HARRISBURG - State Auditor General Robert Casey said Monday that his department soon will conduct a compliance audit of the Kvaerner Philadelphia Shipyard Inc. deal in Philadelphia.

Kvaerner is converting the old Navy Yard there into a commercial shipbuilding operation with a $480 million federal, state and local tax subsidy.

However, the deal became mired in controversy in August when it was learned that Kvaerner, part of an Anglo-Norwegian conglomerate, ordered a gantry crane for the Philadelphia operation to be built in Portugal.

The $128 million tax dollar expenditure outraged state Senate Democratic Whip Leonard Bodack of Lawrenceville.

Bodack formally requested that the auditor general investigate the deal to be sure the master agreement had not been broken.

"We will do a compliance audit to make sure that Kvaerner is living up to terms of the master agreement," Casey said. "Our department does not have the legal authority to see if any Pennsylvania or American (company) could have built that crane. But we can make sure that Kvaerner complies with the agreement."

Terms call for the Norwegian shipbuilder to construct at least three vessels there over the next several years.

Casey did not indicate when the performance audit would begin.

"We are very glad the auditor general has decided to look into this matter," Bodack said through a spokesman. "There are lots of questions to be answered if we are to be sure that all of Pennsylvania is going to get the benefits that were promised."

Bodack's spokesman said the legislator was disappointed, however, that no audit could be done on the subsidized operation's purchase of machinery and equipment overseas for the shipyard conversion.