California risks Los Alamos contract amid fraud claim

The University of California could lose the contract to run the Los Alamos National Laboratory that it has held since the inception of the Manhattan Project during the second world war.

The university is already accused of presiding over financial corruption at America's primary nuclear weapons research laboratory, and its governing body has been warned of possible fresh revelations.

Interim director George "Pete" Nanos vowed that he would "drain the swamp" to root out problems but said the shake-up could feel like "ripping off someone's skin".

"There's going to be more bad news before there's good news," he said.

Allegations of fiscal abuse first surfaced last year, and in November two officials called in to investigate were dismissed.

The two former police chiefs said they were fired as part of a cover-up after allegedly unearthing questionable transactions with a total value of more than $3 million (£1.8 million).

Employees at the laboratory - principally support staff rather than scientists - allegedly used the laboratory credit card to bankroll personal spending sprees.

In a letter to UC president Richard Atkinson at the end of last year, energy secretary Spencer Abraham says the suspected impropriety "called into question the [university's] ability to runI Los Alamos".

He ordered an official probe into the alleged mismanagement to report by April 30.

The university has mounted its own internal inquiry into alleged wrongdoing at the laboratory. It has dismissed, redeployed or secured the resignation of eight senior officials.

To date, the university had accounted for all but $620,000 of the questionable transactions, University of California spokesman Michael Reese said.