Officials: FBI Probing HUD Secretary Alphonso Jackson Over Katrina Contracts

The FBI is examining the ties between Housing Secretary Alphonso Jackson and a friend who was paid $392,000 by Jackson's department as a construction manager in New Orleans, three federal law enforcement officials said Thursday.

Jackson's friend got the job after the HUD secretary asked a staff member to pass along his name to the Housing Authority of New Orleans, a spokesman for Jackson said in a statement.

At the time, the housing authority was in desperate need of a construction manager because there was a severe shortage of reputable local contractors after Hurricane Katrina, the spokesman for Jackson said.

The inquiry was first reported by The National Journal, which identified the contractor as William Hairston of Hilton Head Island in South Carolina. The magazine's Web site said Hairston and Jackson are social friends and golfing buddies.

Three federal law enforcement officials confirmed that an investigation is underway. They spoke on condition of anonymity because of the preliminary nature of the inquiry.

Jackson issued a statement saying: "I intend to fully cooperate with any possible investigation and to clear my name."

The White House said President Bush supports Jackson and that Jackson "expects that the investigation will clearly establish that he did nothing improper or unethical."

Justice Department spokeswoman Jaclyn Lesch declined to comment, as did Hairston when contacted at his home in South Carolina. Michael Zerega, a spokesman for the inspector general's office at the Department of Housing and Urban Development, also declined to comment.

Last year, Jackson became a focus of controversy after telling a Dallas business group that he had rejected a HUD contract because the prospective contractor criticized Bush. Jackson apologized, said he made up the story and declared that Housing and Urban Development Department contracts were never awarded or rejected because of political favoritism.

On Thursday, HUD spokesman Jereon M. Brown confirmed Jackson's ties to Hairston and said his name was one of three the secretary provided to New Orleans officials who were searching for someone to work as construction manager for the local housing authority.

Brown's narrative of events leading to Hairston's hiring was outlined in a series of written answers to questions posed by National Journal. The Associated Press was provided the questions and answers after raising similar questions with Brown.

Hairston Construction was paid $392,000 over a period of a year and a half, according to Brown's statement, and Hairston had been working previously as a subcontractor to the HUD receivers. The New Orleans housing authority was put in receivership after Katrina.

Brown said that during a conversation with Jackson on the status of rebuilding in New Orleans after the storm, a local housing authority official said the agency could find no qualified managers and asked if he had any suggestions.

Jackson thought about it and asked a staff member to pass the names of Hairston and two other construction managers to the housing authority, according to Brown's statement.

The work was not competitively bid and Hairston was hired under emergency procurement procedures, "given the nature of the devastation caused by Katrina," Brown said. Hairston was terminated in June because his job was to be put out for bid.