UNION Asset Holdings (UAH) has claimed the Government owes it $4 million in funds provided for the Berkeley school project ? and requested repayment yesterday in a letter addressed to Acting Premier Paula Cox.

The letter also says the Bermuda Industrial Union (BIU), owner of UAH, has organised a mass meeting of its members this morning and adds that the Government "ignores our rights at its peril".

Last month, the Government terminated its contract with Pro-Active Management Systems (PAMS) to build the second Senior School on Berkeley Road, with the project already running a year late and at least $13 million over budget.

UAH is the surety of the project's performance bond ? a kind of insurance policy ? that provided $6.8 million worth of coverage.

The letter, signed by BIU general secretary Molly Burgess and distributed to all media, concludes: "We need not remind you ? but do so in any event ? that as the direct result of your arbitrary treatment of applications by PAMS for progress payments under the contract, UAH has provided something in the order of $4 million further funding to this project and expects these monies to be returned by Government in due course, and certainly sooner rather than later."

The letter gives no further details about the claim, but in a letter to Government two weeks ago, UAH said it had become a "substantial creditor" of PAMS.

The BIU's mass meeting will take place at the organisation's headquarters in Union Street, Hamilton at 9 a.m. today.

BIU general secretary Molly Burgess did not answer our message yesterday afternoon to find out more about the meeting and the $4-million claim.

Ms Burgess wrote in the letter: "I am directed to inform you that the BIU is gravely concerned about the position of UAH and about the BIU's contingent liability, following Government's decision on August 24, 2004 to terminate its contract with PAMS.

"In particular, we are concerned that UAH's rights as surety under the bond are being completely ignored, violated and disrespected by the Government."

The letter states that the Government failed to pay amounts owing to PAMS before termination of the contract and had "in effect deprived workers who are members in good standing of the BIU of their rights to severance and/or redundancy payments.

"We repeat that these are grave matters and that Government ignores and disrespects our and our subsidiary's rights at its peril.

"The BIU has every intention of taking direct, lawful and reasonable action to ensure that these rights are respected and upheld."

Acting Premier Paula Cox wrote back to the Union yesterday. Her letter stated: "I find it extraordinary that the General Council of the BIU would convene a mass membership meeting at such short notice, and without the courtesies one would expect from a responsible union.

"It is equally extraordinary that the first course of action was to send me a letter, copying it to the media (amongst others) without the benefit of first contacting me to seek a meeting to discuss your areas of concern."

In a statement, Works & Engineering Minister Ashfield DeVent said there were no new legal issues raised by the BIU's letter and added that the Union's attorneys had failed to respond to the Government's legal position.

He also dismissed UAH's claim that, as the surety of the performance bond, it had the right to be consulted on the new contractor.

"The Government has been advised, in the strongest possible terms, that there is no legal basis to this argument," the statement read.

l Government warned last night that some disruption of bus and ferry services was likely today as a result of the calling of the BIU meeting.

The disruption is expected to last from 9 a.m. until 2 p.m. so that school children would not be inconvenienced at the end of the day, the statement said.