Bermuda, British governor set deal in leak dispute

HAMILTON, Bermuda, June 8 (Reuters) Bermuda will ask British police to probe a leak of police files to journalists on the mid-Atlantic island in a deal aimed at ending a dispute with colonial power Britain, Premier Ewart Brown said.

Scotland Yard will be invited to hunt for a mole in the Bermuda police who leaked the files, which detailed a probe into links between the premier and suspected corruption in the island's public housing authority.

Police had sought to find out whether Brown put pressure on the Bermuda Housing Corporation to buy a house from him at an inflated price, according to local media reports yesterday.

Brown said in a national address last week that he was exonerated by the probe and blamed British-appointed Gov John Vereker for not protecting the files.

He threatened to suspend relations with Vereker, a move that could upset a constitutional balance in the colony.

But Vereker and Brown, who leads the center-left, pro-independence Progressive Labour Party (PLP), played down the dispute on Thursday.

''The Governor has advised the Commissioner of Police to seek outside assistance from Scotland Yard,'' they said in a joint statement.

''The Premier assured the Governor that he and his government intended to continue to collaborate with Government House, in the best interests of Bermuda, in accordance with their oaths of Ministerial office.'' Business leaders said the dispute could have harmed the thriving reinsurance industry on the wealthy island of 63,000 and damage its reputation as an offshore financial center.

''Any perceived threat to our stability such as the premier's comments regarding suspension of relations with the governor's office jeopardizes Bermuda's reputation as a secure financial jurisdiction for international business,'' said Cheryl Packwood, chief executive of Bermuda International Business Association.'' This week police raided TV station ZBM to hunt for the missing documents. The Mid-Ocean News weekly also reported details of the probe and police have visited its offices.

Political opponents accuse Brown of using the row to drum up support for independence from Britain.

A recent poll showed a record number of Bermudians now support calls for independence but the majority still reject splitting from Britain. The PLP has yet to say whether independence will be on its platform at a general election expected this year.

REUTERS JK PM0432