Bermuda Housing Corporation (BHC) guaranteed loans to customers outside of the legal remit using taxpayers' dollars - such as for debt repayment, divorce settlement costs and tuition fees, The Royal Gazette has learned.

The investigation into alleged mismanagement at the housing quango threw up nine cases where loans were allowed to customers that were not within the parameters of the Bermuda Housing Act 1980.

None of the nine loans were secured by a first mortgage and none were approved by then Housing Minister Nelson Bascome, as was required.

Auditor General Larry Dennis said, as well, some mortgage loans were increased for such unapproved purposes as paying off old debts, divorce settlements and college fees.

Mr. Dennis said: "Additionally, the corporation has made loans to five of its officials and ex-officials, including the general manager (Raymonde Dill), of amounts up to $11,900.

"None of these loans were for dwelling property-related purposes, none were secured and none were approved by the Minister."

Under the Bermuda Housing Act 1980, BHC could make or guarantee loans only for the purposes of acquiring or leasing land, constructing, converting or improving homes, or other related reasons. All such loans or guarantees had to be secured by a first mortgage or approved by Mr. Bascome.

Mr. Dennis said as of May last year, BHC had loans outstanding totalling about $770,000 and had guaranteed repayment of many mortgage loans that it had facilitated for its customers. But he said the administration of these loans, and the approved policies, were frequently ignored.

He said: "Management also disregarded policies and controls established by the board. For example, not all loans, mortgage guarantees and deeds of further charges were forwarded to the board's Mortgage Committee for approval, and most mortgage and loan files lacked all the required supporting documentation.

"Further, although the Mortgage Committee is - or should be - a critical control component within the loan and mortgage approval process, its operating criteria are in some ways deficient. As well, discussions with committee members revealed that some are unaware of all these criteria. Documentation of the committee's processes and decisions is also often deficient."