further into doubt.

A special committee has been formed in America to examine the possible closure of State Department properties, it emerged yesterday.

And it is thought likely Chelston will come under the microscope when the committee starts meeting early next year.

Earlier this year The Royal Gazette revealed the United States Government believed the sale of the Paget property could raise more than $12 million.

It would also save more than $100,000 annually in maintenance and repair costs.

Premier David Saul, however, has stated Bermuda would oppose any sale of Chelston.

Yesterday US Consul General Robert Farmer was off the Island and could not be reached for comment.

Deputy Principle Officer Bruce Berton, from the US Consulate General's office, told The Royal Gazette the special committee was set up after this year's Budget in America.

The Real Estate Property Board was told to examine all State Department buildings.

"The committee will begin meeting after the first of the New Year, with a view to looking at possible savings,'' said Mr. Berton.

He added: "My guess is that Chelston is a likely property to be examined.'' Chelston -- used for the social aspects of Mr. Farmer's work -- is on a 14-acre estate with a beach house on the South Shore.

Faced with an ever-shrinking budget, the State Department is under constant pressure to make savings.

A General Accounting Office report recently submitted to the US Congress said the home could be sold for more than $12 million.

"Sale of the property would allow the State Department to reallocate millions of dollars in sales proceeds and eliminate the annual maintenance cost of $100,000, as well as the costs of major repairs,'' the report said.

But the State Department also said the luxury home was a gift from the Bermuda Government and selling it over the Island's objections would create "a sensitive political issue''.

"Given the Government's recorded objection, there is no reason to believe they would ever approve its sale,'' said Richard L. Greene, the department's chief financial officer.

Mr. Berton agreed the sale of Chelston could present political difficulties.

Chelston faces uncertain future "There are a lot of people in the US Government who have said Chelston is a national treasure and should be kept as such.'' Mr. Berton added: "There is some question about whether the Bermuda Government had right of first refusal of the property.'' Dr. Saul recently told The Royal Gazette Chelston could not be sold without Bermuda's approval, particularly to a non-Bermudian. And if offered only to Bermudians, it would fetch far less than $12 million, he said.

He added Chelston was not a gift to the US from Bermuda, but was deeded to the States by American oilman C.P. Dubbs in the early 1960s, in exchange for taxes owed.