Contractors working for Bermuda Housing Corporation could virtually charge whatever they wanted for work carried out as cost overruns were rarely questioned or rejected.

In his damning report into mismanagement and corruption at the Government quango, Auditor General Larry Dennis condemned the lack of financial management, which sometimes led to contractors claiming up to 100 percent more than the original estimate - and even double-billing.

But he said just how excessive some of the construction costs were was difficult to assess because project records routinely lacked information on why overruns had occurred, or how they were justified.

And he said: "The size and circumstances of some of the excessive costs raise suspicions that something worse than mismanagement could be involved."

Mr. Dennis was drafted in to carry out an emergency investigation into the running of BHC after it came to light in March of last year that some contractors had been paid large amounts for simple work, such as painting or gardening.

"It seems that cost overruns claimed by "It seems that cost overruns claimed by contractors were virtually never questioned or rejected," Mr. Dennis said in his report.

"A review of a sample of projects for which quotations had been received ranging from $22,000 to $390,000 revealed cost overruns from ten percent to 100 percent of the estimate. In one case, work quoted at $390,000 eventually cost more than $740,000.

"For some other projects reviewed, the price for the work shown on the purchase orders (and subsequently paid) appeared exorbitant."

Mr. Dennis said to assess the "reasonableness" of some of the prices, he employed a quantity surveyor and a contractor to estimate the market value of the work performed.

He said the amounts quoted and paid exceeded the assessed value by amounts ranging from 32 percent to more than 200 percent.

But he said a similar comparison was impossible for some apparently exorbitant quotations because the description on the purchase orders about the nature and extent of the work performed was "too vague".

The BHC scandal hit the news in March of last year with allegations of corruption, kickbacks and double-billing being levied at the Government quango.

It was claimed that painter Paul Young was paid a massive $810,940 for work on BHC contracts between May and November of 2001.

Gardener Caven Richardson was paid $5,500 a week - or $70,000 over three months - for landscaping work carried out on BHC properties. However, Mr. Richardson said last year that he could not understand why people had raised suspicions.

But last September, The Bermuda Sun interviewed BHC former general manager Raymonde Dill, who defended the $810,940 payments made to Mr.. Young, who became known as the man with the golden paintbrush.

He said Mr. Young was not just a painter, but worked with a team of young men who also fixed up buildings, as well as painted them.

Mr. Dill said the payments were above board, although neither he or Mr.. Young were able to give detailed accounts of how the 21 cheques were spent.

Mr. Dill said it would be "unrealistic" to ask small contractors like Mr. Young to provide detailed explanations of how they spent BHC money.

Mr. Dill told The Sun: "The record keeping for a small contractor is not likely to be able to produce the detailed analysis people might want project-by-project.

"Information is available on salaries paid or on the amounts paid to subcontractors, but that would cover multiple jobs. It's unrealistic to ask a small contractor to provide `job costing' at the level requested here."

And Mr. Dill had claimed that Mr.. Young made a profit of just between ten and 14 percent. And he said given that the contracts to Mr. Young sometimes had to be subcontracted out, the bills were not inflated.

But Mr. Young said he did not "have the energy" to try to convince the media that the payments were justified.

The Auditor General said his investigation had found that in six instances cost overruns were increased by contractor's invoices being paid twice, with the errors remaining undetected or detected much later.

Once such duplicate payment was for $32,000 and two others were for each $10,000.

"Deficient internal controls and weak project management have undoubtedly cost the housing corporation and/or its customers dearly, though how much is impossible to quantify," said Mr. Dennis.

"The size and circumstances of some of the excessive costs raise suspicions that something worse than mismanagement could be involved."

Mr. Dennis said well-managed organisations had procedures in place to mitigate financial risk, and said purchases should have been properly approved and payments well detailed and documented.

And he said the system should be such that one person alone was unable to perpetrate and conceal a fraud. But Mr. Dennis said a large percentage of the corporation's payments lacked evidence that the required documentation was in place and that the proper procedures had been followed. Much of the time, he said there was little evidence to show that services and work had even been carried out to specification, and said on occasion Mr. Dill was solely responsible for every facet of a transaction, from the signing of contracts to the payment.

And also cause for concern was the abnormally large number of payments that were made by manually-produced cheques or cash. Many large cash expenditures were made from revenue receipts - a practice considered inconsistent with accepted administration and management control practises.

The Auditor General said except for small, out of pocket expenses, only emergency payments should be made by manually produced cheques or cash. However, 25 percent of the Corporation's payments were made in this way and for the majority of the payments reviewed during the investigation, there was no apparent justification for it.

In the same vein, there was little documentation to support charges incurred on the general manager's credit card.

Mr. Dennis said the only documentation available were the statements from the credit card company.

"There were no invoices or receipts or other documentation to verify that the charges were for legitimate corporation business," said the auditor general.

"There was also no indication that a second party had checked the charges for validity. This situation contrasts with the controls exercised over the use of credit cards by senior officials in Government departments where strictly enforced usage and documentation requirements apply."