Home
Up

EXCLUSIVE by GARETH FINIGHAN of Mid Ocean News Bermuda

ALLEGATIONS that Bermuda Housing Corporation funds were used to part-pay for the construction of Premier Ewart Brown's private home have been backed up by fresh financial papers, including bank statements and copies of cheques, leaked to the Mid-Ocean News.

The documents reveal that the BHC made a $400,000 payment to Bermuda Composite Construction (BCC)- the firm hired to build Dr. Brown's $1.5-million luxury mansion in 2000 after the Premier refused to pay for any cost overruns on his new home. The final cost of the project was $1.9 million.

The BHC funds were used to pay off vendors and sub-contractors owed money following the completion of Dr. Brown's house.

BCC bank statements reveal that the company, which was part-owned and managed by Progressive Labour Party candidate Zane DeSilva, was only paid around $1.5 million by the Premier  the cost of the original contract for his residence on AP Owen Road ¿ even though the cost of construction rose by an additional $422,000 due to overruns.

The documents also reveal that BCC was expecting to show a $434,000 overrun on a BHC contract it had secured at Southside to convert 20 buildings on the US base into homes. According to former BHC general manager Raymonde Dill, the reason for the overrun was because expenses incurred through the construction of the Premier's residence were tacked onto the BHC contract.

Mr. Dill made the allegations during an August 2002 interview with detectives investigating widespread corruption at the Government-funded quango, which is believed to have cost taxpayers around $8 million through inflated payments to contractors.

BCC was incorporated in May 2000 by Mr. DeSilva and former PLP MP Arthur Pitcher, along with business partners Kevin Bean-Walls and Leon Williams.

Within weeks of setting up, the new firm had secured two major contracts which it ran simultaneously ¿- the $4 million BHC project at Southside and the construction of Dr. Brown's home in Smith's, which was originally priced at around $1.45 million.

Work on the Premier's property began in the summer of 2000 and the Southside project got under way in November of that year.

Bank statements for the company show that by the end of 2000, BHC had paid the contractor around $380,000. By the end of 2001, that figure had risen to more than $2.5 million.

The statements also show that BCC suffered severe cashflow problems and was almost permanently overdrawn to the tune of hundreds of thousands of dollars and soon ran into financial difficulties. Early in 2001 it arranged a $500,000 overdraft with the Bank of Bermuda, borrowed against the Southside project.

According to BCC documents, the company carried out a financial overview. in December 2001 shortly after work on Dr. Brown's house had been completed. The overview noted that, although the Brown contract was complete, BCC was still owed $422,470 for work on the property. This included "additional works" totalling $332,470, plus $30,000 to install a security system and an estimated $60,000 for any future work.

The overview also shows that BCC was anticipating making an overrun of $434,000 on the Southside project, which was due to be completed early in 2002. Although it expected to be paid a further $1.5 million by BHC, other debts meant that the profit margin was slashed. The company, in fact, received a further $1.7 million from BHC throughout 2002, with a final cheque for $229,000 being presented in October of that year once the Southside project was completed.

However, the company remained overdrawn by several hundred thousand dollars and Dr. Brown repeatedly refused to pay the outstanding $422,470 that BCC claimed he owed through cost overruns on his project which BCC then tacked onto the Southside project.

In October 2002 ¿ nearly a year after work on the property had finished ¿ the Premier told The Royal Gazette he had been overcharged by $200,000 and there were also "major quality issues" with the work. Bank statements reveal that the Premier did subsequently pay BCC another $50,000 in November 2002.

The bank statements show that there was no futher activity on the account for almost another year and the company had effectively ceased operating,despite being overdrawn by more than $200,000 and faced with creditor bills totalling another $200,000.

But in the autumn of 2003, BCC made three deposits into its account totalling $422,000 ¿ the same value that it claimed it was owed by Dr. Brown. BHC paid the company $200,000 in October and made another payment for the same amount a few weeks later. Another construction company made a payment of $22,000 at the same time.

A flurry of cheques, written out by Mr. DeSilva and made payable to a number of BCC creditors was then paid out from the account throughout the course of November and December, effectively clearing the account. The company went out of business shortly afterwards.

As reported by the Mid-Ocean News in June, detectives investigating the BHC scandal interviewed former BHC general manager Raymonde Dill in August 2002. A summary of the interview was later drawn up by Det. Insp. Robin Sherwood, and was included in the dossier on the inquiry leaked to the Mid-Ocean News.

It is not known whether detectives were able to review BCC's bank statements during the course of their inquiry. But in one internal memorandum, Det. Insp. Sherwood said that "monies were mixed from the BHC Southside project and the new house for Dr. Brown at 21 AP Owen Road".

"Documents seized to date seem to support this ¿ it is unclear if Dr. Brown has direct knowledge of this but what is clear is the house was built and paid for under Fair Market Value," Det. Insp. Sherwood added.

"BCC was due to commence work on the Southside project and a separate contract at 29 AP Owen Road. The second contract was with Dr. Ewart Brown ¿ Minister for Transport. Both projects were using the unique building methods and were to run simultaneously. However, due to planning delays at Planning, the Southside project was delayed, however the work at 29 AP Owen Road commenced.

"Dill was initially reluctant to award such a large job to a relatively inexperienced team. He was in fact initially happy with Zane DeSilva joining the team as he felt he had previous experience with large projects through his other companies.

"Dill states that he found it disturbing that both properties and contracts were being built by the same company.

"There was ill-feeling between partners in BCC ¿ Pitcher and DeSilva versus Williams and Bean-Walls. Although BCC had not legally split, Williams and Bean-Walls moved away and formed a new company, Hibiscus Construction.

"There continued to be problems with the Southside project. It became apparent that Zane DeSilva was heavily involved ¿ Coloron Management Ltd. and Delta Developers, both underlying companies belonging to Zane DeSilva, became involved in site management at Southside, thereby increasing his overall involvement and payments with the project.

"The Southside project began to have cash flow problems and Zane DeSilva attended the office of the BHC GM [Raymonde Dill]. He was looking for $800,000 to solve the problems. These problems involved the 29 AP Owen Road as well as the Southside project.

"Dill referred to the documents which relate to the financial overview of BCC as of 14 December 2001. He indicates that the outstanding costs for 29 AP Owen Road ¿ some $422K ¿ was 'buried' in the Southside project, resulting in that project being $430K overdrawn."

"Minister (Nelson) Bascome telephoned Dill after he (Dill) had refused to pay any further monies to DeSilva and BCC. A meeting was set up at BHC.

"Minister Bascome telephoned and changed the meeting from the BHC offices to his Ministerial office. When Dill arrived, he found Zane DeSilva and the Minister present. The meeting concerned the cash flow problems of BCC. Dill was told or persuaded to release $300K, which was part of the 'hold back' on the Southside project. (The release of the hold back and the awarding of the Hard/Soft landscape appear to meet the cash flow problem of the $800K).

"The hard and soft landscaping for the Southside project (value of approximately $350K) was between Derosa Excavation and Island Construction. Dill, in his capacity as General Manager of BHC, had made the decision to award the contract to Derosa Construction and he had made this fact known to Zane DeSilva. Minister Bascome instructed that the contract be awarded to Island Construction, of which Zane DeSilva is the principal shareholder.

"Zane DeSilva would often go directly to Minister Bascome and bypass the correct route through BHC. If there was a delay in cutting a check, Dill would receive a call from Minister Bascome instructing payment to be made to DeSilva."

The allegations presented to detectives were partly corroborated in interviews with Mr. DeSilva's business partner Kevin Bean-Walls.

When asked about the reported $400,000 shortfall at BCC, Mr. Bean-Walls replied: "I know of the $400,000 and the $30,000 security system at AP Owen Road but I do not know how that came about because I did not have privy to BCC books."

According to a police summary of those interviews, the part-owner of BCC told officers that, "when BCC ran into trouble at Southside, Zane DeSilva saw a clause in the contract that he thought could get R. Dill BHC to pay for houses".

The summary went on: "He [DeSilva] wanted Williams and Bean-Walls to say that the contract was amended to say that owners will supply fixtures, windows, plumbing, electrical and fitting, but contract did not say this.

"Was pressured by Ewart Brown, Renee Webb, Nelson Bascome . . . to let Pitcher and DeSilva do the Southside project.

"At one point during dispute with DeSilva 'I am head nigger in charge of Bermuda. F**k Raymonde Dill, I will take care of Raymonde Dill'."

Calls by the Mid-Ocean News to the Bermuda Housing Corporation were not returned by press time last night. http://www.theroyalgazette.com/siftology.royalgazette/Article/article.jsp?sectionId7&articleId}7c39130030185

Looking for last minute shopping deals? Find them fast with Yahoo! Search.

xxxxxxxxxxxxxxxxxxxxxx