The Bermuda Industrial Union (BIU) has unleashed a scathing racial attack on the Auditor General following his questions and criticisms over the handling of the new $70 million secondary school development.

BIU president Derrick Burgess made racial allegations against auditor Larry Dennis, and claimed the only reason a special report on the new Berkeley site had been carried out was because the general contractors, Pro-Active Management Systems Ltd, were black.

And he alleged a conspiracy had been forged against Pro-Active by the Opposition United Bermuda Party and businesses, claiming that they had gone out of their way to make life difficult for them.

Mr. Dennis released his 17-page report to the public on Friday, in which he said the new school was likely to be months behind schedule.

However, he also said he was trying to ascertain from the Attorney General's Chambers how adequate the $6.89 million performance bond (insurance) was, should the project go awry.

The auditor said it had taken him weeks to get hold of a copy of the performance bond, which had been put up by Union Asset Holdings Ltd, which is owned by the BIU.

Mr. Dennis said he had serious doubts over whether or not the insurance company or the union had sufficient assets to cover a multimillion dollar claim, should it be required.

Yesterday, Mr. Burgess said the union had more than enough assets to act as the insurer for Berkeley, and said the BIU had been greatly disturbed by his report.

The president said Mr. Dennis had never carried out special audits of major projects under the United Bermuda Party (UBP) government, but had chosen to do so now, along with raising questions about the financial capability of the BIU.

"The Auditor General's behaviour indicates that he shares the all-too-common belief that people of African descent are illiterate and chained in darkness, and for them to have any type of success, they must be duly humble and suitably subservient," said Mr. Burgess.

"The Auditor General goes on to conjecture that it is unlikely that the BIU is in a financial position to satisfy the bond claims, should there be any.

"The public should be aware that the Auditor General reached this conclusion without making any contact with the BIU prior to writing his very biased report. Again, this behaviour suggests he believes that we in the BIU are descendants of slaves and have no right to expect courtesy or consideration.

"We are firmly of the view that respect for the efforts of Bermuda's working classes who built this great union should have dictated no less."

Yesterday, Mr. Dennis read the full BIU statement, but said he would be digesting it for the next couple of days before responding in full.

However, he said: "The tone and hysteria of the BIU press release, together with outright and calculated false statements therein, suggest that the union officials themselves believe the people of African descent, and indeed the people of Bermuda, are illiterate and chained in darkness.

"In light of the very serious attack on me and my professional integrity, I shall study the press release for a couple of days before making any further comment on the matter. In the meantime, I'm sure that I shall get an apology."

Mr. Dennis' report revealed on Friday how technical staff in the Ministry of Works and Engineering had advised that the $70 million contract be given to BermudaTech, which ultimately went into receivership earlier this year.

Ministry records and files also showed that Pro-Active Management Systems Ltd, which eventually won the contract, had been labelled as a "high risk" by technical officers, due to its lack of experience and track record.

But, when Pro-Active was unable to secure a performance bond with the usual benefactors because it was a newly formed company with no track record, the BIU stepped in.

Mr. Burgess said if the union had not done so, Pro-Active would never have won the contract because the bond was a pre-requisite.

"We believe, without a shadow of a doubt, that the Auditor General's conjectures regarding the BIU's financial position would not have been made had he been dealing with an institution other than our union," added the president.

"He, like many others, believes that it is impossible for a working class organisation to have enough assets to guarantee such a bond required for such a project."

Mr. Burgess said the BIU made major business decisions every day, and owned several major city properties.

"We believe we made a sound business decision providing a bond for Pro-Active," said Mr. Burgess.

"They approached us for backing with a performance bond after being refused by all of the traditional lending institutions. We in the BIU felt compelled to help assist in the economic empowerment of a solely-owned Bermudian company that is supportive of this union's goals and objectives."

Mr. Burgess said he believed Mr. Dennis had gone outside his remit by commenting on the union's finances, and said it was "none of his business".

He also said it was no one's business whether or not Pro-Active actually paid the $700,000 surety fee to the BIU, which was required to get the bond put in place.

The auditor's report had claimed Government reimbursed Pro-Active for the $700,000, despite having no receipt or confirmation that the money had been paid in the first place. Asked why there had been so much secrecy surrounding who had put the performance bond in place, Mr. Burgess said the union did not have to reveal all.

He said contractors in the past had never been asked to reveal their bondsmen.

But Mr. Burgess denied any involvement with Government in setting up the performance bond for Pro-Active, and said it was a decision taken between Pro-Active and the union's General Council, which had supreme power over union business and represented members.

When asked if the union had $6.89 million to cover the insurance policy it put in place for Berkeley, Mr. Burgess said it had assets that would easily cover it. The membership was not affected at all. Whether or not the performance bond would be collected on, should the project be late and a penalty paid, Mr. Burgess said he was not privy to that information.

"We believe there are those people who tried to ensure that Pro-Active would fail," added Mr. Burgess.

"Once the bond was in place, the tactics used were to prevent the company from receiving credit, as well as to encourage other construction companies from providing any type of assistance to them.

"We are thankful that all businesses in Bermuda did not follow that lead and Pro-Active is forging ahead and will complete the project within a reasonable time."