Police/Court builders Landmark Lisgar donated $1,000 to the Progressive Labour Party and then claimed the money back from Government, says Auditor General Larry Dennis.

The cheque was made out as a "charitable donation" and Mr. Dennis said it was included in a bill to be reimbursed along with other costs.

His audit revealed other strange payments including $14,500 for a car for building managers.

Releasing a copy of the cheques to the media yesterday Mr. Dennis said: "These cheques were included in a total amount to be reimbursed by Government.

"Our audit work confirmed that they were paid by Government."

And Mr. Dennis said both claims were originally rejected but paid later on.

Last night Works and Engineering Permanent Secretary Robert Horton said: "I am able to confirm that the Ministry of Works and Engineering received from Landmark Lisgar Construction Ltd. (LLC) copies of the following two HSBC Bank of Bermuda cheques in support of payment requests related to the Magistrates' Court/Hamilton Police Station Construction project:

¦ Cheque Number 166 dated 26 June, 2008 made payable to the Progressive Labour Party in the amount of $1,000 as a charitable donation.

¦ Cheque Number 151 dated 12 June, 2008 made payable to Elaine Goodman in the amount of $14,500 for a car purchase. A LLC representative explained that the payment request related to the purchase of a car for one of the company's contract workers from whose salary monthly reductions would be made to cover the cost of the vehicle."

But Mr. Horton said those payment requests were not honoured as the Ministry was not satisfied that they related specifically to the construction project.

"That is, the relevant Certificate for Payment submitted by LLC was reduced by $15,500 overall to account for these two rejected claims."

Mr. Horton said the Auditor General had made reference to these claims in the first draft of his Special Report that was received at the Ministry in mid-February.

"Three days later, the Auditor General was provided with an explanation and has removed the reference from the final version of the Special Report that was tabled in the House of Assembly on March 11. Clearly, the Auditor General was satisfied with that explanation."

Last month Government held an extraordinary press conference attended by the Cabinet and top brass from the Civil Service in which Premier Dr. Ewart Brown claimed copies of cheques from the same builders to him and Works and Engineering Minister Derrick Burgess were fabrications aimed at bringing the Government down.

Mr. Burgess had stopped his staff from cooperating with the audit by the Auditor General's office after claiming that Mr. Dennis had told the Governor and others that he was the 'D. Burgess' on the cheque.

Responding Mr. Dennis said telling the Governor and Minister of Finance was in accordance with generally accepted auditing standards which require the auditor to inform top officers of the organisations of important matters from the audit. "Further the audit process was not completed," he said.

He said after informing the Governor and Minister of Finance, the next audit step was to talk to the Permanent Secretary of Works and Engineering.

And, if the matter was not cleared up at this stage, to talk to the Minister and then maybe the Audit Committee before any reference to the cheques appeared in public. "But before any of this could happen, the Minister himself went public and had blown up facsimiles of those cheques plastered to our TV screens," added Mr. Dennis.

In a long written response to critics of his recent special auditor's report Mr. Dennis said that Mr. Burgess had gone "on and on and on" about there being no need for supporting invoices and that substituting management and technical controls for invoices is "exercising appropriate control."

Mr. Dennis said the certifying architect can only certify the value rendered for a specific period of work. So obtaining invoices and reviewing cleared cheque detail and bank statements is an important step.

However management and technical controls are no substitute for detailed supporting documentation for payments, argued Mr. Dennis.

"They are a very important complement, but they are no substitute. Invoices can be corrupted. Who is going to corrupt the invoices now?

"Would the present 'proven and accountable means to validate the monthly payment requests' have caught a $14,500 request for payment for the purchase of a car? Or a $1,000 request for payment of a charitable donation to the Progressive Labour Party?"

Original contractors Landmark Lisgar had not been the choice of technical officers and the $78 million project has been mired in controversy over delays which saw Government having to hire a $400,000 project supervisor to get it back on track.

And Mr. Dennis defended his claims that the new contract, given after Canadian partners Lisgar left the job, would make cost over-runs easier.

The original architect, who oversaw the costs, had rejected ten requests for change orders worth $291,000. Yet the new contract brought in for new company LLC Bermuda allowed such change orders.

Mr. Burgess, in a statement to the House last week, had said Mr. Dennis was wrong to claim $665,000 had to been paid outside the terms of the contract.

But Mr. Dennis appeared to claim that rebuttal was just semantics as he pointed to two credits totalling that sum.

And he refused to withdraw his claim that Government was financing an under-funded contractor by claiming to have bank statements, which he is willing to share, showing LLC's bank balances moving from a balance of nearly $400,000 in February 2008 to being overdrawn between May and July by more than $600,000.

A $600,000 advance payment was then given to ease LLC's cash flow, which Mr. Dennis said confirmed his fears that the company is not financially viable company.

He added: "The contractor has received at least $665,000 in accelerated administrative fees to which it had no contractual right. Further this modus operandi is frighteningly similar to how the ProActive contract started out.

"The Minister may have the luxury to ignore past experience and set such suspicions and conclusions aside, but the Auditor General does not."