Government Ministers either misled MPs or showed "extreme incompetence'' when the House of Assembly gave more than $1.2 million in handouts to struggling hotels.

And more than three years after the deadline for repayment, Goverment has not had any of the cash back -- while some of hotels involved have gone out of business altogether.

The Island's independent financial watchdog, Auditor Larry Dennis, said: "To date no amount has been received nor has legal action against the debtors commenced.

"As can be seen..some of the debtors no longer exist.'' And Mr. Dennis said: "This is evidence of extreme incompetence'' or "the House of Assembly was misled when it was asked to pass the resolution in the form of a loan.'' Mr. Dennis' attack came in the Auditor's report on Government spending for 1994/95 published last week -- although much of the information has been updated to November last year.

Mr. Dennis said Government accounts showed a $1.277 million bad debt charge for cash handouts made to around 30 hotels and guest houses in 1985.

The money -- due to be paid back by December, 1995 -- was to cover the cost of services provided to customers who had bought coupons from failed travel wholesaler Haley Martin Corp. -- which had not passed the cash on to the hotel properties.

Among the debtors in the report are the Princess Hotel, the Elbow Beach Hotel, Grotto Bay and Harmony Hall.

Those who have since shut their doors are the Belmont and Bermudiana Hotels, the Hamiltonian and Inverurie Guest House.

The biggest individual debts logged in the report include a whopping $275,000-plus given to Grotto Bay, more than $190,000 given to Elbow Beach, and $184,000 forked out for Sonesta Beach.

Recipients of smaller amounts include the long-gone Bermudiana ($86,274), the closed Belmont ($42,454), Stonington Beach ($52,629) and Mermaid Beach ($47,770).

Mr. Dennis' report added there was a total of 91 different recommendations outstanding from various reports prepared by his office.

He said: "The Office of the Auditor is meeting with the Ministry of Finance and other Ministries and Departments in an effort to have satisfactory solutions implemented.'' m Finance Minister defends Accountant General: Page 3 Editorial: Page 4 Student loans not being recovered, says Auditor Elsewhere in the hard-hitting report, Mr. Dennis said Government's efforts to recover student loans scored less than full marks.

He pointed out that $2.6 million under the National Education Guarantee Scheme, underwritten by Government, was receivable, or potentially receivable, at the end of the 1994/1995 financial year.

Mr. Dennis said: "The sytem used to track the amounts due, or potentially due, under the programmes are inefficient and unreliable.'' He added that cheques had been issued before the required bonds were issued, $380,000 in payments were in arrears and the computer system for tracking loans was "inadequate''.

Other problems spotlighted in the report include guarantees and bonds of less than the amount advanced -- and even a missing loan agreement.

Mr. Dennis recommended: "The systems used to track amounts loaned, advanced or guaranteed on behalf of students should be improved to enable Government to know exactly what is owed and from whom.

"Amounts in arrears should be pursued, and guarantees, where applicable, should be called in.'' The report added: "The National Education Guarantee Scheme should seek the same level of assurance as the Student Loan Programme and guarantees on amounts loaned from the banks should be obtained.'' A reply from the Ministry of Finance attached to the recommendations backed the new approach.

Larry Dennis: Auditor