2002 was a year the construction industry will never forget. While the industry boomed, the Government was rocked with two of the biggest controversies in recent memory.

The Bermuda Housing Corporation

In March, the United Bermuda Party's Michael Dunkley raised allegations of corruption at the Bermuda Housing Corporation (BHC) during a Parliamentary session. He stated that some of the BHC staff were taking kickbacks and accepting monetary gifts, then called for an investigation into the Government quango.

Besides looking into bids made and their awardees, Mr. Dunkley also said the investigation should look at each property the BHC purchased, every mortgage it gave and make public a list of BHC staff alongside their qualifications and ability to do the job.

Soon after the allegations were made, Collingwood Robinson of Gold Star Construction said it was unfair to point a finger at general manager Raymonde Dill, as most of the BHC's contractors were hard-working and honest people. Meanwhile, Mr. Dill remained tight-lipped about the accusations.

But The Mid-Ocean News revealed that painter Paul Young received over $800,000 for work completed over a seven-month period; landscaper Caven Richardson was paid nearly $70,000 for three months' work on BHC projects, and payments totalling $487,193 were made to contractor Borden's Carpentry, between May and November of last year. At that point, Housing Minister Nelson Bascome said: "Heads will roll."

Meanwhile, The Royal Gazette learned that Mr. Young, who is the husband of one of the Premier Jennifer Smith's closest friends, had convictions in the US dating back to the 1980s for theft and possession of cocaine. A former BHC management figure also told this paper that he thought Mr. Young, who is thought to have begun doing work for BHC in 1999, won a lot of contracts because he supported a programme started by Mr. Dill to take on unemployed adults in the housing units that were being refurbished.

In the wake of the corruption allegations, Auditor General Larry Dennis said a team of investigators would be appointed to investigate the Government quango. Two Scotland Yard officials would eventually assist the Police with its inquiries.

It was soon discovered that Mr. Dill's secretary, Leila Outerbridge, was given a $252,000 BHC mortgage for a property more than two years after building was scheduled to begin and seven months after it was completed and approved to be lived in, according to official papers.

Mrs. Outerbridge was reported as saying she did not have a loan or mortgage with the Housing Corporation before November or December last year.

But mortgage papers showed she and Lionel Cleveland Godfrey were given the mortgage for the property in Cut Road, St. George's, on September 28 last year.

A contractor who did personal work for a Bermuda Housing Corporation officer said his company was kicked off its BHC contracts after he tried to bill for the work done at the man's property.

Kevin Pilgrim's small business - SOHO Applications - was working on two BHC contracts while also carrying out work at the Tee Street home of Terrance Smith, a property officer at BHC. Then, the elaborate home drew ire of the Planning department after extensive renovations which were refused Planning approval went ahead anyway.

Mr. Smith was forced to apply for retroactive permission for the renovations or face an enforcement order to have them removed and even possible prosecution. The Royal Gazette later revealed that some of the unauthorised work on the prominent Devonshire home was done by a Planning Inspector, Austin Simons, who was moonlighting in his free time. Allegations are also made that Smith was running a private architectural design and building consultancy companies out of his office.

In March, the BHC board suspended Mr. Dill, then finance manager Robert Clifford, but stated that the suspensions did not imply he had done anything wrong. However, in September, ??? sued the BHC. His lawyer, Kelvin Hastings Smith would only confirm that proceedings had been initiated and refused comment on the substance of the matter.

When he took over the Housing portfolio in October, Minister David Burch said Government planned to sue BHC contractors who were massively overpaid as part of the clean-up of the quango.

The Berkeley Senior School

In a special report on the Berkeley School project, in November, Auditor General Larry Dennis recommended that the Ministry of Education be warned that the new senior school would not be completed on time. He suggested that Pro-Active would have to increase its work rate by 100 percent if it is to meet its new estimated deadline of January 2004. But, he said, if its current work rates were anything to go by, the new second senior school would not be ready until well into 2004, almost a year behind schedule.

Mr. Dennis also raised major concerns over the authenticity of the performance bond put in place to financially safeguard Government in the building of the new senior school.

He said even before bids were officially submitted for the project, technical officers at the Ministry of Works and Engineering had raised concerns about Pro-Active's ability to secure an insurance policy.

But, during his audit, he discovered that Cabinet awarded the contract to Pro-Active before a bond had been secured, despite the fact that it was a prerequisite of the job.

And Mr. Dennis said when the bond - which he said took weeks for him to receive a copy of - was eventually put up by a new insurance company, Union Asset Holdings, it was issued 11 days before the company had even been incorporated, raising doubt about its authenticity.

Embattled Works and Engineering Minister Alex Scott hit back at the report by the auditor and said much of it was nothing more than "pure speculation".

In an interview with The Royal Gazette, Mr. Scott accused the Auditor of acting outside of his remit and said a review of the extent of his role was needed.

"The completion date for Berkeley is still September, 2003. I think they are two months behind, at least," said Mr. Scott.

Mr. Dennis denied the accusations, and said he had worked well within his boundaries.

"I think what needs to get across to people is that the conclusions I came to were the conclusions of the Ministry of Works and Engineering," said Mr. Dennis.

Afterwards, BIU president Derrick Burgess made racial allegations against the Auditor, and claimed the only reason a special report on the new Berkeley site had been carried out was because the general contractors were black.

Recently, Mr.Dennis said he was awaiting information on the mystery $700,000 cash reimbursement paid out by taxpayers to Pro-Active. But Works and Engineering Minister Alex Scott said shedding light on the paper trail was "not a priority" and said the Auditor General should be replaced periodically.

Pro-Active could face a $2,000 penalty for every day the mammoth site is behind its completion deadline, TheRoyal Gazette then learned.

The Auditor said he was trying to ascertain who would be culpable to pay the penalty if Pro-Active failed to hand over the site to the Education Ministry on the agreed date of September 4 next year.