A cash-strapped United Bermuda Party (UBP) made a deal with the Island's two top banks in 1990 in which it agreed not to go ahead with the planned revoking of real-estate licences in return for financial support to help "the turnaround of public opinion", a leaked memorandum revealed yesterday.

The document, marked "very confidential" and written by former Bank of Bermuda president Donald Lines to his executive vice-president John Lightbourne, details the negotiations and backroom bargaining that went on between the then ruling UBP, which was apparently teetering on financial ruin, and the bosses of the Bank of Bermuda and the Bank of Butterfield.

A meeting is described as having taken place between Mr. Lines, former Bank of Butterfield vice-chairman Jim King and UBP officials, including the then premier John Swan and subsequent premier Dr. David Saul. Mr. Lines wrote it was agreed that the Bank of Bermuda would share with the Bank of Butterfield a third of the UBP's half million dollar annual expenditure, amounting to as much as $125,000, in the lead up to the 1993 election.

It was noted that the Bermuda Commercial Bank "would only make a modest contribution because of its involvement with the (Bermuda Industrial) Union and the composition of its board and to the extent they given anything, they would be considered part of the 'other'".

The Bank of Bermuda's proposed donation was in addition to the usual contribution of $40,000 per year. Mr. Lines wrote the UBP was "in desperate straits and unable to pay its bills" because it had had "great difficulty getting indications of support from the public and...has only raised small amounts".

The party at that time had a list of outstanding payables exceeding $108,000, he wrote.

"It is quite clear that if something isn't done to give support to this organisation and to pay outstanding bills, including amounts due to advisors, the UBP office might as well close and the party will automatically disintegrate. I also believe there is now a realisation within the party that they cannot follow their own agenda and must do things which are acceptable to the public."

Mr. Lines noted that financial support from the banks was essential "both verbally and financially", as well as "support on the turnaround of public opinion which was absolutely essential".

According to Mr. Lines, the agreement to help bankroll the party was conditional on a promise from Sir John and Dr. Saul that the government would not withdraw the banks' licences to conduct real estate business in Bermuda, which had been proposed. "I must admit, having heard David Saul say it once again, I can't honestly believe his statements but then again John Swan also gave that commitment this time and I believe we can hold them to this position."

He said he saw the proposal to withdraw the licences as an attempt by the UBP "to cut up the banks".

"We found it very discouraging to be asked to provide money without any sense of the caucus appreciating what we are asked to support while they are busy trying to cut up the banks."

The banks subsequently withdrew from the local real estate markets voluntarily. However, Mr. Lines noted the issue of the licence was "more of a principle".

"I noted it could only be a voluntary withdrawal not one which could be imposed on us for that would not be acceptable under any circumstances. In any event, no such withdrawal would be contemplated until we had considered it for we have a number of employees in the real estate business and there are other issues which would have to be addressed before any such thought would even be contemplated."

Those at the meeting also agreed on the creation of a party fundraising program called the UBP 500 Club, to set about the task of raising $500,000 and creating "a continuous dialogue" between party officials and the banks' board and executives and others "to obtain support".

Pointing out that he would provide an overdraft for the UBP of $50,000, as well as contribute another $50,000, Mr. Lines wrote: "The UBP will find themselves in a lot better shape that I had expected." It was also revealed that, at an earlier meeting in which Mr. King and Sir John discussed what the UBP should do "to win the next election", the original idea of the then premier was to "send a message by dismissing a couple of members of the Senate and appointing others to create a new image". Both Mr. Lines and Dr. King were off the Island and unavailable for comment last night.