Works Minister Derrick Burgess yesterday admitted he ordered his staff to refuse to comply with an investigation by the Auditor General because he was outraged over the 'false cheques' scandal.

Mr. Burgess said that when a photocopy of a cheque for $10,000 made payable to 'D. Burgess' was found in Ministry files, Larry Dennis informed Governor Sir Richard Gozney that 'D. Burgess' was a reference to Derrick Burgess.

It later emerged that cheque had apparently been doctored to imply Mr. Burgess received kickbacks from Landmark Lisgar Construction as part of the controversial Police/court building project in Hamilton. The real cheque had in fact been made out to Chester Management.

Mr. Burgess said he felt his character had been called into question and could not understand why Mr. Dennis had not confirmed the authenticity of the cheque — and ordered his Ministry team not to cooperate with him.

This non-cooperation was one of a number of findings in a damning special report released by Mr. Dennis this week, some of which Mr. Burgess addressed in a Ministerial Statement in the House of Assembly yesterday.

"Among the most misleading and indeed disturbing aspects of the special report is the Auditor General's account with respect to the withdrawal of Ministry cooperation," stated Mr. Burgess.

He then referred to the two 'false' cheques found in Works files last month, one to 'D. Burgess' and another to 'E. Brown', supposedly a reference to Premier Ewart Brown.

Mr. Burgess continued: "As I have stated publicly on numerous occasions already, I was astonished to see these cheques, as I knew that I had received no funds from Landmark Lisgar Construction.

"Within the next two hours or so, I had proven that I was not the 'D. Burgess' whose name appeared on the cheque.

"By this time, I had also learnt that many days earlier the Auditor General, having seen the photocopies of these cheques, had informed His Excellency the Governor, yes, His Excellency the Governor, among others, that I was indeed the 'D. Burgess' whose name appeared on the cheque.

"I was unable to understand then — and I do not understand now — the Auditor General's failure to confirm the authenticity of the cheques.

"I felt that my integrity had been impugned, not only as a Minister, but as a citizen of this country. I felt that my family had been insulted. I felt justifiably outraged. Consequently, I questioned the motive and credibility of the Auditor General in the entire 'value-for money' audit process.

"Having sought and received legal advice regarding the matter, I instructed my Permanent Secretary to write to the Auditor General advising that: 'Certain matters had come to the Minister's attention that have caused him to instruct that the Ministry should not cooperate any further with his audit until satisfied that he is properly authorised to conduct it.'

"It had been my intention to seek the views of the Attorney General's Chambers regarding the decision to instruct non-cooperation on the part of Ministry staff.

"Having seen the Auditor General's e-mail of February 6, 2009, to my Permanent Secretary in which he threatened criminal proceedings unless all impediments to the conduct of his audit were immediately removed and having received the advice of the Attorney-General's Chambers, I requested that my Permanent Secretary advise the Auditor General that the Ministry would resume cooperation with the Office of the Auditor General with immediate effect.

"That communication was sent to the Auditor General on February 10, 2009, the day preceding his stated deadline."

Mr. Burgess claimed this sequence of events showed he had operated "in the cause of fairness, objectivity, and good governance".

The Minister addressed three more of Mr. Dennis' points during his Ministerial Statement:

• Mr. Dennis' claim that the new contract did not require the contractor to provide invoices with every progress payment submission, meaning $6.5 million has been paid without verifying amounts to receipted invoices.

Mr. Burgess argued yesterday: "It is misleading in the extreme to state in any form or fashion that invoices are an apt or best means of validating a payment request, as there would be an unacceptable risk to either a public or private sector project of this size being managed retroactively on the 'cost-and-charge' basis implied by the 'payment on invoice' terms type of contract seemingly preferred by the Auditor General.

"For most construction projects, especially large ones, fixed costs are defined at the start by way of lump sum competitive bids for each element of the work and the work and values implemented into the project each month are drawn down against these fixed costs. Cash flow, product and resource allocations are all dependant on this and contractual paperwork support is provided for each monthly payment request.

"For the Auditor General to state in this section that $6.5 million under the new contract has been certified without validation is simply wrong, as the project record reflects that all certified requests for payment have been supported by work and or material in place and or material stored off site and dedicated for the project." He said further checks and balances had been put in place by the Ministry.

• Mr. Dennis said a newly drawn up contract meant copies of all correspondence, progress report meetings and meeting minutes go directly to the Permanent Secretary. Previously this information had gone to the Ministry's Department of Architectural Design and Construction to enable it to monitor the project's progress.

Mr. Burgess said yesterday that upon the signing of the new contract, a project team replaced the overseas architects, consultants and some Ministry technical staff.

He said these experienced professionals work in close collaboration with the general contractor to ensure absolute contractual compliance.

l Mr. Dennis said Government gave the contractor a $600,000 cash injection when Canadian firm Lisgar quit the job after falling out with Bermuda partners Landmark. The project was four months behind schedule at that stage.

Mr. Burgess argued: "We were of the view that there was a very real likelihood that the project would experience significant difficulty, or falter altogether, in the absence of the cash advance, so we approved it.

"It is to be noted, however, that the advance payment of $600,000 made under the new contract was within the gross contract sum and is being amortised at the fixed rate of $30,000 per month back to the Ministry. Therefore, there is ultimately no net effect on the new contract sum. It was a contractually compliant solution and one based on proven means to move a project forward. Significantly, already some $120,000 of that amount has been repaid."

For Mr. Burgess' Ministerial Statement in full, visit www.plp.bm/node/1846