It would be a "grave'' error to delay the Independence referendum planned for this summer, says Bank of Butterfield chairman and former Premier the Hon. Sir David Gibbons.

And while the Green Paper on Independence could leave a casual reader with the wrong impression of the costs of cutting ties with Britain, it can still serve as a good basis for debate leading up to the referendum, Sir David told The Royal Gazette yesterday.

"There is no doubt in my mind the referendum must take place at this time to eliminate the uncertainty,'' he said. "It's causing serious problems from the bank's point of view.'' Having returned on Thursday from a business trip overseas, Sir David said "uncertainty in the international business community'' had already cost the Island business.

Sir David, who is chief executive officer of Gibbons Company parent Edmund Gibbons Ltd. and was Premier of Bermuda from 1977 to 1982, said he disagreed with those who felt the discussion paper, called a Green Paper, was biased.

"The information put forward, such as it is, in no way deviates from what is quite correct,'' he said.

But by not pursuing "what I would have thought would have been fairly obvious conclusions,'' the Green Paper creates the impression "that the negatives as far as Independence was concerned were not terribly great.'' If matters are pursued further, "very, very much more expense,'' will be found to be "inevitable...in many cases,'' he said. For instance, the Green Paper says "there is little evidence that would lead one to believe that those characteristics which have made Bermuda attractive to international company business in the past would disappear simply because the Country chose to be Independent.'' Sir David said the statement is factual.

"But in an imperfect world, things do change,'' he said. And "once one becomes Independent, any change is going to be magnified.'' The Green Paper, prepared by a Cabinet committee chaired by the Hon. Irving Pearman, is scheduled to be debated in the House of Assembly on March 10. Mr.

Pearman has also tabled a bill to allow for an Independence referendum this summer. But dissent among United Bermuda Party backbenchers means its passage is by no means assured.

Sir David said "the very fact of going Independent will mean that some new business will be lost.'' Some businesses wanted "a Constitutional guarantee that they will have access to the Court of Appeal and the Privy Council.'' It is "all very well'' to say access to the Privy Council will continue, but any Independent country is able to change its Constitution, Sir David said.

And most Commonwealth countries have eliminated appeals to the Privy Council in London.

While he did not believe existing international companies would leave Bermuda over a decision to go Independent, given a choice between Bermuda and the Cayman Islands, "there will be (new) companies that will say, `I'm just not going to run the risk.'' "`Bermuda's Independent -- they can change (the right to appeal to the Privy Council) in a very short time.'' Similarly, if Government or Opposition MPs made remarks after Independence that were seen as unfriendly toward international business, "that is the sort of change that is going to send people scuttling,'' he said.

He recalled the "bend or break'' remark by former Bahamas Prime Minister Sir Lynden Pindling. "What he intended I don't think was actually that serious,'' but the result was the departure of 21,000 expatriate workers and "the entire reinsurance industry'' within two years. Most of it came to Bermuda.

After Independence, "all you need is an irresponsible statement by the Opposition or Government,'' and the same could happen here, he said.

Sir David said the Green Paper correctly suggests that in assuming full responsibility for its internal security, an Independent Bermuda would want to fund the Police to its full officer complement of 489. Funding is currently only provided for 432 officers.

But he suspected the cost of 57 more Police officers, complete with uniforms, benefits and equipment, would exceed $2.3 million -- the maximum annual cost of Independence outlined in the Green Paper.

"Instead of $2.3 million, it would be more than double that immediately,'' Sir David said.

The projected costs were also lower than they should be due to "sins of omission'' in the area of overseas representation, Sir David said.

An ambassador or high commissioner would be entertained by others and would be expected to do likewise, he said. But the travel and entertainment expenses outlined in the Green Paper were "very modest.'' Similarly, the ambassador would need a car and driver, for which costs were not included, he said. "Can you think of the Bermudian ambassador or High Commissioner going off to Buckingham Palace in a taxi cab?'' he asked. "Now, come on.'' Sir David noted that the Green Paper said British missions would be prepared to assist Bermudians in non-Commonwealth countries where Bermuda did not have representation after Independence.

But he said both Britain and the United States had offered Bermuda such an arrangement in the past, while "strongly recommending against it.'' Whether the nation assisting was the UK or the US, it would be only "a hired hand,'' he said. "Their citizens are going to get first priority,'' and "some consulates are clogged with would-be immigrants.'' The paper also did not address what would happen when a Bermuda-based ship got into trouble in a foreign port.

And one lawyer in the Attorney General's Chambers could not possibly review all international agreements after Independence, as the Green Paper suggests.

"You're going to need a fairly significant amount of expert assistance,'' he said.

On the question of a dependent Bermuda winning the right of abode in Europe after Hong Kong is returned to the Chinese in 1997, Sir David said the UK Government "could not and would not'' give any undertakings now. But the situation would be far different once the six million Chinese in Hong Kong were returned to China, he said.

Sir David Gibbons.