AUDITOR General Larry Dennis submitted the report on his probe into the affairs of the Bermuda Housing Corporation to Premier Jennifer Smith this week - but she sent it straight back to him.

Premier Smith said yesterday that she took her action on the basis of legal advice which indicated that the report into the troubled quango should not be made public yet.

Mr. Dennis said yesterday he had recommended that the report should be kept under wraps for the time being because of "possible pending criminal proceedings".

The Mid-Ocean News understands that the police are currently making investigations into the BHC.

Mr. Dennis was ordered by the Premier in March to mount an in-depth investigation into the BHC, after Shadow Health Minister Michael Dunkley made allegations of corruption and this newspaper made revelations of huge payments to contractors.

Mr. Dunkley said the whole BHC issue raised serious questions over the leadership of the country. And he added: "You have to ask whether the Government were asleep at the wheel or were they aware of what was going on and trying to cover it up."

And Mr. Dunkley said it was essential for the police to proceed speedily with their investigation, so "Bermudians knew whether their hard-earned tax dollars had been properly spent or frittered away on corruption".

Mr. Dennis confirmed yesterday that he had completed his 15-page report and had passed it on to the Premier, Health Minister Nelson Bascome and Valerie Dill, chairman of the BHC board.

The Auditor General's comment yesterday indicated that he had found grounds for suspicion of criminal wrongdoing.

Mr. Dennis said: "I have reported to the Speaker of the House that it would not be advisable to release this report at this time, pending possible criminal proceedings."

When asked for her reaction to Mr. Dennis' findings, Premier Smith said: "I have received a copy of the findings and conclusions arising from the investigation into the affairs of the Bermuda Housing Corporation from the Auditor General, Mr. Larry T. Dennis, CA, and the legal advice is that it not be in the public domain until the investigations are finished.

"Consequently, I deemed it appropriate to return the document to the Auditor General. I have also been advised to have nothing further to say until the investigations are concluded."

Mr. Dennis said his investigations into the BHC, carried out with the help of a team comprising seven chartered accountants, a quantity surveyor and a painting contractor, were complete, unless further information came to light. Last month, he passed on some of his findings to the Department of Public Prosecutions.

Hence, the ongoing investigations mentioned by the Premier are likely to involve the police, who possess the powers to take Mr. Dennis' investigation a stage further.

Police spokesman Dwayne Caines said yesterday that he was not at liberty to discuss the matter and added: "Our position is that we are not saying any more about the BHC at this moment in time."

In March, the BHC executive suspended general manager Raymonde Dill and finance manager Robert Clifford pending the outcome of the probe.

The executive said the suspensions did not imply wrongdoing on the part of the men and had been carried out to protect their reputations and the integrity of the investigation.

Valerie Dill, who chairs the BHC board, received a copy of Mr. Dennis' report this week, but yesterday she was remaining tight-lipped about it.

"I am not in a position to make any comment at this time," said Ms Dill.

Mr. Bascome did not return a message left at his office yesterday.

In early March, the United Bermuda Party's Mr. Dunkley said in the House of Assembly that corruption was rife at the BHC and he described the publicly-funded organisation as "Bermuda's Enron".

Mr. Dunkley said yesterday that when he had first sounded the alarm, the Government had been quick to deny that anything was wrong.

"We in the UBP do not want to pervert the course of justice, if this is now in the legal domain," said Mr. Dunkley. "We hope that in due course this is dealt with and charges will be placed where necessary.

"Having said that, really one has to step back and reflect on the leadership of this country. When you look back at the Budget debate, when the UBP raised the problems at the Housing Corporation, we were being stopped in our tracks by the Deputy Speaker, by the Minister (Nelson Bascome) and, I think, probably by the Premier as well.

"They denied that there were any real problems, but when push came to shove they had to admit there were problems. So you have to wonder why they were not aware of a crisis like this happening in an arm of Government."

It was vital for the matter to be concluded and for the public to know all the details as soon as possible, added Mr. Dunkley, so the BHC could resume its job of tackling the housing crisis and for Bermudians to know what really happened to the large sums of public money involved.

"Now that the Auditor General has worked hard and produced his report, we hope that what is happening now is not just a ploy from the Government to let some time go by and sweep the whole thing under the carpet," Mr. Dunkley said.

Days after Mr. Dunkley (pictured left) voiced his concerns in the House the Mid-Ocean News reported, backed up by documentary evidence, that painting contractor Paul Young was paid more than $810,000 by the BHC last year for seven months' work and and that gardener Caven Richardson, who later stated publicly that he worked alone, earned $68,000 in the space of 12 weeks.

Within days, the Premier ordered Mr. Dennis to carry out a full-scale audit of the Corporation.

Mr. Young has never commented publicly on the payments and no representative of the BHC, nor any member of the Government has attempted to explain them.