New Orleang - Former New Orleans Mayor Ray Nagin, the colourful and controversial spokesman for the city after the devastating Hurricane Katrina in 2005, is under investigation by federal authorities, a source with direct knowledge of the probe said.

   The source told Reuters on Friday that several people linked to Nagin or the New Orleans city administration during his two terms as mayor ending in 2010 were cooperating with the U.S. Justice Department and the FBI.

    The investigation includes whether Nagin received favours or items of value from vendors to the city in return for contracts they received while Nagin was in office, the source said.

     Nagin, who was in Minnesota for a speaking engagement on Friday, spoke to a WWL-TV reporter at the New Orleans airport on his return. Asked about allegations he benefited personally while in office, he said:

   "They're three years old, and they keep coming up. I only want an opportunity to finally deal with them. Hopefully we can have an honest, open approach where truth and justice can prevail, but I'm starting to worry about that now," Nagin said.

   A Justice Department spokeswoman in Washington had no comment. The U.S. attorney in New Orleans, Jim Letten, did not return a call requesting comment. A spokeswoman for FBI Special Agent in Charge David Welker declined to comment on whether an investigation is underway.

   Nagin was thrust into the national spotlight in 2005 when Hurricane Katrina overwhelmed levees and flooded 80 percent of the city, killing 1,500 people and causing more than $80 billion in damage.

   Thousands of New Orleans residents were displaced, especially poor African-Americans, and many were relocated to other cities in the region for months or left New Orleans permanently.