THE police investigation into the use of $700,000 of public money given to former Berkeley contractor Pro-Active Management Systems Ltd. has been completed and the file has been passed on to the Director of Public Prosecutions (DPP).

DPP Vinette Graham-Allen confirmed yesterday that the file on the police findings had been passed on to her chambers.

Auditor General Larry Dennis raised the alarm over the payment back in 2002 when the Ministry of Works & Engineering failed to provide a receipt proving how Pro-Active had spent the money.

It was intended to pay for a performance bond ? a kind of insurance policy on the project to build the new Berkeley school ? from Union Asset Holdings Ltd. (UAH), an insurance company that is a subsidiary of the Bermuda Industrial Union (BIU).

Mr. Dennis, who is responsible for vetting Government accounts, needed proof that Pro-Active had actually spent the $700,000 in the intended way.

His efforts yielded nothing and so Mr. Dennis passed his file on to the Bermuda Police Service in January 2003.

"The matter has reached our office," Ms Graham-Allen said yesterday. "It is here for me to give a legal opinion on it and so it would be completely inappropriate for me to make any comment on it."

Mr. Dennis also kept his comments brief. "I have been in touch with the DPP's office recently to find out what they are doing with this," he said yesterday.

Should the matter reach the courts, it would be a politically sensitive case.

Premier Alex Scott was the Works & Engineering Minister at the time when Mr. Dennis made his original request for the receipt.

Back in November 2002, Mr. Scott said the matter was "not a priority" for his Ministry. "From what the officers said, we are not in the practice of . . . giving receipts for everything," Mr. Scott added.

Derrick Burgess, president of the BIU and a Government backbencher, has said that whether Pro-Active paid out the $700,000 was "nobody's business".

Mr. Dennis has treated the case with the utmost seriousness. In a statement made in 2002, he explained why.

"If the $700,000 surety fee has not been paid, Pro-Active has received a $700,000 interest-free injection of public funds for which Government has received no value.

"Most charitably, I might describe it for now as an interest-free cash advance, to help with cash flow problems, that was received under false pretences."

After numerous attempts to acquire the elusive receipt from civil servants, Mr. Dennis wrote to the Governor on the matter and requested a police investigation.

The performance bond was supposed to cover the project for up to ten per cent of its original $68 million value. The project costs have now soared to more than $121 million.

Despite Pro-Active having been fired, the project being around $50 million over budget and three years late, it is believed that no claim has been made on the bond.

Mr. Dennis has questioned whether or not a bond is actually in place because of the lack of proof that the $700,000 premium had been paid by Pro-Active. And he has raised concerns over the fact that the bond was agreed 11 days before UAH had even been incorporated.