Former Premier Ewart Brown and former Public Works Minister Derrick Burgess should not have used public funds to pursue their lawsuit, the Public Accounts Committee (PAC) has found.

However, acknowledging the “unusual circumstances of the case”, the PAC has agreed that the two men’s actions were in line with financial instructions — because their suit was for a governmental purpose.

The PAC document tabled in the House of Assembly by chairman David Burt of the Progressive Labour Party reviewed the Auditor General’s special report on the misuse of public funds, presented to Parliament two years ago.

From September, 2013 to May of 2014, the Committee held nine meetings with the Auditor General and staff, as well as current and former public officers.

The report did noted that a contract with “the Canadian law firm” hired by Dr Brown and Mr Burgess had been ratified by Cabinet.

Government’s retainer agreement with Lax O’Sullivan Partners was terminated in September, 2011.

“The main contention”, the report continued, was how an action approved by Cabinet for the Bermuda Government ended as a lawsuit in their names.

The two men launched legal action against architects Sam Spagnuolo and former Government Chief architect Lawrence Brady in a Canadian court, on allegations of defamation.

They accused the two of trying to besmirch them by fabricating a plot to embroil them in a “kickback” scheme over the Dame Lois Browne Evans police and court building — but the $2 million suit was dismissed last year by an Ontario judge.

Auditor General Heather Jacob Matthews branded the use of public funds for a private legal action “a direct violation of Financial Instructions”.

The PAC wasn’t able to learn “precisely by whom or when authorisation was given” for the legal action.

Its report stated that the Justice Ministry told the Committee that the personal action had been “the only means by which the Government could take action against those responsible for essentially attacking the Government via its Ministers”.

Government by itself couldn’t be a plaintiff in a legal action.

However, the PAC wasn’t provided with legal or contractual evidence to support the assertion, which the report said “allowed for the possibility for someone to personally benefit from the lawsuit”.

It added that the PAC wasn’t accusing either man of seeking to profit, but maintained that “no documentation had been provided” to satisfy the dilemma.

The PAC was also “wholly dismayed” by the “unwillingness” of the Attorney General’s Chambers to share information with the Auditor General — and said the claim of privilege wasn’t acceptable.

Information should have been provided to Ms Matthews, the report added.

Former AG Michael Scott was also taken to task for declining to provide additional details to the PAC.

However, the PAC report didn’t support the recommendation by Ms Matthews that the surcharged funds be paid back — since the Committee accepted the explanation that Cabinet approved the funds under the view that it was spent for a “government purpose”.

The group concluded that Government should look into reforming its financial instructions procedures to support a civil action taken on behalf of a Minister defamed while carrying out their duties.

“PAC recommends that the Government ensure that the Auditor General receives access to all Government files without delay,” the report added.