Auditor General Larry Dennis was last night still awaiting information on the mystery $700,000 cash reimbursement paid out by taxpayers to the general contractor of the troubled Berkeley School development.

But Works and Engineering Minister Alex Scott said shedding light the paper trail was "not a priority".

Mr. Scott told The Royal Gazette last night: "From what the officers said, we are not in the practice of... giving receipts for everything. I have a recollection that we got a written request for the payment (from Pro-Active), so that's what I'm waiting to have back from them (technical officers)."

The Auditor General had raised questions in his Special Audit of the Berkeley project about why Pro-Active Management Systems Ltd was given the money when the Ministry of Works and Engineering had no receipt to prove that Pro-Active had actually parted with the cash in payment of an insurance premium needed for the site.

As of last night, the Auditor had still not received proof Pro-Active had paid the money, and Mr. Scott had not contacted him.

In his latest statement on his audit of the Berkeley site, Mr. Dennis said if the $700,000 payment had not been made by Pro-Active to Union Asset Holdings (UAH) Ltd, who put up the performance bond (insurance), then senior civil servants who reimbursed the money in good faith had been compromised.

When The Royal Gazette this week asked Derrick Burgess, president of the Bermuda Industrial Union (BIU), which owns the bonding company, if the money had been paid by Pro-Active, he said it was nobody's business.

However, the Auditor General disagreed and said it was the business of the public and BIU members.

He said: "If officials of the BIU really believe that 'it is no one's business whether or not Pro-Active actually paid the $700,000 surety fee to the BIU', they don't understand the potential seriousness of the problem that is stealing its way through the system.

"My concerns are grave enough that I do not think I should be coy."

Mr. Dennis said large amounts of taxpayers' money should not be paid out without Government first having some evidence that it was warranted.

"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."

Mr. Dennis, in his report, said Works and Engineering staff had expressed concern that the Ministry had not received any evidence that Pro-Active had paid the surety fee.

So, he said, in other words, it was common knowledge in the Ministry that evidence of the payment from Pro-Active to the surety was needed before the Government reimbursed payment.

Following on from that, he said it was his belief that the Ministry did not have evidence on its files to meet the requirements of the Public Treasury Act, or the Financial Instructions, as it stood.

"In both situations, penalties are provided for failure to act as instructed," said Mr. Dennis.

And he added: "If the $700,000 surety has not been paid, the premium has not been received by the insurer and the bond is not in effect.

"This could suggest that the bond was never expected to be called, a suggestion that needs to be dispelled immediately. The documentation that evidences Pro-Active's payment to the surety should, therefore, be provided now."

Mr. Dennis said he had "no doubt that all senior officers of the Civil Service who were instrumental in processing the payment of $700,000 acted in good faith and with full expectation that the required, evidential documentation would be forthcoming".

And he said if, for only this purpose, the documentation that evidences Pro-Active's payment to the surety should be provided immediately.

If the Auditor General does not receive proof that the $700,000 was paid by Pro-Active, along with the assessment of Union Asset Holdings' ability to meet claims of up to $6.89 million, which was carried out by Cabinet or the Attorney General's Chambers, and the original copy of the bond he will refer the matter to the Governor.

In order to be awarded the contract, Pro-Active had to have a performance bond in place to insure against additional costs and delays.

The bond had to be ten percent of the overall $68 million cost of the project, and was eventually put up by a UAH insurance company, which was created solely for that purpose by the BIU.

However, Mr. Dennis said that in order for the bond to be in effect, Pro-Active had to pay a $700,000 premium.

Yesterday in Parliament, Mr. Scott tabled the Auditor's special report on Berkeley as a "take note motion", which means it could be months before it is discussed in the House of Assembly.

However, Mr. Scott said he believed it should be "given a full airing", so the public could be fully informed of what both sides are saying.

On Thursday night, Mr. Scott said he had asked his Permanent Secretary to brief him on the status of the receipt of the $700,000.

And he said he had believed that the Auditor General had been satisfied when going through the files in search of information about Berkeley, and was not aware he was still waiting to see the receipt for the premium.

However, as of last night, Mr. Scott said he had not been to his Ministry so did not know what the status of that request was, but disagreed with Mr. Dennis and said he did not believe it was a vital issue.

"It's not a priority, I don't think, but I certainly asked my Permanent Secretary about it," said Mr. Scott.

But Mr. Scott said, contrary to what the Auditor General said, it was not necessary for Pro-Active to prove that it had paid the $700,000 to Government, and the whole matter of the premium did not matter, provided the performance bond was in place and it could be called upon.

He added: "We know the bond exists. We can make a claim. The Auditor again creates a smokescreen when he says we can't claim on something if we don't have a premium. I signed the bond. The Attorney General advised that it was a bona fide document."

And Mr. Scott said his Ministry had documents that stated that a bond was required for the job, and once that was in place, the premium would be reimbursed by Government.

He added: "We could have had a claim against us for not acknowledging a request for payment from Pro-Active. We have a legitimate document in hand, and a premium that really I can claim against.

"I don't get involved in the payments, the Permanent Secretary does. He is very judicious, He would not make a payment unless he had sufficient information that all the requirements and criteria had been met."

Mr. Scott said he could not understand why the Auditor General wanted the original copy of the bond, when he already had a copy.

But he said the way he felt the Auditor had behaved this week, he "would not trust him with the original copy".

"He's an auditor out of control," he added.

"He got the information he (asked for). He did not ask for the original."

And Mr. Scott accused the Auditor General of "manufacturing explanations", and said "his mouth is not a prayer book".

He added: "I do take exception when he raises these red herrings to make it sound like there is really something to it. I will provide him with what the technical officers feel we have to, but he certainly cannot approach me through the media and expect a response, and that's what is happening right now."

But when asked if the Minister had approached the Auditor General, he said: "He is not high on my list of people to talk to right now."

Mr. Dennis said the Government had turned the Berkeley bond into a "sacred cow".

He said there was nothing sacred about a bond, but it was just one of many options available to mitigate risk.

And he said if Government had only said at the beginning of the tendering process for Berkeley that a bond was not necessary, this whole quagmire over the performance bond would not be in existence.

Mr. Dennis said, knowing how difficult it was for companies to receive performance bonds, he had always expected Government to issue a policy statement saying that bonds were no longer required for public contracts.

Of course, he said, as Auditor General he would have expected to have seen alternative methods used to ensure projects were covered against additional costs, for example each individual contractor taking out insurance.

However, he said: "Instead, Government turned the performance bond into a sacred cow, paid out $700,000 of public funds and, in the process, appears, until proven otherwise, to have performed administrative inexpediencies in order to give the appearance that this bond is in place and is callable."