Government Ministers held a damage limitation press conference yesterday in an effort to end press speculation about "the Elbow Beach Affair''.

And both Immigration Minister Paula Cox and Tourism Minister David Allen went on the offensive, blasting the hotel's owners for their tactics during last week's confrontation and warning that the resort's general manager, Bill Shoaf, was on a "watching brief''. But although the two Ministers dismissed some media reporting of the controversy as "straight out of fantasy land'' they also implied that Government had granted general manager Bill Shoaf's work permit after being threatened with the closure of the hotel.

On Friday an aide to Saudi Arabia's Prince Khalid Bin Sultan threatened to close down the resort if Mr. Shoaf's work permit, which expired in January, was not renewed.

Despite initial denials of a climbdown by Ms Cox, the following day she confirmed that the work permit had been renewed for six months.

Yesterday she stressed the point that certain conditions had been attached to the renewal and also warned that Mr. Shoaf was under close Government scrutiny.

"We are not saying that non-Bermudians who come here and are prepared to act in the best interests of Bermuda are not welcome,'' Ms Cox said.

"However, when you have people in positions of leadership and responsibility Cabinet Ministers take offensive accountable and accountable not just to Government but the people of Bermuda.

"Mr. Shoaf has been given a renewal of six months and there are some conditions attached. We have given him a six month watching brief and it's still unproved how much of a benefit he will be unless he acts in good faith.'' She hinted Mr. Shoaf's permit was not going to be renewed because of his track record in handling other staff, but confirmed it was approved after the threat to shut down was released. She added: "I would point out that good management in this case also includes good management of your human resources and working with other employees.'' Ms Cox denied reports in yesterday's Royal Gazette that human resources director Robert Calderon had been forced out, saying: "Mr. Calderon's name was never mentioned.'' Mr. Allen backed up his Cabinet colleague, saying: "We clearly stated our intention to work with our partners in the economy in ensuring that there is a rebirth of Bermuda's tourism industry and the advancement of Bermudians as part of this.

"However, this must take place on a basis of mutual respect and integrity on the part of all partners in this endeavour.

"Over the last several days I regret to say, this has not always been the case with reference to what will probably become known as the Elbow Beach affair.'' Denying there was any rift between himself and Ms Cox, Mr. Allen stated that in talks one month ago between the Government and Elbow Beach owners "there was broad and cordial agreement between us''.

"Thus the events and tactics of last week came as a severe disappointment to us. There's always going to be areas of disagreement but I would hope that it would be done on a basis of mutual respect -- we didn't think that was happening last week.''