THE Bermuda Housing Corporation paid a contractor $4.2 million for building 12 new condos - around twice as much as it should have cost, according to one experienced builder.

And the same two businessmen who won the contract for the Warwick project are also behind another company that was awarded the contract for the multi-million-dollar BHC development at Southside, the Mid-Ocean News can reveal.

BHC documents obtained by this newspaper show that Hibiscus Development Ltd. was paid $4,197,518.20 by the corporation for work on 12 two-bedroomed units known as the Perryville complex.

The founding partners of Hibiscus are listed as Kevin Bean-Walls and Leon James Williams and they remain the only two shareholders, according to the company's Register of Members.

Mr. Bean-Walls and Mr. Williams are also the founders and two of the four current directors of Bermuda Composite Construction Ltd., the company that has the contract for the $4-million BHC project at Southside to convert 20 buildings on the former US base into homes. The project has since been scaled down to 17 new homes.

The other two BCC directors are Government MP Arthur Pitcher and Zane DeSilva.

Auditor General Larry Dennis said this week he had not been made aware of the Perryville project when his team of seven chartered accountants, a surveyor and a painting contractor carried out an in-depth investigation of the financial records of the BHC earlier this year.

When shown this newspaper's findings, Mr. Dennis said: "This project (Perryville) did not come to our attention during the audit."

Mr. Dennis's report, ordered in March by the Premier after revelations of apparent over-payments to contractors by the BHC, has never been made public, for legal reasons.

His report was finished in May and was passed on to the police who are currently investigating the BHC.

The Warwick condos, on Tribe Road Two, off the South Shore Road, opposite Warwick gas station, remain empty as the corporation board goes through the process of selecting families to go into them.

And the BHC has hired security guards to protect the complex - at a cost of $3,450 per week, according to the documents.

The corporation's acting general manager Deborah Blakeney said yesterday: "Some people have been selected (as buyers) but no-one has moved in as of today."

She said she was not in a position to discuss the amount paid to Hibiscus for work on the Perryville project.

The units were valued at between $200 and $225 per square foot, not including the value of the land they were built on. Those figures appear in the results of an appraisal of the property published in a mortgage report for discussion by BHC directors.

The total area of the 12 units adds up to 10,320 square feet. And when the money paid to the contractor is divided by that figure, the cost of the building work - presuming that Hibiscus Development did not supply the land - comes to $406.73 per square foot.

This newspaper approached contractor Gilbert Lopes, of GL Construction, to ask for a rough estimate of what the Warwick project should have cost.

"Without seeing the plans, it's difficult to say, but I would have thought that for a project like that, you are looking at about $200 a square foot," said Mr. Lopes.

"My company builds condos for $150 a square foot, but realistically for something like that (Perryville), you'd be looking at about $200."

When told the BHC had paid $406 per square foot for Perryville, Mr. Lopes said: "That's way too much."

Yesterday, we contacted Mr. Bean-Walls at the Pembroke office of Hibiscus Development.

He confirmed that Hibiscus was the contractor for the Perryville project.

When asked whether it was true his company had been paid around $4 million for the project, Mr. Bean-Walls said: "I'd have to speak to you later about that."

When asked why it had cost around $400 per square foot to construct the condos, a rate double the industry norm, Mr Bean-Walls said: "I'm not clear about that. I'll have to speak to you later on that."

The BHC documents reveal plans to sell the units, built to address the island's need for affordable housing, for up to $370,000 each.

That figure is $120,000 higher than the sale price for two similar-sized condos sold by the BHC earlier this year.

A report drawn up for discussion by BHC directors valued the plot of land used at the Warwick project at more than $1.4 million. When the contractor's bill is added, the scheme's total cost comes to $5.63 million - an average of $469,000 per condo.

Minutes from a joint meeting of the BHC's Finance & Audit and Property & Rentals Committees on September 4 this year show that the corporation's directors proposed to sell the condos for between $335,000 and $370,000, valuing the entire complex at $3.88 million.

The pricing proposals were put forward for ratification at a meeting of the full BHC board on September 18. Provided those prices were rubber-stamped, the difference between the construction cost plus the land value and the sale price would leave the troubled corporation facing a loss of $1.75 million.

The mortgage report showed a table of previous sales of BHC condos, all with either two or three bedrooms. None had sold for more than $295,000 and the most expensive two-bedroomed condo had gone for $265,000.

In February this year, the BHC sold two two-bedroomed condos for $250,000 each.

One prospective Perryville buyer, a single mother, said that BHC officers had told her the condo she wanted would cost around $240,000, according to a story in The Royal Gazette last month.

For six months, she believed the price had been locked down, but last month she received a call from the BHC telling her that the prices would be considerably higher than she had earlier been told and that she had been unsuccessful in her attempt to buy.

"I was 95 per cent sure I had a place," she said. "But then she (BHC officer Cheri Moore) called and said I would have to pay $2,500 per month for the cheapest unit.

"$2,300 would go toward the mortgage and the other $200 was for maintenance fees. I can't afford that and I have a good job. If I can't afford that what single mother can?"

Buyers of the Perryville condos will pay by 30-year BHC mortgages. And the report said the standard requirement was for a $10,000 deposit, plus an estimated $7,000 to cover legal fees.

With holders of such mortgages limited to paying no more than 55 per cent of their monthly household income on the mortgage payments, the report concluded for a $325,000 mortgage, "a potential owner would need a total household income of $4,515, plus maintenance fee".

The Perryville condos come in two sizes, 780 and 900 square feet. An appraisal of the units in the mortgage report valued the smallest lower units at $276,000 (including the value of the land) and the most expensive large first floor units at $325,000.

The sale prices proposed by the directors were considerably higher, with the two smallest ground floor condos coming with a price tag of $335,000.

In addition, three units were priced at $370,000, four units at $355,000 and the remaining three condos at $345,000.

The BHC report indicated that monthly mortgage payments for the cheapest $335,000 condos would be $2,217.07. That figure is based on a $10,000 deposit having been paid, a 30-year mortgage and an interest rate of 7.75 per cent.

In addition there would be a maintenance fee of around $200 per month.

The $370,000 condos would require mortgage payments of $2,455.83, plus maintenance fee.

The latest revelations come the week after the new Housing Minister, Senator David Burch, conceded that some contractors had indeed been overpaid and that the Government planned to sue the overcharging companies.

Raymonde Dill, the BHC's general manager at the time the Perryville project started, was sacked in August, after being suspended from work for five months.

Property officer Terrence Smith was also sacked, while finance manager Robert Clifford remains suspended but has filed a writ against the BHC.