A $32 million bid to get international business to finance low-cost housing could lead to the law being broken, Shadow Finance Minister Grant Gibbons warned yesterday.

And he called on Government to come clean on details of the bid to win finance through low-rate bonds for the 100 Bermuda Housing Corporation units.

Dr. Gibbons said loans were normally guaranteed and pointed out that, if the project over-ran its projected costs or flopped, non-Bermudian businesses could end up owning homes, which is illegal.

He added: "This really raises a whole series of further concerns about transparency and poses a series of questions the public should really have answers to.'' And he questioned whether Government -- in the event of default -- would force businesses holding the bonds to sell the houses and whether anyone would buy them if they were being let at below-market rates.

Dr. Gibbons added: "The alternative is that Government will guarantee the bonds -- if that's the case, then it's my understanding that should be counted as part of Government debt because if Government has a liability it should be disclosed.'' BHC is considering a bond issue, which it wants international business to buy, with a payback rate of four percent, half the going market rate.

Dr. Gibbons said he had asked questions about financing for the homes during the Budget debate in February -- but insisted Finance Minister Eugene Cox and Health and Social Services Minister Nelson Bascome had avoided answering.

He added: "What we were trying to understand at the time was whether the amount of money they needed to raise would be an additional part of Government debt. If it was going to affect the debt limit, our view is it should have been included in the Budget.'' Dr. Gibbons said an additional $461,000 was set aside in the Budget to help BHC with the 100 houses project -- but added, even at a low interest rate of four percent, interest alone on the $32 million would amount to nearly $1.3 million a year.

He pointed out: "This doesn't even include any repayment of the $32 million itself -- but if there is an intention to pay this back in ten years, there would be a repayment element in there as well.'' Dr. Gibbons said around $35 million of Government's total debt was Bermuda Housing Corporation-related.

He added: "The Housing Corporation is now going out on its own to raise $32 million -- and it's clear Government doesn't want that included in their debt limit.'' Dr. Gibbons said that Government had not yet said if the rents for the new homes would be at below-market levels, with subsidies from the Financial Assistance Department being used to top up what tenants could afford.

He added: "This raises an additional problem because if you look at Financial Assistance this year, they have decreased its budget by something like $500,000 to $2 million.

"I don't know if they didn't budget for it because it won't happen by the end of the financial year next March or if they will come forward with an additional Supplementary Estimate -- or if they are expecting their tenants to pay full-market value.'' Dr. Gibbons said Government MP and building contractor Arthur Pitcher had started to clear land in Southside, St. David's for 20 of the houses -- but been told to stop because there was no planning permission.

He added: "Mr. Pitcher has already been awarded the construction contract -- allegedly there was a tender process which happened ten months ago.

"It seems very odd that someone could be awarded a contract but the money BHC are looking for hasn't even been raised yet.'' Dr. Grant Gibbons