Auditor General Larry Dennis will today hand over his file on the new $70 million secondary school to Police Commissioner Jonathan Smith for investigation into a payment of $700,000 to the general contractor.

Mr. Dennis told The Royal Gazette he had repeatedly asked senior staff at the Ministry of Works and Engineering for documents relating to the payment, but the requests had fallen on deaf ears.

He met with Governor Sir John Vereker last Thursday and the decision was made to hand the file over to Police for a criminal investigation to begin.

Mr. Dennis had originally planned to take the matter to Magistrates' Court if the information he sought over the payment was not forthcoming.

However, he said he now believed that the documents he wanted did not exist and so taking the matter to court would prove fruitless.

Speaking to The Royal Gazette, Mr. Dennis said: "I will be giving everything to the Commissioner of Police on Monday.

"If they (the works Ministry and the Attorney General's Chambers) refuse to give me information, my feeling now is that there is no information to give me, so there is no point going that route.

"If they had the information that I wanted, they would have given it to me by now."

Mr. Dennis said he had spoken to the Governor about it and had written a letter to the Commissioner detailing everything.

He added: "I have done everything that I possibly can. They have had ample time to respond and hand over the information I wanted, but nothing has been forthcoming."

The investigation will probe the legality of the $700,000 paid to contractor Pro-Active Management Systems Ltd. in autumn of last year.

Mr. Dennis raised serious concerns about the payment when he carried out a detailed audit of the whole public school project.

The money was supposed to be a reimbursement of cash already paid out by Pro-Active to Union Asset Holdings Ltd. (UAH), a new company which had been set up by the Bermuda Industrial Union (BIU) to provide a bond (guarantee) for the massive development.

The $6.8 million bond, which was ten percent of the overall project cost, would provide some financial security to Government, which owns the school site, should ProActive fail to deliver on its contract.

In theory, once the bond was in place and ProActive had paid the $700,000 as a premium to UAH, then the Ministry of Works and Engineering was to reimburse the contractor.

However, both technical officers within the Ministry and Auditor General questioned why the $700,000 had been reimbursed to ProActive when Government had received no evidence that the money had been paid out in the first place.

Immediately following his report, Mr. Dennis asked the Ministry for the receipt to show that ProActive had paid the cash, along with the original copy of the bond agreement.

And he also asked the Attorney General's Chambers for a copy of the assessment supposedly carried out on UAH before the bond was put in place.

The assessment was to ascertain that the bond company had the financial capability to meet a demand of up to $6.8 million.

Following the release of his report three weeks ago Mr. Dennis wrote to both departments asking for the information, but none has been forthcoming.

As a result, he wrote again to Works and Engineering permanent secretary Russell Wade last week saying that as the document and receipt had not turned up he assumed that they did not exist.

On Friday, Mr. Wade replied to the Auditor General and said his assumptions were wrong.

Mr. Dennis added: "After I wrote the second letter, Mr. Wade wrote back to me and said that I had no right to the information. He said that they had given me a copy of the bond and that was sufficient support for the payment.

"He said what I was asking for was unreasonable."

Mr. Dennis, in his audit, questioned the ability of the bond company to meet an immediate demand for cash should the project be delayed or go way over budget.

And he also questioned whether or not a bond was actually in place if the $700,000 premium had not been paid by ProActive.

However, Mr. Dennis also raised concerns over the fact that the bond was agreed 11 days before UAH had been officially created.

President of the BIU, Derrick Burgess, accused the Auditor General of singling the project out for special attention and inferred that he was racist.

And when asked by The Royal Gazette if the $700,000 had been paid to UAH by ProActive, he said it was nobody's business but the unions.

ProActive has refused to comment to The Royal Gazette, and Mr. Wade has not returned calls.

Works and Engineering Minister Alex Scott said previously that provided the bond agreement was in place, that was all that mattered.

He said: "We have a copy of the bona fide bond and we can call on it if we need to.

"There is absolutely no irregularity involved. We have conducted ourselves properly. We are quite satisfied with the way we have managed it."