Auditor General Larry Dennis has hit back at claims that his report on the $70 million Berkeley project was out of order - and vowed that he would not be beaten down with false claims and emotional outbursts.

He finally spoke out yesterday, after a week of claims and counter-claims from Minister of Works and Engineering Alex Scott and the Bermuda Industrial Union (BIU), which claimed his special report on the troubled project was unbalanced and included details outside of his remit.

Mr. Dennis said the Government's own audit committee reviewed his report and found it to be balanced - and there was no higher accolade than that for an Auditor General.

The report, which was released last Friday to Parliament, called into question the validity of the $6.89 million performance bond (insurance) put up by Union Asset Holdings, owned by the BIU, and suggested that the new secondary school would be delayed by several months.

It has led to Mr. Scott calling into question whether or not the auditor acted inside of his normal domain, and to BIU president Derrick Burgess making an angry outburst, in which he strongly inferred that Mr. Dennis was a racist.

But the auditor, who received a full copy of the BIU written statement, hit back, and released a lengthy reply yesterday.

He said: "If officials of the Bermuda Industrial Union, or of any other organisation, think that by playing the race card I am going to duck and cower into some dark recess, they are mistaken.

"I am not impressed. I am not embarrassed. I am not intimidated. I shall wear the outrageous and off-the-subject accusations as a badge of honour that indicates the length that officials will go to to escape accountability when they have no legitimate answer to legitimate questions.

"The scandalous comments say more about those making them than they do about me."

Mr. Dennis said the emotive and racial words used in the BIU statement were meant to play to the emotional impulses of human nature and therefore to obscure the truth.

"In the modern exercise of this tragedy in Bermuda, it is used as a last refuge of those who wish to escape accountability," said the auditor.

"As such, people who would employ such methods jeopardise and demean the aspirations and legitimate claims of the very people they purport to represent and, to put it bluntly, they insult the trials and steadfastness of those who went before."

In his report, Mr. Dennis raised serious questions about the capability of Union Asset Holdings to meet claims of up to $6.89 million.

He said he had had great difficulty getting hold of a copy of the bond, and discovered that senior Ministry staff had not even seen a copy of it in the 16 months following the contract's award to Pro-Active Management Systems Ltd.

Mr. Dennis also said Cabinet awarded the contract to Pro-Active, which had been labelled as a "high risk" bidder by the Ministry's technical staff, before the bond was in place. This was in despite of a bond being a prerequisite to the job.

Union leader Mr. Burgess earlier this week criticised the auditor for failing to contact the BIU before writing his report, and said the union had assets that could well cover a $6.89 million claim, should it be called upon.

He said no other company on the Island would have been so heavily criticised as the BIU had been, and said the special report on Berkeley by the auditor was rare.

Mr. Burgess said: "The Auditor General's behaviour indicates that he shares the all-too-common belief that people of African descent are illiterate and chained in darkness, and for them to have any type of success, they must be duly humble and suitably subservient."

And he added: "Again, this behaviour suggests he believes that we in the BIU are descendants of slaves and have no right to expect courtesy or consideration."

Mr. Burgess has since denied he was branding Mr. Dennis a racist when he made the comments.

Yesterday, at a press conference, Mr. Dennis said he believed the union leader had been calling him a racist.

He said: "I think Mr. Burgess has attributed to me all the attributes of a racist. Once you do that, you are calling someone a racist.

"A rose is still a rose by any other name, and a racist is still a racist by what ever other name you wish to give it."

Mr. Dennis said he realised the statements by the BIU were defamatory and libellous, but he was not seeking legal action.

Mr. Dennis said he did not think his report on Berkeley would receive the backlash it did, but said he and his staff were confident that they had acted within their boundaries.

He said it was normal for any Government to feel affronted by some of the auditor's reports, while the Opposition often saw him as an ally.

But Mr. Dennis said Government's own audit committee, which includes Finance Minister Eugene Cox, saw the report before it was publicly released and rubber stamped it, and the Ministry of Works and Engineering received a draught copy, and amendments were then made.

Mr. Scott said yesterday that he believed the Auditor General had become a fixture of Government during the last 24 years, and therefore achieved the acceptance and approval of Government agencies, committees, Ministers and Civil Servants, without them being prepared to publicly provide a critical review of his comments.

He said: "Simply stated, he has become an institution. He may have become an arm of Government which Ministers, Civil Servants, committees, etc. are reluctant to be seen to publicly rebut.

"Let me hasten to state, that this view should not be perceived as an invitation to challenge the Office of the Auditor General. Again, the role and function of the Office of the Auditor General is a most important endeavour in the Government's requirement to provide a fiduciary oversight to its fiscal conduct.

"However, if the Auditor General is more feared than respected by those who are subject of his review, especially if they have substantive disagreement with his conclusions and remain silent, then the process will be in danger of not producing the intended result."

On the issue of the BIU and the performance bond, Mr. Dennis said he concurred that the BIU was an organisation that made major business decisions on a daily basis, and that the BIU can boast ownership of several major city properties.

He added: "On a personal basis, I even applaud the BIU for feeling compelled to help assist the economic empowerment of a solely-owned Bermudian company that is supportive of the union's goals and objectives.

"This, however, will not excuse any action if it does not hold up to public scrutiny."

Mr. Dennis concluded: "This is where we find ourselves today. Officials of the BIU can call my modus operandi racist if they like. It will not alter the fact that I shall get the information I am required to be given in accordance with the law and the Constitution.

"The conduct of certain parties to date has tainted the audit environment. Not only do inconsistencies and delays heighten professional scepticism, obstruction inspires suspicion."

Assistant Auditor Generals Tracey Pitt and Karen White said they both supported the report on Berkeley, which had been completed by two senior auditors in their office.

Ms Pitt said: "I certainly support the report. I believe it is a balanced report and it specifically states the facts."

And Ms Pitt said she definitely did not think the Auditor General had been racist in putting together the report.

She said: "I don't believe it's the case. I believe it's probably someone's own opinion."

Mr. Dennis, who answers to the Governor, said he had sent a copy of the BIU's statement to the Governor, along with a copy of his response yesterday.

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