Auditor General Larry Dennis has confirmed that Bermuda College chairman Raymond Tannock signed away Stonington hotel to Coco Reef bosses without consulting the board.

And he said it could make the validity of the lease subject to a legal challenge.

Yesterday Mr. Dennis said: "The board has responsibility to approve contracts."

Asked if he was upset about the handling of the lease he said: "I think my report reflects that."

Last week Mr. Dennis released a report attacking the deal which doubled the lease, slashed rent, added oceanfront land and cottages and allowed condominiums to be built and sold. He said it was so different from the original tender it should have been re-tendered.

But he said there was nothing more to investigate for his department.

He said: "Whether the lease is invalid or not is for the courts to decide."

The deal has left College staff fuming.

One lecturer said the deal had saddled the college with extra debt which was now causing staff and programme cutbacks.

"The general feeling is that Bermuda College has been badly, badly used by Government and this board willingly or unwillingly acquiesced in the violation," the lecturer said.

"It's a violation of trust of the employees who expect to have an organisation well run and to know they have some type of job security.

"It's been a major disservice to the Bermudian taxpayer, especially those parents who don't have the means to send their children for four years to an overseas university.

"How can we move forward and develop programmes if we are working with an economic albatross around our necks?

"There are restrictions on staff hiring and programme development yet the Government is quite comfortable for us to incur this albatross.

"Are we in the business of subsidising John Jefferis or educating the Bermuda taxpayer?"

The source said the hospitality division had been closed and merged with the business department with the loss of one senior position while work permit jobs in the technical field had not been renewed.

The lecturer was also angry about the deal giving protected woodland reserve to Coco Reef. When the hotel cut down trees to grant beach access they were threatened with legal action.

Government have promised that woodland is to be spared development.

But the staffer said: "If the land was to be preserved it could just as easily be rested with Government.

"There was a test case under (former Environment Minister) Arthur Hodgson where reserve was violated.

"The PLP has already set the parameters for this to happen. The only way it can be completely preserved is if it remains with Government."

Yesterday Senator Tannock refused to speak about the matter and said questions should be put to the Tourism Minister Renee Webb.

Asked if he did what Ms Webb told him, Sen. Tannock repeated: "You have to speak to Ms Webb at the Tourism Department."

However Ms Webb was clear where the responsibility lay. While defending the deal on Thursday she said: "Ministry of Tourism was not a party to the lease. That was between the Bermuda College and Coco Reef. The Bermuda College owns the property."

Opposition leader Grant Gibbons accused Sen. Tannock of ducking the issue.

He said: "First of all Senator Tannock was the one who signed the lease with Coco Reef as chairman of the College board.

"Clearly he's responsible and accountable for what he committed the College to.

"I think it's completely inexcusable for him to suggest responsibility lies with the Minister of Tourism. Either he knew what he signed or he didn't.

"Senator Tannock has a lot of questions to answer as to why the Bermuda College's lawyers allegedly did not review the lease before it was signed."

He said Senator Tannock's job was to represent the College to get the best deal to help run its hospitality programme.

Either Senator Tannock and then Education Minister Paula Cox were derelict in their duty or they had another agenda, said Dr. Gibbons.

"I think the lease was signed with undue haste. Obviously part of the reason for that was to make sure the lease was signed before the election in July."

Mr. Jefferis was seen leaving Progressive Labour Party Headquarters with Tourism Minister Renee Webb and others in the early hours of the morning following the election win last July.