Government is planning to sue Bermuda Housing Corporation (BHC) contractors who were massively overpaid as part of a clean-up of the quango, Housing Minister Sen. David Burch promised yesterday.

Meanwhile, Police Commissioner Jonathan Smith assured the public the ongoing fraud investigation at BHC would not be "swept under the carpet," and he said no one had been trying to influence the inquiry.

Sen. Burch, pictured above left, said a "substantial" amount of money had been overpaid to contractors and that a number had been struck off BHC's approved list because their performance was not satisfactory. The list will be constantly reviewed.

Outlining a series of measures to get the corporation back on a proper management and financial footing, Sen. Burch said one problem identified and now stopped was the use of verbal agreements with contractors.

At a press conference yesterday, he estimated that 60 percent of the problems at BHC were long-standing, while the rest were more recent.

When asked how much money had been overpaid, Sen Burch said: "My assessment so far is that it is substantial, but because many of the contracts were verbal, it is very difficult to try to ascertain what should have been and what it was.

"In instances where we can pursue people for redress, we will certainly do so."

He would not name the contractors struck off the BHC approved list or how many there were, but added: "They know who they are and it is our intention to try in some instances to recover financially through the civil courts, so I don't want to give them notice.

"The most glaring (problem uncovered) has been the number of contracts that were entered into verbally: 'he said, she said', and you can imagine what kind of activity had to go on in response to that to get a handle on that."

The scandal broke in March over allegations of massive over-payments to some contractors and corruption in the corporation.

BHC documents showed painter Paul Young was paid $810,940 between May and November last year.

A carpentry firm was paid $487,193 over the same period, and a gardener received $68,564.

Mr. Young later said the payments were for maintenance work as well as painting, although he admitted to the Bermuda Sun that he could not give details of how the money was spent.

General manager Raymonde Dill and property officer Terrence Smith were sacked in August, five months after Mr. Dill was suspended by the BHC board. Finance officer Robert Clifford is still suspended.

Newspapers uncovered a catalogue of mismanagement at BHC, but Sen. Burch said he did not view the media revelations and internal inquiries which confirmed the problems as a blessing in disguise.

"It is regrettable that it has got to this stage where you have faith in people you thought would do the honourable thing, and we have had to do the appropriate act to correct it," he said.

Sen. Burch, who took over the housing portfolio two weeks ago, said all BHC officers had been instructed to provide documentation for all current contracts so they can be reviewed.

All construction and equipment supply companies were told purchase orders should not be accepted unless accompanied by a letter from the acting general manager Deborah Blakeney.

The companies were told to submit statements listing how much BHC owes them, with a list of purchases, which was checked against the corporation's purchase order books.

All BHC purchase books were reviewed; the finance manager must co-sign purchase orders; all BHC mortgages have been suspended; and no new projects have been started with the exception of the "flood or fire" cases.

"I can assure the Bermuda public that BHC is now operating within its mandate and according to the legislation that governs its activities," said Sen. Burch.

"I can further assure the public that under my stewardship, infringements of policies and procedures will not be tolerated. I will take immediate steps to correct any irregularities.

"It is now my firm belief that BHC is now on a solid foundation on which to build."

At a press conference an hour later, Commissioner Smith revealed seven detectives are working on the BHC fraud inquiry.

"It has certainly been the largest fraud investigation in recent years that has involved public funds," he said.

"I want to allay any fears that there was talk in the community that this would be swept under the carpet or that there was any influence one way or the other.

"Bermuda Police Service will act independently and we will fulfil our obligations under the law. There has been no undue influence on the investigation, which has been complex and time-consuming.

"Investigations that involve a significant number of financial and business transactions over a period of time, as this one does, requires considerable research, the obtaining of supportive evidence and the interviewing of people.

"Analysis is also required so the investigators can more readily determine active and appropriate lines of inquiry.

"It is not unusual for such investigations to take time. This investigation is complex. Our focus is to investigate the allegations thoroughly, to follow the appropriate lines of inquiry and to fulfil our obligations in law.

"At this stage, I am not in a position to discuss whom may be subject in this investigation or what transactions may feature in our lines on inquiry.

"There is a lot of work to do and invariably these lines of inquiry have a tendency to change as more facts become known and additional evidence is assessed."

Mr. Smith also confirmed a Royal Gazette story that two Scotland Yard detectives, a Detective Superintendent and a Detective Sergeant, had been invited in for five days to give advice.

He urged any members of the public with information to call 298 4870.