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Police probe of abuses went as high as Cabinet - by GARETH FINIGHAN

PREMIER Ewart Brown was one of the subjects of a two-year police investigation into allegations of corruption at the Bermuda Housing Corporation, the Mid-Ocean News can reveal. And a host of other Government MPs — including former Premier Jennifer Smith and former Ministers Renée Webb, Nelson Bascome and Arthur Hodgson — were also investigated in the probe by fraud squad officers.

But, following the conclusion of the inquiry in the summer of 2004, then-Police Commissioner Jonathan Smith conceded that many of those named in the probe could be accused of nothing but bad ethics.

At the same time, then-Acting Director of Public Prosecutions Kulandra Ratneser revealed that some of those under investigation only escaped prosecution because of the island’s antiquated corruption laws.

However, the Police files indicate that detectives were hoping to prosecute several key suspects under existing criminal legislation. One document, titled ‘Action Plan’, reveals that officers considered bringing Conspiracy to Defraud and Official Corruption charges against Dr. Brown contrary to Sections 393 and 111 of the Criminal Code.

The investigation was launched in March 2002 after this newspaper exposed evidence of massive corruption at the BHC, the Government-funded quango set up to build affordable housing. The scandal is believed to have cost the taxpayer more than $8 million through backhanders, questionable accounting practices, fraudulent deals and inflated invoices with building contractors.

The findings of the inquiry have remained largely top-secret since its conclusion in 2004. One junior BHC officer, Terence Smith, was jailed last year after being found guilty of 41 counts of fraud, but otherwise authorities have - until now - been able to keep a tight lid on the extent of the police findings and no charges have ever been brought against any MPs.

However, after reviewing extensive Police files detailing the investigation the Mid-Ocean News can today reveal that several senior Government MPs were at the centre of the inquiry. The documents show that detectives believed there were “reasonable grounds to suspect” that offences involving Government Ministers occurred.

The damaging dossier — consisting of thousands of pages of confidential interviews, progress reports, internal e-mails and other incriminating documents such as bank statements, many stamped ‘Confidential’ or ‘Secret’ — reveals how Fraud Squad officers, assisted by Scotland Yard detectives and US law enforcement agencies, the FBI and Department of Homeland Security, uncovered a paper trail of what were thought to be under-the-table deals and backhanders leading them through the corridors of power to the highest political offices on the island.

The inquiry unearthed evidence which suggested that top-ranking Government MPs, including Dr. Brown, employed tactics of manipulation and abuses of power for their own financial gain — all at the expense of the taxpayer.

It also exposed close-knit personal relationships between a number of Cabinet Ministers and construction bosses who were awarded both BHC and Government contracts.

Officers obtained evidence which suggested that Premier Brown, who was Transport Minister at the time of the inquiry:

* Cajoled BHC boss Raymonde Dill into buying his Flatts property at an inflated price.

* Did not pay a $150,000 bill for renovation work carried out by BHC on the Flatts property before it was sold.

* Was in line to receive financial rewards from a business associate and construction boss Zane DeSilva who was planning to broker a deal with Government involving the shipment of asbestos to Cuba.

The documents reveal that Police also followed up rumours that Dr. Brown awarded a Government contract to Mr. DeSilva in return for “financial considerations”.

And the documents reveal that they also probed allegations that Mr. DeSilva buried costs incurred in the building of Dr. Brown’s luxury mansion on A.P. Owen Road, Smith’s in a BHC housing project that he was working on at the same time. “It is unclear if Dr. Brown has direct knowledge of this, but what is clear is the house was built and paid for under FMV [Fair Market Value],” one document contained in the police files claims.

Police also received reports alleging that antique cedar beams removed from the St. George’s post office were installed in Dr. Brown’s newly-built A.P. Owen Road home.

Other lines of inquiry pursued by the Police that are outlined in the documents include;

* The relationship between former Premier Dame Jennifer Smith and Dale Young — the wife of painter and decorator Paul Young, who was paid more than $800,000 through BHC contracts. Mrs. Young was also involved in the sale of Dr. Brown’s Flatts property to the BHC.

* Dame Jennifer’s use of a multi-million-dollar Tucker’s Point condo that she could allegedly not afford on her salary as Premier.

* Allegations that then-Housing Minister Nelson Bascome applied for a mortgage with BHC, and furthermore abused his position by ordering BHC boss Raymonde Dill to award BHC contracts to certain builders, one of whom provided the Minister a Fairylands apartment free of charge to house his lover and illegitimate child.

* Allegations that Telecommunications Minister Renée Webb had renovations to her Ferry Reach home carried out by Parliamentary colleague and builder Dennis Pitcher, allegedly paid for by the BHC.

* The awarding of BHC contracts to former Government backbencher and builder Arthur Pitcher.

* The awarding of BHC contracts to former Government backbencher El James.

The documents also list a number of allegations against a number of BHC staff, including how:

* One contractor was offered a $4 million contract provided they gave a $100,000 ‘kick back’.

* One property manager purchased a ‘derelict’ house and sold it on to the BHC on the same day — netting him an $80,000 profit.

* A property manager employed to manage a $5 million low income housing project had a $28,000 Jacuzzi installed at his private home. The Jacuzzi was allegedly installed by a company awarded a BHC contract.

* One contractor earned $500,000 cleaning water tanks.

* Contracts were awarded “well above the market value”.

Police records show that a second arm of the inquiry focused on nine contractors alleged to have gained financially by their association with Government and the BHC. Labelled ‘The Magnificent Nine’ by detectives, the contractors include Island Construction owner Mr. DeSilva, a friend of the Premier’s who last week was tipped to run as a Progressive Labour Party candidate in a safe Government seat at the next General Election. The selection of Mr. DeSilva has been roundly condemned by grassroots party workers who accuse the Premier of hand picking personal friends ahead of dedicated and long-serving PLP members.

Detectives seized hand-written documents from Mr. DeSilva’s offices revealing that the businessman was in line to earn millions of dollars by acting as a middle man between Government and the Cuban authorities — and planned to palm off a $200,000 slice of those profits to both Dr. Brown and Mr. Bascome.

The deals, involving the shipment of harmful Bermuda asbestos and other building site waste to the isolated Caribbean dictatorship, were hatched at around the time that Dr. Brown visited Cuba in an apparent drive to forge “cultural links” with the Caribbean oligarchy.

Mr. DeSilva was also the contractor at the centre of allegations that “monies were mixed” from the BHC Southside project and Dr. Brown’s new A.P. Owen Road home. Mr. DeSilva was involved in both projects.

In an August 2002 report summing up the allegations against Dr. Brown and Nelson Bascome, Assistant Commissioner Carlton Adams wrote: “The allegations contained in this report are serious in that they are levelled against two sitting members of Cabinet.

“Despite the source of the allegations (Mr. Dill, whose credibility is suspect), the allegations require clarification. This will mean broadening the investigation to examine in detail the activities of both men and others with respect to their involvement in questionable real estate transactions which were financed by quango BHC.

“The consequences of broadening the investigation (and there are sufficient grounds for doing so) are that Police activity will come to the notice of the public and with it potentially damaging revelations to the Government.

“For the present, I recommend that this information be shared with the office of the Deputy Governor alone.”

Despite the extensive investigation, former Police Commissioner Jonathan Smith, speaking after the inquiry wrapped up in June 2004, said he believed those under investigation had acted unethically rather than illegally and no charges have ever been brought against any public official.

That view was backed by then-Acting Director of Public Prosecutions Kulandra Ratneser, who, while naming no names, implied that those mentioned in the inquiry had only escaped justice because of Bermuda’s outmoded fraud legislation which needed a serious upgrade. “There was no evidence in this case of any crime as we know it in Bermuda,” he said at the time.

When asked by reporters if the outcome of the investigation may have been different had that legislation been updated, Mr. Ratneser replied: “Yes, the outcome could have been different.”

Governor Sir John Vereker was also fully briefed on the police findings, as were his superiors in Westminster.

“I have been kept fully informed about the investigation throughout,” Sir John told The Royal Gtte <$>in August 2004 after the investigation had been wound up.

“The Commissioner’s statement was made with my knowledge and approval and I think there’s very little I can usefully add. London are already aware of the outcome of the investigation. In terms of anything else going to happen, I note that the Commissioner of Police has referred the issue of the Criminal Code to the responsible Minister and I note that the Auditor General has been invited to take a further look at those behaviours which do not amount to criminality — and I hope that lessons are being learned in the appropriate places.”

Despite subsequent promises by the current PLP administration, the necessary upgrades to that archaic legislation have yet to be implemented.

The full extent of the BHC scandal

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