A ROW over sending obsolete US navy support ships to be broken up in Britain, has taken a new twist.

The investigative arm of America's House of Congress is preparing a scathing report on the US Maritime Administration's (Marad) handling of the affair - and questions its authority to enter into a contract with a British breakers' yard.

Hours after a judge in the US dismissed a legal bid by environment groups to stop nine rusting hulks leaving their Virginia anchorage for the Hartlepool-based Able UK, it has emerged Marad's contracting process has been attacked as "inconsistent'' with American federal law.

A draft report by the Government Accountability Office (GAO) in the US states an inability by Marad to make "sound decisions'' was accompanied by a "lack of transparency'' in contract bidding.

Breakers' yards in the US have complained to Congress that they were unaware they too could bid to scrap the ships.

GAO has reserved special criticism for the deal with the Tees yard, saying that the £11m contract to break up 13 ships was agreed "even though export was considered more complicated and time consuming.''

It also claims Marad failed to determine whether the ships could be safely towed overseas.

Environmentalists have long claimed that the ghost ships are contaminated with asbestos, lead, mercury and toxic PCBs and argued that the vessels should have been dismantled in the US.

The American audit report says Marad will fail to meet a US Government deadline to scrap 121 derelict ships lying at anchor in Virginia, California and Texas by September next year, having only requested a sixth of the total funding it needed to dispose of the vessels.

A spokesman said it was not for Able UK to comment on the GAO draft report.

* www.ghostships.co.uk

Read more about the Ghost Ships campaign here.