The Progressive Labour Party attacked a government defamation suit against Jason Hayward, adding that it is wrong to use public funds for a private matter.

The PLP also questioned this afternoon why neither the Auditor-General nor Governor George Fergusson had spoken out about the government funding of the lawsuit, arguing that it is against financial instructions.

However Auditor-General Heather Matthews responded early this morning that the question of if the matter was approved according to financial instructions should be put to the Financial Secretary, the chief accounting officer for the Ministry of Finance.

Finance minister Bob Richards told the House of Assembly last month that Cabinet had agreed to pay for the lawsuit against Mr Hayward, the president of the Bermuda Public Services Union (BPSU), which revolved around comments made on behalf of the People’s Campaign during a paid television broadcast.

David Burt, the Shadow Minister of Finance, noted that the Auditor-General had previously spoken out against the use of government funds to finance a lawsuit surrounding forged cheques, which had been placed in government files in an alleged effort to implicate Ewart Brown, then the Premier, and Derrick Burgess in a corruption scandal.

In that case, the Auditor-General said the use of public funds to finance a private action was against financial instructions, stating that government funds must be used only for government purposes. While modifications to the financial instructions were suggested by the Public Accounts Committee, Mr Burt said such changes were never implemented.

“It is clear that the Auditor-General considers private lawsuits initiated with government funds to be a violation of financial instructions,” he said. “I will repeat what the Auditor-General said. ‘There is no statutory provision for the underwriting by government of the costs of a minister or civil servant suing in a private civil action.’

“To the best of understanding, financial instructions have not been modified since the Public Accounts recommendations were made and, therefore, the Government is acting in contravention of financial instructions by approving this expenditure of taxpayer funds for the minister’s private action.

“This is a clear violation of financial instructions, and I would expect the same zeal from the office of the Auditor-General in dealing with this matter of the hurt feelings of minister Bob Richards as the office gave to the matter of forged cheques being placed in official government files.”

Opposition leader Marc Bean described the legal action as “an act of cowardly, political intimidation” against Mr Hayward.

“There rightly exists concern that an OBA government that told our seniors that ‘money does not grow on trees’ and slashed the education and scholarship funds have found the money to pay high legal fees to silence a member of civil society,” he said.

“These actions, in our opinion, will be used to victimise the BPSU and intimidate others from speaking out against the actions of the Dunkley administration. The use of intimidation and bullying tactics to silence dissent is not new in Bermuda. This latest use of the courts is simply a return to the dark days of yesteryear, and has no place in any modern, sophisticated jurisdiction.”

He said the Island has seen a “silencing of the watchdogs”, specifically the Auditor-General, the media and the Governor.

“The Governor, supposedly the final check and balance against government corruption, lack of transparency and dictatorial action has been silent for reasons only the United Kingdom Government can say,” he said. “Suffice it to say that it may be time to consider having a watchdog for the watchdogs.”

The Governor declined to comment on the story, but the Auditor-General stated that questions of if the decision was made according to financial instructions should go towards the financial secretary.

Regarding the previous matter involving forged cheques being placed in government documents and her office’s findings, she said: “You will recall that the Auditor-General was denied access to information by the then Attorney-General — information that would have confirmed whether the monies paid out for legal fees were for a legitimate purpose or for a private matter.

“Unfortunately that information was not forthcoming. As a result, I concluded in the special report such expenditure to be improper and unjustified and a violation of financial instructions.

“This special report was presented to Parliament for tabling on January 26, 2012. It is important to note that the Auditor-General is unable to respond to inquiries which have not been investigated and which have not been the subject of a report presented to Parliament for tabling.”

Ms Matthews said the Auditor-General’s office is primarily intended to audit the financial statement of government ministries and government controlled entities, although the Auditor-General is also empowered to carry out inquiries into any matter which comes to her attention relating to how a Government entity uses its resources.

“This matter may be brought to the attention of the Auditor-General by a member of the public, an MP, a Parliamentary Committee, another organisation or from within the Auditor-General’s office,” she said. “The final decision on whether to carry out an inquiry or investigation rests solely with the Auditor-General. However, in accordance with the Audit Act 1990, the conduct of financial audits takes precedence over inquiries/investigations.”