The Bermuda Housing Corporation inquiry was the biggest scandal yet to rock this Progressive Labour Party Government.

At one stage Police considered laying charges against 11 people including two Government Ministers while questions were asked about several other PLP politicians including Cabinet members going right up to then Premier Jennifer Smith.

Accusations ran rife — contractors were overpaid, politicians pressured BHC staff to bend the rules for their own personal ends, BHC staff themselves benefited from housing deals and up to $8 million of the public's money was missing.

Police tore into the investigation obtaining 45 search warrants.

The scale of the investigation, which at one point involved Scotland Yard, was impressive:

* 40,000 documents were reviewed, logged and retained while another 10,000 were returned.

* 63 witness statements were taken.

* 40 field interviews were done along with 50 house-to-house inquiries.

* Three people were arrested, there were 35 hours of audio tape interviews done with seven persons, and 26 storage devices were reviewed.

Yet years of Police work ended up with just one man, Terrence Smith, a BHC officer, found guilty and jailed last year on 41 counts of fraud.

But it had started so differently in March 2002 with explosive allegations erupting in Parliament when then UBP Shadow Health Minister Michael Dunkley dubbed BHC the "the Enron of Bermuda" as he claimed staff were taking kickbacks.

He called for a full-scale, independent investigation into BHC operations after saying problems at the publicly funded body went right to the very top.

But he was told by Health Minister Nelson Bascome that BHC's general manager Raymonde Dill was already investigating allegations.

For weeks controversy surrounding the BHC was relentless.

The Mid-Ocean News published a story detailing large sums of money paid by the BHC to contractors.

The paper quoted a source who said: "inflated bills are normal" at the Corporation.

At the request of Premier Jennifer Smith, Auditor General Larry Dennis appointed a team for a full-scale investigation into the BHC finances.

Soon, General Manager Raymonde Dill was suspended along with Finance Manager Robert Clifford and Terrence Smith.

The Press dug into the story and The Royal Gazette revealed Smith had been running a private architectural design and building company out of his BHC office.

Heads began to roll — property manager Jerry Robinson left his post and Raymonde Dill and Terrence Smith were sacked in August 2002.

Mr. Dill then told The Bermuda Sun that Health Minister Nelson Bascome ordered him to award a $300,000 landscaping contract in breach of BHC tendering rules. Mr. Bascome denied it.

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

Dr. Brown denied being involved in the scandal and said he withheld cash because of disputes over the invoiced amount.

Mr. Dill also accused Environment Minister Arthur Hodgson of trying to intimidate him into accepting some of his apartments into the BHC rental stock, an accusation denied by Mr. Hodgson.

With the story firmly in the public eye, then Premier Smith told the public she would talk to Dr. Brown and Mr. Bascome about the newspaper allegations.

Meanwhile Dr. Brown tried to clear his name in the press (see sidebar on Ewart Brown).

Mr. Bascome was removed as Housing Minister but kept his Health portfolio with new Housing Minister David Burch pledging to sue BHC contractors who have been substantially overpaid.

Strong statements also came from then Police Commissioner Jonathan Smith who vowed the investigation would not be swept under the carpet.

But five years later the public is asking "was that it?"

The greedy contractors seemed to have got away with it after Senator Burch claimed court action could cost more than the funds it would likely recoup.

The BHC scandal seems to have brought more questions than answers.

Prosecutors said some of those looked at were guilty of bad ethics but not lawbreaking under Bermuda's 100-year-old corruption law.

Police said the investigation had not been hampered by political considerations.

But the public was left wondering while the politicians might not have broken the law shouldn't they at least be held to a higher standard than ordinary citizens?

Then Premier Alex Scott promised speedy updating of Bermuda's dated corruption laws but had done nothing by the time he was ousted by Dr. Brown two years later and now it appears that plan has been dropped.

Some tried to paint the controversy as a storm in a teacup — or a more sinisterly as establishment plot to tarnish the PLP.

But the Prosecutors and Police weren't the only ones looking hard at the case.

Auditor General Larry Dennis, a man who was a thorn in the flesh of the previous United Bermuda Party administration, raised some serious concerns.

The Auditor General was also critical of Government MP Arthur Hodgson for his undisclosed business dealings with the BHC.

In November 2000, while still Environment Minister, Mr. Hodgson placed two rental apartment blocks into the hands of the BHC to manage.

The corporation refurbished two units and received rent for all of the apartments involved under a deal that Mr. Hodgson received a fixed $11,000 a month in rent, regardless of what BHC charged.

As with the usual agreement, the intention was to then recoup the money spent on the refurbishment from the excess rents given to BHC.

However, with a $73,000 refurbishment bill, the profits from the rents were insufficient to cover the maintenance costs, let alone pay off the loan which increased rather than dropped.

The auditor said the loan was outside the Bermuda Housing Act, was not secured by a first mortgage, some of the properties were not dwellings, and it was not approved by the Minister.

"In addition, it does not satisfy the disclosure and conduct standards," said Mr. Dennis.

Mr. Dennis said that not only did management not ensure that documentation was available to demonstrate that the agreement represented arm's-length values and arrangements, but the General Manager did not bring it to the attention of either the Audit Committee or the Board of Directors.

The auditor said these were not the only instances where properties were purchased without first obtaining an independently appraised value.

He said an appraisal was obtained for only one of the 12 properties purchased during a two-year period by BHC. In a later report, Mr. Dennis described the BHC board as an extreme example of an ineffective board.

By 2004, the focus seemed to have shifted to Terrence Smith alone, although occasional new allegations surfaced including claims by former BHC boss Ed Cowen that during his ten months in charge under the PLP — before he was forced out — it had "become obvious that they intended to use the BHC for their own personal gain".

That charge was particularly damning given the widespread clamour for housing from Bermudians under the cosh of high private sector rents which forced some to cram into overcrowded accommodation and some to even take their chances on the street.

Despite assurances the Island's public housing body was under new management and had a clean bill of health, the public were left wondering how much more the BHC could have done to fulfil its mandate to provide housing for the needy if it had not been the mired in sleaze?

But like so many other questions, that too is likely to go unanswered.