.

Other contracts have gone to Kellogg, Brown and Root (KBR), a subsidiary of Halliburton, which used to be run by Vice- President Dick Cheney and has come in for criticism over its Iraq deals, and the Bechtel engineering firm, which also has links to President George Bush's administration.

Fraud fears have been raised over special permission given to some federal employees to spend up to $250,000 using credit cards for hurricane expenses, when they normally have a limit of $2500.

Past investigations into credit card fraud by government officials have shown that the money sometimes went to prostitutes and casino gambling.

Official comment

Homeland Security Secretary Michael Chertoff on Tuesday defended the government's emergency spending but added that contracts could be renegotiated to avoid waste.

He said the hurricanes had produced special circumstances when the need to save lives and make sure people had food and shelter meant that normal procedures had to be put to one side.

Last week, the Homeland Security Department's main audit watchdog set up a "special bureau" to check on the huge amounts of reconstruction money expected to pour into Louisiana and neighbouring states in coming months and years.

President Bush has promised one of the biggest reconstruction projects in the world after the hurricanes. Congress has already voted more than $62 billion in special funding. Estimates of up to $200 billion have been made for the final rebuilding cost.