Legal liability for illness caused by pollution on the old US bases is not an issue, Development and Opportunity Minister Terry Lister insisted yesterday.

He said: "There isn't risk post-clean-up. The whole point of clean-up is to eliminate the risk.'' Mr. Lister added that the real liability risk was the ultimate cost of clearing away pollution left behind by the US and who would bear responsibility if the work went wildly over budget.

He was speaking after a source close to the bid to redevelop the base lands claimed that liability for any illnesses down the road was making potential investors nervous -- especially at the old Naval Annex, now known as Morgan's Point, which is earmarked for housing and tourism ventures.

The insider added that the spectre of massive claims for damages from anyone who fell ill with what was alleged to be a pollution-related disease alarmed potential developers.

He was backed by Shadow Finance Minister Grant Gibbons who said developers, especially those with US connections, would be aware of potential liability from pollution.

Mr. Lister said: "The real risk is that the developers get in there thinking it will cost, say, $1 million to clean it up and it costs $4 million. "It's got to be determined who owns that bill. That's the only risk. It's not a risk of someone coming back saying `I got ill from this site and you, Bermuda, are responsible'.'' The Royal Gazette revealed last week that the US Navy had pumped raw sewage into the cave system underneath the Naval Annex.

Caves under the site are also full of old oil, which has leaked over the years from storage tanks, and hazardous heavy metals like mercury, lead and cadmium.

Bermuda-based BEAM Ltd. has been given time extensions for its development proposals to allow them to prepare a feasible plan and sort out a concession package with Government -- including indemnity for the potential clean-up costs.

Possibilities include Government accepting liability for cost overruns to remove pollution or the developers themselves taking insurance to cover them for extra expense.

Mr. Lister said: "The insurance is to cover everybody off and that will be taken care of. That's one of the things that is being looked at.'' He hinted the likeliest outcome was everyone involved taking out insurance to cover themselves for a massive remediation bill.

Mr. Lister said: "It's up to both of us, from a professional point of view, to ensure we're covered. You have to. You'd be crazy not to.'' He pointed out that the Bermuda Government view was that the US was responsible for the mess and that any costs associated with cleaning up pollution rested with the US government and Navy.

He said: "We are going to try and keep that issue right there with them and make sure that they realise that they are the party we're looking at to pay for the clean-up.

"That is our ultimate position -- that they realise and accept their responsibility. Our challenge today is getting them to accept that responsibility.'' Terry Lister