The extent of mismanagement of the Bermuda Housing Corporation discovered by the Auditor General is today revealed by The Royal Gazette.

Alleged corruption, possible kickbacks, gross negligence and an "out-of-control management", which ultimately cost the agency hundreds of thousands of dollars, were catalogued by Auditor General Larry Dennis and handed to Premier Jennifer Smith in May of last year.

Until now, the 14-page document has remained only in a few, select hands as a veil of secrecy was placed over the affairs while Bermuda Police and Scotland Yard were called in to investigate.

More than a year after the alarm bells were first signalled, no charges have been brought and no official statement has been released by Government.

But The Royal Gazette can today reveal that the Auditor General found:

Two Government MPs heavily involved in dealings with the Corporation without disclosing their interests;

contractors got away with double-billing and charging what they liked, sometimes double the amounts quoted for jobs;

loans given to clients and BHC officials without being secured or given Ministerial permission;

policies and procedures were blatantly ignored; and

the responsibilities of the board had virtually been abolished.

The Royal Gazette understands that the Premier Jennifer Smith, the chairman of the Corporation board and Health Minister Nelson Bascome refused to look at the Auditor's report when given copies last year, and instead suggested it be given to the Governor.

This despite the Premier ordering that the investigation to be carried out in the first place.

In his summary findings and conclusions, Mr. Dennis said he found the responsibilities of the Corporation board had virtually been abolished as the then-general manager Raymonde Dill "dominated" and "dictated" the running of the Government-funded agency.

He claimed that if the board of directors had been discharging its responsibilities properly, it would surely have become aware of at least some of the "management problems" and control deficiencies.

And he said, similarly, when rumours and allegations of wrongdoing surfaced, the board should have demanded that management explain or resolve the underlying issues to its satisfaction.

"In my view, instead of the board directing and supervising the performance of the general manager, the general manager directed, dominated and circumvented the authority of the board, and the board acquiesced to this arrangement," said Mr. Dennis.

"Ultimately, senior management and the corporation were out of control."

Mr. Dennis also said there had been "serious and widespread failure" to comply with many of the housing corporation's legislative authorities, administrative policies and control procedures.

He added: "Control deficiencies were particularly severe relating to the awarding and administration of construction and maintenance projects.

"Tendering and quotation processes were rarely used, and, when they were, the fairness of the process was sometimes questionable.

"In most cases, project work was performed based on broadly worded purchase orders with estimates of the value of the work to be performed.

"There is little or no evidence that most of these estimates represented competitive prices, and some were wildly in excess of the value of the work performed."

In his much-awaited secret report, which has been obtained by The Royal Gazette, Mr. Dennis also said the internal controls to ensure the Corporation paid only for goods received and works performed were also weak.

He said available documentation to support project payments was often lacking or incomplete, or insufficiently checked and approved.

"For many projects, functions such as selecting the contractor, signing the purchase order, approving the work done and authorising and signing the cheque were concentrated in one person - usually the general manager," said the Auditor General.

"Similarly, some of the Corporation's property officers performed a range of functions incompatible with the principles of sound internal control."

Mr. Dennis said another major concern related to loans made by the housing corporation - and one such loan was to a Government MP.

He said: "Loans totalling $770,000 are outstanding that are ultra vires in the requirements of the Bermuda Housing Act in that none of them are for the purposes allowed, none are secured and none were approved by the Minister (Nelson Bascome).

"The serious and pervasive control deficiencies outlined above, as well as other weaknesses and practices detailed below, preclude the Corporation from discharging its duty to demonstrate that its financial affairs have been administered with due regard for economy and efficiency.

"To the contrary, I am satisfied that in many instances, appropriate value for monies spent has not been received. In addition, control deficiencies increasingly cultivated an environment conducive to financial inefficiency and mismanagement, and in which kickbacks and other fraudulent activities could occur and remain largely undetected.

"It is unsurprising that allegations of wrongful behaviour by Corporation officials have surfaced, that managers have been released for cause, and that senior managers have been suspended pending the outcome of investigations of their activities."

The Auditor General also said that several companies that regularly performed construction and maintenance work for the housing corporation were not registered with the Tax Commissioner or Insurance Officer, meaning they were not remitting payroll taxes or pension contributions, as required by law.

As well, he said, some companies and businesses were registered but were not remitting, or were remitting amounts inconsistent with the amount of work they were doing for the Housing Corporation.

As a result, the auditor said he had forwarded details of the anomalies to the Tax Commissioner and the Insurance Officer for further investigation and action.