Senate orders review of cruise line deal

October 29, 2005|By LOS ANGELES TIMES

WASHINGTON -- The Senate unanimously passed a measure yesterday that will require an investigation of a $236 million deal to lease three ships from Carnival Cruise Lines for emergency housing after Hurricane Katrina.

The measure calls on the Department of Homeland Security's inspector-general to determine whether the deal "was appropriate and reasonable" and whether "there were any irregularities or deviations in the award ... oversight and administration of the contract."

The Department of Homeland Security oversees the Federal Emergency Management Agency, which brokered the deal.

The contract was negotiated after Hurricane Katrina struck New Orleans and the Gulf Coast in late August. The deal pays Carnival $192 million over six months for about 7,100 berths and up to $44 million in reimbursements for fuel, waste removal and other expenses.

The ships were intended for evacuees but are being used mainly to house emergency workers.

"The U.S. government has the right to audit the charters," Tim Gallagher, a Carnival spokesman, said. "We are confident that it will stand up to any governmental review."

Last week, Rep. Henry A. Waxman of California, the ranking Democrat on the House Government Reform Committee, blasted the deal in a letter to Homeland Security Secretary Michael Chertoff.

He said that internal company financial data obtained by his committee indicated that Carnival could net as much as $94 million more under the deal with the government than it would have gained if the ships had been at sea.

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