Government should consider withholding its contracts from firms which do not pay taxes and pensions, said the Opposition after it was revealed Berkeley school builder Pro-Active is in arrears.

The company is one of a number of construction and contracting firms revealed to be owing pension money in the Auditor General's annual report.

Larry Dennis listed around 60 companies who owed more than $40,000 and were more than 90 days in arrears on July 31 last year.

Pro-Active Management Systems owed $56,907 in pension money, a figure topped by Universal Construction which owed $107,708, Precision Construction which owed $86,288 and has since gone bust, Hi-Span Construction which owed $75,285, Fine Touch Construction and Maintenance which owed $64,565, Salisbury Construction which owed $60,713, Tony DaCosta General Contracting who owed $59,793 and Pyramid Construction who owed $59,467.

Other such companies owing pension money include Whited Construction which owed $44,283 and has since gone bust along with Precision Engineering and Technical Company Ltd. which owed $40,050.

Opposition leader Grant Gibbons said: "It is definitely a concern when a company which is actively receiving compensation from Government right now should be in arrears. Clearly this is a case in which Government has a good opportunity to say they will deduct it from payments due to them.

"Government should consider whether it wants to do business with companies that are not fulfilling their tax or pension liabilities."

Companies dodging financial obligations should be tackled early but he said many of the companies listed had gone out of business.

Dr. Gibbons said he feared companies viewed paying on a timely basis as an optional. "It creates a lax environment," he said.

Government is owed nearly $31 million in tax. In 2003 fees more than three months in arrears included pension contributions of $9.2 million, payroll taxes of $16.2 million and land taxes of $5.7 million.

Dr. Gibbons said the public should be concerned Government was not keeping up the pressure against delinquent employers who were withholding pensions and taxes.

The problem had increased 14 percent between 2002-03 after a jump of around 20 percent the year before said Dr. Gibbons.

"It's not just a one-off - there's a further deterioration. Government is not getting tax money and revenue it is due and goes looking for it in other places by raising taxes or borrowing it.

"In the cases of pensions it is a concerning matter. If employers don't make contributions their employees get reduced pensions or no pensions when it comes to their time to retire. These are issues of real concern and to see further deterioration is really outrageous."

Dr. Gibbons said the Auditor General had raised other questions about the Berkeley project which is one year late and $13 million over-budget.

He said Mr. Dennis had been trying to understand for two years where $700,000 of the taxpayers' money went in respect to Berkeley and whether it was paid to the company who were supposed to have it and provide the bond - Union Asset Holdings - and whether they were able to pay out the $6.8 million if Pro-Active defaulted.

He said the Auditor General had expressed other frustrations, saying: "It's outrageous there is such a lack of cooperation from a number of different entities. That was an issue. There are a number of other instances.

"The Small Business Development Corporation was another - just trying to get information was extremely difficult. He called it obstructionism. For an Auditor General who is doing his job to have this degree of lack of cooperation should worry us all in this community."

He said Premier Alex Scott had tried to label the Auditor General "assertive" but Dr. Gibbons said Mr. Dennis had been firm with the previous United Bermuda Party government.

Auditor Generals were supposed to root out fraud, said Dr. Gibbons, and Mr. Dennis was by no means unique.

He said Canada's leader Paul Martin faced a tough time in the upcoming federal election after Auditor General Sheila Fraser found $75 million US of an advertising programme's $188 million US budget was siphoned by advertising firms with strong ties to the Canada's Liberal Party.

"She has been quite aggressive in ensuring fraud and inappropriate use of taxpayer's money is brought to light. I don't think Mr. Dennis is any different, he is within his rights in bringing forward these issues."

Dr. Gibbons lamented the deterioration in the timeliness of financial reporting after progress had been made between 1997-1999 in tackling sloppiness typical in the early 1990s.

He said the alleged corruption at Bermuda Housing Corporation was a classic example of where things had been allowed to slide and served as a warning.

"The board didn't carry out the appropriate functions and the minister and ministry did not keep a close watch on what was going on at BHC."