Bank of Bermuda's objections to a board of inquiry into allegations of racial discrimination will "feed the perception" that there is bias, a court heard yesterday.

But the bank said it had no objection to the inquiry if it was done in accordance with the law. And it said once these allegations ? which it denies ? are made, even if they are disproved, some on the Island will think there is "no smoke without fire".

The bank is trying to block a long-running bid by black businessman Harold Darrell to have a Human Rights Commission (HRC) hearing into his claims he suffered racial discrimination because the bank allegedly failed to address his contention that it leaked confidential information.

The bank, which denies the claims, wants the decision by then Sport and Community Affairs Minister Randolph Horton to appoint the HRC board of inquiry quashed on the grounds the complaint was out of time, action was legally stayed, it was not handled legally correctly, and that there was alleged bias against the bank.

Lawyer for Mr. Darrell, Delroy Duncan, told Puisne Judge Charles-Etta Simmons yesterday that English courts had found great care should be taken to hear cases of alleged racial bias because they were so sensitive in pluralistic societies.

"Discrimination cases in this community are particularly fact-sensitive," said Mr. Duncan.

"Based on what the (English judge said), one does have to consider how the matter would be viewed if an attempt to bring a discrimination claim against one of the largest institutions in this jurisdiction is constantly faced with legal obstacles that prohibit hearing the merits of the claim.

"I would submit that that can feed the perception of discrimination if one cannot have a hearing on the merits which is why, in these circumstances, the objections by my friend (Jeffrey Elkinson for the Bank of Bermuda) should be taken before the board of inquiry."

Mr. Duncan also argued that the bank's reputation would not be seriously damaged just because a claim of racial discrimination was put before a board of inquiry.

But Mr. Elkinson said: "At worst, individual directors, both black and white, are to be accused of that same offence which in any right-minded society is odious.

"It is all too easy to say that somebody is prejudiced against another because they are black or because they are Jewish or for some other distinguishing feature.

"Once the allegation is made, it is human nature to consider there is no smoke without fire, regardless of the truth.

"It is easy for a person to say that they failed in a certain endeavour because they were black, Jewish, white, or Asian, and that the decision-maker was prejudiced against them. It is far harder to disprove such an allegation.

"So, for it to be submitted on behalf of the Minister and Mr. Darrell that there is no real prejudice in allowing a matter to go to a board of inquiry, truly misses the point.

"Any person or anybody which finds itself in a position of being referred to a board of inquiry should go there if the decision is fairly made and in accordance with the law.

"The applicant (the bank) in these proceedings has no issue with attending a board of inquiry if it is fairly done and in accordance with the laws of Bermuda.

"However, it takes great objection to the whole matter being before a board of inquiry and in the public domain in circumstances where the decision to do so has been made unfairly and not in accordance with the law."

The long-running dispute arose after the bank alleged Mr. Darrell constantly reneged on promises to repay his overdraft and then asked for more money.

The bank says he then made allegations that two members of the bank's staff disclosed confidential business information to a third party.

The bank denies any disclosure and said it investigated the claim and found there was no truth to it.

Mr. Darrell, according to the bank, then claimed an internal investigation found in his favour, but the bank said it had no record of any such investigation or finding in his favour.

Terry Lister, the Minister formerly in charge of HRC, turned down Mr. Darrell's request for a board if inquiry into his claims the bank's directors and chief executive officer discriminated against him because he is black.

When Mr. Horton took over, Mr. Darrell says he wrote to the new Minister and had telephone calls with him to push his case for a board of inquiry.

The bank says these approaches were improper and the Minister could be seen to have been biased, and it did not have a chance to make any representations.

The bank says Mr. Darrell has been using his bid to get a board of inquiry into the racial discrimination claims to force it to settle a separate civil suit in which the businessman is seeking a substantial cash settlement.

And rejecting claims of race discrimination by the board of directors, it points out the board is multi-racial.

Judge Simmons is expected to deliver her decision next month. Minister Horton is represented by Melvyn Douglas.