The United States Government is taking legal action to recover millions of dollars which officials believe was stolen from Nasa's space shuttle programme.

Officials in Los Angeles believe a sub-contractor on the multi-billion dollar space probe swindled them out of development funds and spent it on houses, lavish holidays and expensive jewellery among other things.

This week, the US Justice Department filed a suit naming Rockwell International, Boeing North American and United Space Alliance - the current space shuttle contractor.

The suit contends that officials at Rockwell - which was formerly the prime contractor for Nasa's space shuttle and space station - knew about the bogus costs and concealed the fraud by its former sub-contractor Omniplan.

Horror movie

It maintains Omniplan was hired by Rockwell to handle cost controls and management but did quite the opposite, resulting in a plundering of millions of dollars from Nasa accounts between 1986 and 1993.

Rockwell's Nasa contract included a $350m bonus based on how well it monitored its subcontractor, which has since gone out of business.

According to a report in the Los Angeles Times, the lawsuit filed in a Los Angeles federal court asserts that Nasa unwittingly paid the contractor's expenses in making a horror movie, operating a pizza franchise, vacations around the world and mortgage payments on two family homes and a ski lodge.

Guilty of fraud

The newspaper said that according to the law suit, the pizza franchise was operated out of a building Omniplan rented for its work on the Nasa contract, and the government ended up paying for the wages of employees who took telephone orders and kept the records.

In the 80s and early 90s, Rockwell was given a $4.7bn contract to build the space shuttle. The business was later acquired by Boeing, which assumed the contracts under its Boeing North American division.

The acquisition included Rockwell's share in United Space Alliance, a joint venture with Lockheed Martin.

Boeing has issued a statement saying it had co-operated in the investigation and believed it was not liable for the actions of its sub-contractors.

The head of Omniplan, Ralph Montijo pleaded guilty to fraud five years ago and was sentenced to two years in prison.