John Jefferis, the man whose award of the controversial lease at Government-owned Stonington Beach Hotel was branded unfair by the Auditor General, secretly funded a political consultant to work for the Progressive Labour Party (PLP) at the 1998 election, The Royal Gazette can reveal.

A senior PLP insider familiar with the arrangement said Mr. Jefferis paid for Trinidadian consultant Roy Boyke to work for the party when they swept to power for the first time six years ago.

Only a handful of top PLP figures knew who financed the arrangement, and Calvin Smith, the chairman of the party's campaign committee in 1998, said yesterday he had no idea who paid for Mr. Boyke.

Mr. Jefferis, a naturalised Bermudian who was running the Coco Reef Hotel in Tobago at the time, knew Mr. Boyke and agreed to pay for him to come to Bermuda after meeting the then shadow Tourism Minister David Allen shortly before the election, said the source.

Mr. Boyke was working for RF Communications, the Bermuda public relations firm employed by the PLP during the 1998 general election.

The senior PLP source told The Royal Gazette yesterday: "Before the election David Allen was on holiday in Tobago and met Jefferis, they were friends.

"The deal was Jefferis knew Roy Boyke was a political consultant in the Caribbean specialising in taking out incumbent governments.

"He also knew that for the 1993 election Boyke was suggested for the UBP. Jefferis said to David Allen that he would pay all Boyke's fees to be a political consultant to the PLP.

"Roy Boyke came to Bermuda and the only expense the party had to pay was his rent for an apartment, and that came through the PLP's contract with RF Communications.

"John Jefferis paid Boyke's way. I can triple assure you the PLP didn't pay and Boyke told me Jefferis was paying for him.

"The party never had a clue how much it was because we had a contract with RF Communications and nothing with Boyke.

"I don't think anyone in the PLP knows how much Boyke was paid because there was never a bill, no retainer, nothing."

Mr. Jefferis applied to run the Stonington Beach Hotel when Government put it out to tender in 2002, but a Bermuda College committee rejected him and five other companies in favour of a bid from Bermuda Resort Hotels (BRH).

The decision was never announced publicly, however. Government then transferred the loss-making hotel from the Department of Education to Tourism to save it being a drain on the College and set about re-tendering the lease.

BRH was headed by Billy Griffith, who was then on the College Board.

College President Dr. Michael Orenduff said at the time the re-tendering was to ensure there was no perception of any conflicts of interest.

This time Mr. Jefferis, a former general manager of Elbow Beach Hotel, was picked in December 2002 by a team of civil servants from Tourism and Education as well as Philip Butterfield of the Bank of Bermuda and a Californian hotel consultant, Jerry Morrison.

But after his selection, he managed to save himself millions of dollars in rent by dramatically renegotiating the lease with a company set up to transfer the hotel out.

He ended up paying less than originally set out in the heads of agreement document and getting a five year rent-free holiday; more than doubled the lease from 21 years to 50 years; acquired 5.9 acres of land and two ocean front cottages that were not in the original proposal; and was given permission to build and sell condominiums which were also not part of the original proposal upon which he was selected.

Between January 2003 and June 2003, Mr. Jefferis negotiated all the contentious changes to the lease with the Stonington Beach Company, which had been set up to finalise details. It consisted of, among others, former Tourism Director Judith Hall-Bean, Education Director Michelle Khaldun, chair of Bermuda College Board of Governors Raymond Tannock, and it was chaired by lawyer Paul King.

The lease then had to go to the Ministry of Tourism and be endorsed by the entire Cabinet.

The lease was signed in June last year by Mr. Tannock, who is now a PLP Senator, and deputy chair of the College Board Attorney General Larry Mussenden without going to the the Board for approval.

The lease was heavily criticised two weeks ago by Auditor General Larry Dennis, who said the lease signed was so radically different from that envisaged in the heads of terms offer when Mr. Jefferis was selected that it was unfair and should have been re-tendered.

He said the process up until Mr. Jefferis was selected was in accordance with Government policy, but the final lease executed had so many material differences that "the tendering process was effectively compromised".

Mr. Dennis said businesses would not bother wasting their time tendering for Government contracts if they did not think the process was open and fair, leading to Government not getting best value for money.

He also said because the Board has responsibility for approving contracts, the lease could be challenged in the courts.

Former Tourism Minister Renee Webb, who was minister in December 2002 when Mr. Jefferis was selected, said yesterday she had no knowledge of Mr. Jefferis paying for Mr. Boyke to work for the PLP in 1998, but did not think it would have been an issue anyway.

Ms Webb has defended the final lease to Mr. Jefferis, saying the tax-payer got great value for money because a hotel that was draining Government of $500,000 a year was being transformed by the businessman into a top of the range hotel.

Ms Webb told The Royal Gazette yesterday: "I know nothing about that (Mr. Jefferis paying for Mr. Boyke) and even if he did, I don't see what the issue is. I don't know anything about who paid for him or how that worked.

"We have a lot of people who pay money and some are beneficiaries and some are not. That's politics, Bermuda is a small place."

Calvin Smith, the chair of PLP's election committee in 1998, said: "I knew Roy Boyke came to Bermuda.

"John Jefferis knew him, that's all I know. I had nothing to do with him coming here. I knew he came and I knew John Jefferis knew him.

"How he was paid for, I have no idea, but I was glad to see him around because he did a damn good job. From my point of view, the only thing we needed money for was advertising.

"The campaign was designed to avoid the standard media and go straight to the doorstep and rely on the fact that the community knew us.

"Boyke's role was to keep our public face looking pretty. As far as who took care of Boyke's expenses, I have no idea."

There was controversy in 2002 when it was revealed then Tourism Minister David Allen had employed Mr. Boyke using tax-payers' money to act as a consultant to the Ministry of Tourism.

Mr. Boyke confirmed in 2002 that he worked for the PLP in the 1998 election - although no mention was made of who paid him - but said "absolutely not" when asked if he was doing any work for the PLP during the course of his work with the Ministry of Tourism.

At a Press conference on July 22 last year, the day The Royal Gazette revealed the details of the Stonington deal, Mr. Jefferis was asked if he got the lease because he was a PLP financier.

Mr. Jefferis said that if anything he was a "PLP victim" because he had to negotiate so hard over the Stonington contract.

Two nights later, the self-described "PLP victim", was spotted at Alaska Hall with Ms Webb celebrating the party's second election victory.

Mr. Jefferis was out of Bermuda yesterday and could not be contacted for comment. He was also out of Tobago, said a spokeswoman at his Coco Reef Hotel there, although they would try to contact him while he was in transit in Miami to see if he could comment. But he did not contact this newspaper.

Mr. Boyke, who is currently a consultant to the Prime Minister of Antigua Baldwin Spencer, did not return calls seeking comment yesterday. RF Communications also did not return calls.

When asked to confirm Mr. Jefferis paid for Mr. Boyke to work for the party at the 1998 election, PLP spokesman Scott Simmons said: "It is not our policy to discuss members or donations, and I don't think any political party does that.

"It is absolutely our policy not to divulge that information. If the individuals are prepared to say they are donors, that is up to them, but we don't discuss any financial contributions."