A former Bermuda Housing Corporation general manager told the trial of alleged fraudster Terrence Smith he once called Police over suspicions another worker acted improperly, but they told him it would be too much work to investigate.

Raymonde Dill said this employee was one of two staff members he dismissed for ?doing things they shouldn?t have been doing? at the BHC.

He was giving evidence at Supreme Court after Smith?s defence lawyer, Larry Scott, took the unusual step of asking for the case to be re-opened after closing it on Friday. Mr. Dill became BHC general manager in October 1999 and was in charge at the time of the alleged fraud.

Former Property Officer Smith, 45, is accused of defrauding the corporation of $1.3 million between September 2000 and February 2002. He is said to have done this by rubber-stamping inflated bills submitted by carpenter Steven Barbosa for payment in the knowledge they were false. Mr. Barbosa, according to the prosecution, passed $924,668 in profits from this scam back to Smith in the form of cash and goods for his home.

Mr. Scott asked Mr. Dill ? now working as a consultant ? about a time under his management when suspicions arose about property officers and the work they were doing.

He replied: ?Bermuda is a rumour mill and there were rumours when I arrived at the Housing Corporation about the potential for improprieties.? He said these put him on his guard and he warned staff at the BHC that he was on the look out. He added that rumours had been brought to the attention of the board but that these were vague, and did not specify any particular property or property officer. An investigation was done which resulted in a report to the board recommending new procedures to block the potential for improprieties,? he said, adding that there had been no need for ?a witch-hunt?.

Asked if it had ever been necessary to dismiss anyone, he said yes, explaining: ?During my tenure there were two of the staff of the housing corporation who I discovered were doing things they shouldn?t have been doing. I had proof, I discussed it with the board, and decided to act immediately and fired two members of staff.?

He said the Police were called in over the second incident for advice on how to proceed.

?The young man had brought the union in claiming unfair dismissal which was part of the reason I got some advice from the Police,? he explained, confirming that the member of staff in question was not Terrence Smith.

?Members of the Police department ? ironically the department involved in this case ? came to my office. In that discussion with the Police I was advised that it would be unduly burdensome for them to take on this enormous paperwork and paper trail. It was going to be too cumbersome. I don?t remember the exact words but they were not interested in proceeding,? he said.

?I should add that I didn?t want to prosecute either ? I just wanted advice. Mr. Dill was not asked when this incident had happened.

Talking through the process of handling bills from contractors, he said that after the relevant documentation was checked off by the Property Officer and Property Manager it would go to the finance department for ?due diligence?. He said that as part of this the finance department should have ?due diligence regarding the values shown on the purchase orders and invoices.?

He said that as a Chartered Accountant, Finance Manager Robert Clifford would be expected to take certain steps with regards comparing work done by contractors to past records on the cost of jobs.

He also spoke of recommendations contained in an audit completed shortly after he arrived at the BHC which had resulted in what he called ?a litany of control weaknesses running for pages and pages? and a large number of recommendations for management improvements.

He said that it had been Mr. Clifford?s responsibility in the main to fix these and that the audit for 2001 showed a reduction of around 75 percent in the number of ?totally unacceptable management control weaknesses.?

Mr. Dill also answered questions on an incident when he said he had reprimanded both Terrence Smith and Steven Barbosa after discovering the carpenter had submitted invoices for payments on work that had not yet been completed.

Under cross-examination from Consultant to the Department of Public Prosecutions Kulandra Ratneser, Mr. Dill was questioned about claims Smith made to the BHC board of directors in April 2002 when he was quizzed about allegations of improper behaviour. Smith had told the board Mr. Dill gave him the authority to award contracts of up to $200,000 in violation of BHC rules. Mr. Dill dismissed this as ?absolute madness?.

Mr. Dill also told the court that if he had known that a fictitious invoice had been submitted, he would not have signed the resulting payment cheque.

He, Smith, and Mr. Clifford were all suspended from their jobs when the BHC saga came to light in March 2002.

Smith denies 45 charges of obtaining property by false pretences, and the case continues.