A Bermuda bank was used to launder $50,000 in bribery payments made to a US city council chief, prosecutors in Florida claimed yesterday.

The Bank of Bermuda was named by the Miami US Attorney's Office as the one used by allegedly corrupt ex-Miami-Dade County Commissioner James Burke to hide money in a cash-for-contracts scandal.

Bank of Bermuda senior vice-president Danny Fox said: "We are unable to comment on the specifics of this case as we are not involved as a party.'' And he referred to statements made in connection with the case last year.

Mr. Fox said: "We carried out thorough due diligence before we completed the transaction involving this case.

"We have very strict anti-money laundering procedures in place. Bank of Bermuda acted properly in every way regarding this transaction and this has been recognised by both the Bermuda Police and the FBI.'' And he added: "In addition, we do have procedures in place for the handling of large transactions.'' Burke was nabbed after an undercover FBI probe lasting several years into claims of corruption in the Miami-Dade County area.

Burke, former chief of staff Billy Hardemon, and bond underwriter Calvin Grigsby all face charges stemming from a federal probe dubbed Operation Greenpalm by investigators.

Prosecutors say they have videotape evidence to prove their case, which was laid out in a 1998 indictment.

Grigsby -- owner of what was one of the nation's largest minority-owned municipal bond firms -- is alleged to have promised Burke $300,000 in return for $180 million in county bond work for a new garbage recycling plant.

Burke is alleged to have received a first payment of $50,000 in 1996, using a Swiss bank and the Bank of Bermuda to launder the cash.

The three accused face charges of money-laundering and bribery following the Operation Greenpalm probe of public finance corruption in the Miami area.

The allegations come months after the Bank of Butterfield was caught up in a Canadian money-laundering scandal involving a Quebec judge.

Superior Court judge Robert Lahiff was jailed for three years for laundering C$1.65 million between 1989 and 1991 for a drug dealer while running his former private legal practice.

The cash was funnelled through Canadian banks, to Swiss institutions, then Bermuda and Hong Kong before going back to Canadian banks. A total of C$60,000 went through the Island.

Bank named Bank of Butterfield chief executive Calum Johnston said the bank had "no knowledge'' of the transactions.

In a letter to the Editor, he said his staff complied with "all our anti-money laundering procedures''.

Saying the bank opened accounts when "apparently respectable depositors are introduced to us by reliable sources'', he added: "We have no way to determine the original source of funds and we are alerted to possible abuses only by insufficient or inadequate introductions or by large and too frequent deposits or by depositions from unusual sources.''