Overseas lawyers, who had been working through the arbitration process, arrived at a deal last week, two sources close to the hearings informed this newspaper ? although we were told the final papers have not yet been signed.

It is understood that Pro-Active and the company's owner, Arthur Ebbin, are to be awarded just over $9 million.

According to one source, the deal also means that all subcontractors still owed money by Pro-Active will be paid in full for their work and Government will foot the bill for the legal fees accrued during the process.

In addition, the source said a condition of the settlement was that $700,000 would be paid out to Union Asset Holdings Ltd. (UAH), an insurance company and subsidiary of the Bermuda Industrial Union (BIU).

UAH provided the performance bond ? a type of insurance policy ? for the project at a cost of $700,000. That sum was previously paid out by the Ministry of Works & Engineering to Pro-Active as reimbursement for purchasing the bond from UAH.

But Auditor General Larry Dennis raised serious concerns over whether the money was actually paid to UAH after the Ministry failed to come up with a receipt to prove it.

The matter has been investigated by the police and their findings have been passed on to the Director of Public Prosecutions, Vinette Graham-Allen.

UAH also gave financial support to Pro-Active to help with its cash flow, Pro-Active adviser Julian Hall has previously said.

Premier Alex Scott did not respond to our questions on the matter yesterday.

The arbitration began last month, under the chairmanship of British barrister John Uff, QC.

Contacted at the offices of Keating Chambers in London yesterday, Mr. Uff said he could not give out any information at all about the hearings, as the arbitration process had been private and confidential.

British lawyer Anthony Canham represented the Government and US attorney Hugh McCombs was counsel for Pro-Active.

We left e-mail and voicemail messages for both lawyers, at their respective offices in London and Chicago yesterday, but neither responded.

Mr. Hall, who had called for the arbitration hearings to be held in public, did not respond to phone or e-mail messages yesterday.

Mr. Ebbin's company was awarded the $68-million contract to build the new school in 2001 by the then Works & Engineering Minister Alex Scott, against the advice of the Ministry's technical staff who considered Pro-Active's bid to be "high risk".

The contract stipulated a completion date of September 2003.

The contractor fell behind schedule and also lagged with payments to subcontractors, several of whom took out writs to recoup what they were owed.

Several subcontractors still owed money by Pro-Active for work on the school are expecting payments as a result of the settlement.

TES Ltd. did some fire-proofing work on the structure, but laid off four of its staff in early 2003 because Pro-Active fell behind with payments to them.

Terry Sergeant, who owns TES, confirmed this week that Pro-Active still owed money to his company.

He added: "We have been in talks with Pro-Active and we are scheduled for a meeting this week."

He declined to elaborate.

Bermuda Air Conditioning (BAC) filed a writ early last year seeking $100,000 from Pro-Active for its work at the school. The company's general manager John Plested said this week: "I have no knowledge of any notification of a settlement in the arbitration."

He declined to say whether Pro-Active still owed BAC money.

Opposition MP Grant Gibbons, who had called for the arbitration hearings to be held in public, said yesterday: "It's outrageous that the huge financial claims involved in the Berkeley Senior School project dispute between the PLP Government, Pro-Active and the BIU have apparently been agreed behind closed doors without any information going to the public.

"We're talking about millions of dollars of taxpayers' money that should have been settled by an open arbitration process, where the public could understand the claims and hold the PLP government accountable for the shocking waste and mismanagement.

"If the reported terms of the settlement payout are verified then Government has a lot of explaining to do. We may well end up with a senior school that cost more than double the $71.2 million originally budgeted."

When Pro-Active fell behind with payments to subcontractors in 2003, the BIU came to the rescue with an undisclosed amount of financial support.

Early in 2004, representatives of Pro-Active and the Government met to deal with a $20-million claim by the construction company.

After 26 days of talks, the result was that Pro-Active was given a year's extension on the completion date and an extra $13 million from the Government.

Of that, $5.117 million was to cover the project's operating costs through to September 30, 2004, the new target date. The remaining $7.883 million was to cover substantiated claims.

Ashfield DeVent, the Works & Engineering Minister at that time, also announced that two matters remained outstanding and would go to arbitration. They were compensation claimed by Pro-Active for adjustments to the bill of quantities (a schedule containing agreed values for units of work) and compensation for an insurance premium.

The extra expense meant the total allocated public funds for the project rose to $101 million.

However, the project continued to encounter difficulties and the contractor was sacked in August that year.

At that time, inspectors representing Pro-Active and Government agreed that the building was more than 80 per cent complete.

Late last year, new Works & Engineering Minister David Burch, soon after he replaced Mr. DeVent, announced another hefty increase in the cost of the project, telling the Senate that the new school would now cost $121.7 million. And that figure will rise significantly with the arbitration settlement.

The budget for the school project was initially set at $71.2 million by the late former Finance Minister Eugene Cox in his Budget statement of 2000.