Premier Jennifer Smith is to have crisis talks with Health Minister Nelson Bascome and Transport Minister Dr. Ewart Brown after the pair were accused in the Bermuda Housing Corporation scandal.

She said allegations in yesterday's Bermuda Sun had sparked a special cabinet meeting yesterday.

In the paper, sacked Bermuda Housing Corporation (BHC) general manager Raymonde Dill said Mr. Bascome ordered him to give a $300,000 landscaping contract to a company which hadn't even been tendered, and without it going to the board - in breach of BHC rules.

And Mr. Dill said one of the reasons the BHC project at Southside was behind schedule was because one of the contractors, Bermuda Composite Construction (BCC), was running out of money because Transport Minister Dr. Ewart Brown, who also employed the company to work on his South Shore house, owed the company more than $400,000.

Ms Smith said: “Government views these allegations with grave concern, particularly since the integrity of two ministers has been impugned.”

She said the Ministers were off the Island and unable to respond to the allegations which she said had taken her by surprise, adding: “I fully intend to meet with both of them on their return.”

Dr. Brown had said the reason he had withheld payments to BCC was because he had been overbilled by $200,000 and there were “major quality issues”.

The matter was still in the hands of his lawyers.

Yesterday Dr. Brown told The Royal Gazette: “I've said what I had to say. I've scheduled a meeting with my lawyers when I return to the Island and I don't have anything else to add. We'll be considering all our options.”

Mr. Dill also alleged former Environment Minister Arthur Hodgson tried to intimidate him into accepting some of his apartments into the BHC rental stock - which Mr. Hodgson flatly denied.

The Premier said: “In addition I will be meeting with every Government member named in the Bermuda Sun article in order to respond to these allegations.”

Ms Smith said Acting Housing Minister Sen. David Burch has been told to meet with the BHC board to ensure they publicly answer issues directly affecting them.

She said measures had been taken to ensure Government's financial orders were followed by all quangos.

“In addition, the Central Policy Unit, which comes under the cabinet office, will this month begin a project to investigate whether or not proper controls exist for prudent oversight within all quangos.”

The Premier promised further Government action and regular updates on progress.

Ms Smith said: “This Government will take all necessary measures to ensure the public can continue to have faith in the integrity of this first Progressive Labour Party Government.”

Opposition United Bermuda Party Legislative Affairs spokesman John Barritt said Mr. Bascome, who has responsibility for BHC, should be sacked and a public inquiry be held into the scandal.

Mr. Barritt said the public would be right in thinking that there is either a “cover up” or that delaying tactics are being employed so that it “could be safely ignored. Both of which are unsatisfactory”.

“It seems to me that the Minister (Mr. Bascome) has to tender his resignation,” Mr. Barritt said.

“As to whether any others are to tender their resignation is a matter for the Premier to decide after speaking with Dr. Brown. And what must be done now is to set up a Commission of Inquiry.”

He said the Commission of Inquiry Act 1935 exists “precisely for this sort of thing”, adding: “The public confidence and trust in not only the Housing Corporation but the government of this country has to be at an all-time low when people read this kind of thing in the newspaper.

“It's now apparent everyone's to blame but no one is responsible. Frankly it's a crisis of leadership.

“If a Minister was not able to get on top of it - which clearly was the case - the Premier has no choice but to ask his resignation and allow this Commission of Inquiry to be set up so we can get all the facts.

“Who knows who else will be dragged through the mud as everybody puts into practice the Shaggy song ‘It wasn't me'?”

Mr. Dill broke his silence on the scandal in yesterday's Bermuda Sun to deny staff committed any criminal acts at BHC - which is under Police investigation over allegations of corruption and massive overpayments to some contractors - and vow not to be the “fall guy” for the shambles.

And he defended controversial payments - including $810,940 to contractor Paul Young, the man dubbed “the man with the golden paintbrush” - saying everything was above board.

However, both Mr. Dill and Mr. Young, who also spoke out for the first time to the newspaper yesterday, said they could not provide details of how the money was spent.

Auditor General Larry Dennis has completed a lengthy inquiry into BHC but the results of his report have not been made public because Police are still investigating.

But Mr. Dill said: “To my knowledge there is nothing he could have found in the transactions of the BHC that were of a criminal nature.

“The Auditor General may have had issues with some of the processes and some of the procedures, but these are policy issues to be dealt with internally, not criminal issues.”

He added: “I may have made the cardinal mistake as a civil servant dealing with a politician and that mistake was to say to my minister at the very beginning of all this: ‘Minister, I am not going to be the fall guy for corruption that may well have been in the corporation initially for years of for anything that someone else has done below me or above me because I have done nothing but carry out your mandate and I am not going to be the fall guy.

“You need to fix this because you know what I know'.”

Mr. Dill alleged that Mr. Bascome told him to give a $300,000 landscaping contract at Southside to Island Construction, even though the job was allegedly out to tender and Island had not even made a bid.

Former BHC chairman Wentworth Christopher is quoted as saying: “The board gave to management the authority to deal with certain projects up to a certain limit. A $300,000 contract goes beyond the threshold of the limit, which means it should have come to the board.”

Island Construction boss Zane DeSilva said yesterday: “I cannot comment because of the ongoing police investigation into the Housing Corporation.”

Mr. Dill claimed Mr. Hodgson intimidated in into adding two of his apartments to the BHC stock.

He said Mr. Hodgson, who at the time was challenged Premier Jennifer Smith for leadership of the PLP, pointed a finger in his face and said: “You need to know who pays your salary”.

Mr. Dill said: “I felt intimidated. This was the man who was openly challenging the Premier and might, in a few days time, be Premier. There was no doubt that was in my head.”

Mr. Hodgson told The Royal Gazette yesterday: “I haven't pressurised anyone to do anything. I am surprised by it really.

“There was no pressure whatsoever. There was no need to, it was a straightforward simple agreement. Government needs rental properties and I have been encouraging people to turn their properties to the Housing Corporation.”