Auditor General Larry Dennis will hold meetings today to appoint a team of investigators to probe claims of corruption and huge payments to contractors at Bermuda Housing Corporation (BHC).

Mr. Dennis received a letter from Premier Jennifer Smith yesterday instructing him to extend into a full investigation an audit launched two weeks ago at the housing corporation.

The inquiry is believed to be the first of its kind into a publicly-funded body in Bermuda and was ordered on Friday following reports that painter Paul Young was paid $810,940 in seven months last year, gardener Caven Richardson received 68,564 in three months, and Borden's Carpentry received 28 cheques totalling $487,193 between May and November last year.

Mr. Dennis, who has been highly critical about government spending in the past, told The Royal Gazette yesterday he will bring in as many people as is needed for the investigation and will submit a file to the Attorney General's Chambers if he finds any evidence of criminal activity.

Meanwhile, former BHC chairman and head of the finance committee Geoff Gardner said that while he did not have details of work carried out by Mr. Young, he thought the payments were high.

And he said it was unusual for so much of the maintenance budget to be paid to one contractor when it was policy when he was BHC chair, until 1999, to spread the work as evenly as possible to the maximum number of businesses.

Mr. Dennis said yesterday: "I received a letter from the Premier today asking me to 'extend the investigation as merited' should the circumstances warrant it.

"I have been asked by the Premier to undertake a complete investigation and to extend it to wherever it has to go. It has changed from an audit to an investigation.

"When I have finished, if it warrants it, the report will be submitted to the Attorney General's Chambers for whatever needs to be done. I will submit my report to the Speaker of the House and it will be made public in full.

"I will be having meetings all day tomorrow to see who will be needed and what expertise is needed.

"I will bring in as many people as is needed."

Mr. Dennis, who met the Premier and Health Minister Nelson Bascome on Friday following the reports in the Mid-Ocean News, said he got the impression Ms Smith wanted to get to the bottom of problems at BHC.

He added that he was not aware of any another audit at a publicly-funded body on the Island which has been expanded into a full investigation.

Mr. Bascome told MPs in the House of Assembly in the early hours of Saturday morning that Government would not tolerate any illegal activity.

He later told The Royal Gazette that anyone found guilty of wrong-doing at BHC would be sacked.

Mr. Gardner told The Royal Gazette yesterday: "In 1997, BHC spent nearly $3 million on maintenance. It spends a significant amount of money on maintenance, however, this (the payments to Mr. Young) seems like a very large portion of what I would expect the current budget to be.

"I can't tell whether it was well spent, but it is a surprisingly large portion of the overall budget going to one person. Prior to that, as part of Government, we tried to spread the business around to help the smaller contractors to a greater extent.

"It seems high. Even if the contract was to paint all of the houses, the numbers speak for themselves as being high."

However, in his introduction to the BHC annual report in 2001, Mr. Bascome wrote that the Corporation is now spreading the work more evenly than it had in the past.

"Another area that has seen improvement is the distribution of wealth afforded by the expanded base of suppliers across all industries employed by the Corporation. While this has led to some increased risk in some cases, the benefits to the local workforce have been significant," Mr. Bascome wrote.

Mr. Gardner said BHC had a very rigorous policy about getting competitive quotes for maintenance policies and his staff stuck to them, even if it made them unpopular with contractors.

He said he was not aware of any "significant abuse" in his time at BHC. "There was always people calling in, where they thought someone might be getting what they should not be getting, but that was why we had policies."

When asked if there was "insignificant" abuse, he said: "Sure. In any job site you get that, but we are not talking about a government scandal.

"There might be the odd tin of paint that a contractor claimed for that was never seen again, but we had staff who monitored this and checked to see if these were reasonable. You can't guarantee that you will stop it but you can have policies in place to minimise it. I presume the current board also has these policies or has maintained the policies we had."

Efforts to contact Mr. Young were unsuccessful. BHC general manager Raymonde Dill has refused to comment on the controversy and did not return calls to the The Royal Gazette yesterday.