seized by Police when they raided a local law office, the businessman testified in Supreme Court yesterday.

Mr. Peniston told the court that receipts for his payments were in the hands of a Police "fraud squad,'' which he said "seized all of Mr. (Charles) Vaucrosson's records'' related to trust accounts.

On March 30, 1991, The Royal Gazette reported Police armed with a search warrant had raided Vaucrosson's and seized documents two days earlier.

As he tries to fight off bankruptcy, Mr. Peniston is alleging that his former business partner Mr. Robert Thomson deliberately and improperly tried to ruin him.

Mr. Thomson, who won a $103,000 Supreme Court judgment against Mr. Peniston in 1992, has petitioned the court to declare Mr. Peniston bankrupt. Puisne Judge the Hon. Mr. Justice Ground ordered that the truth of Mr. Peniston's allegations against Mr. Thomson first be tried in court.

Mr. Peniston, whose legal aid application was approved on Friday, was denied a request for a further adjournment so lawyer Mr. Delroy Duncan could be briefed. He was ordered to take the stand and begin presenting his case.

Mr. Peniston and Mr. Thomson were partners in the glass bottom boat business Bermuda Vacations Ltd., which was ordered wound up last year.

Mr. Saul Froomkin QC, lawyer for Mr. Thomson, questioned Mr. Peniston about a $80,000 loan Mr. Thomson made to Mr. Peniston in July of 1989.

When the loan was not repaid with interest by the July 18, 1990 due date, Mr.

Peniston signed a second agreement by which he agreed to pay Mr. Thomson $88,000 plus interest within one year. In June of 1991, the 48-year-old Sandys resident and former United Bermuda Party Senator signed a third agreement. He promised to take out a second mortgage on his Turtle Hill, Southampton home if he could not repay the debt plus interest by July 18.

Mr. Froomkin pointed to an October 24, 1991 letter from Mr. Vaucrosson, demanding that Mr. Peniston repay Mr. Thomson. Mr. Froomkin charged that when he received the letter, Mr. Peniston had not even paid interest on the $88,000 debt.

"Wrong,'' Mr. Peniston said from the witness stand. "I have paid to Vaucrosson's over a period, interest and principal.'' He said he never responded in writing to the letter, but pointed out verbally to Mr. Vaucrosson that he had made payments on the debt.

Mr. Peniston then produced a receipt for $733 from a Vaucrosson's trust account. Dated January 16, 1990 and marked "re Robert Thomson,'' the amount was "consistent with the monthly amortisation schedule'' on the debt, Mr.

Peniston said.

"There are others,'' but they were "all in the hands of Police at this stage.'' Mr. Justice Ground said that if Mr. Peniston believed that was true, and he needed them for his case, it would be up to him to take action to have them released. Mr. Peniston said he did not think that would be possible.

Mr. Peniston also charged that a former Vaucrosson's corporate secretary, who now lives abroad, was persuaded by Mr. Thomson to destroy a record of a company transaction.

"Mr. Thomson was able to get Mr. Vaucrosson to do things like that as well?'' Mr. Froomkin asked.

"Mr. Thomson was able to get Mr. Vaucrosson to walk on water,'' Mr. Peniston replied. "He had him financially on a short leash.'' The case continues today.