Auditor General Larry Dennis found ?serious and widespread failure to comply with many of the Housing Corporation?s legislative authorities, administrative policies and control policies?.

The 2002 probe into the BHC reported that the quango?s lack of internal controls was ?particularly severe? in awarding and administering construction and maintenance projects. ?Tendering and quotation processes were rarely used, and when they were, the fairness of the process was sometimes questionable,? Mr. Dennis reported.

He said there was ?little or no evidence? that project estimates reflected competitive prices, ?and some were wildly in excess of the value of the work performed?.

Mr. Dennis found myriad instances of improper documentation or no documentation at all, and said that for many projects the General Manager alone selected contractors, signed purchase orders and cheques and approved work done.

The report found that the quango had made nine loans for purposes not allowed and none of them were secured or approved by the Minister. He said the lack of adequate internal controls left him ?satisfied that in many instances appropriate value for money spent has not been received.

In addition, control deficiencies increasingly cultivated an environment conducive to financial inefficiency and mismanagement, and in which kickbacks and other activities could occur and remain largely undetected.

?It is unsurprising that allegations of wrongful behaviour by Corporation officials have surfaced, that managers have been released for cause, and that senior managers have been suspended pending the outcome of investigations of their activities.?

Some specific examples of mismanagement mentioned in the report include:

One case of work quoted at $390,000 eventually costing more than $740,000. ?It seems that cost overruns claimed by contractors were virtually never questioned or rejected.?

BHC paid contractors twice for the same work in six instances

A number of the businesses contracted by BHC were not in good standing with the Government ? they were not paying payroll taxes or pension contributions.

In a number of cases BHC tried to pass on cost overruns for renovations to the property owners. Many refused forcing the quango to absorb the costs.

The Corporation refurbished two rental properties owned by an MP which it had managed since 2000, spending $73,000 on the work. The money was supposed to be paid back from the lease of the property minus maintenance costs.

But the agreement was unsigned and the loan was increasing because the maintenance costs were too high and nothing was left to repay the loan.

BHC renovated two apartments belonging to a Minister, spending $152,000 and then agreed to buy it from the Minister. The quango spent $610,000 in total and there was no documentation to show that it was a reasonable price.