THE NALCOR STATE: A CLEAR AND PRESENT DANGER

Likely, most
people believe that the Muskrat Falls Project is out of reach of cancellation.  That may be true; still, the public expects their
Government to keep a tight rein on Project costs and to report frequently. 

So far, the
Dunderdale Administration has shown no sign that it is either concerned, or that
it even cares, whether the public is kept informed.

The
Government has sanctioned Muskrat Falls based upon a series of dodgy and ever
changing arguments.  But, having passed
over complete discretion on how billions of dollars of public money will be
spent, to a cabal of unelected bureaucrats at Nalcor, represents an
unparalleled dereliction of duty, by elected officials.

The
performance of Nalcor CEO Ed Martin, during its recent Annual General
Meeting (AGM), is significant.  Russell
Wangersky raised the issue in the June 30th edition of the Telegram.  He cited several specific examples of the
Corporation’s refusal to disclose essential information regarding major Project
contracts and expenditures. In a nutshell, Nalcor is making copious use of the “can’t
tell you” strategy: it responds to many enquiries, with either “no answer” or
“too commercially sensitive to answer.” As a backgrounder to this piece, Mr.
Wangersky’s Column, “Variations on a theme – questions and non-answers”, is
well worth reading. 

The
Provincial Government has functioned, for forty years, under strictures imposed
by The Public Tendering Act. The Act was promulgated, under the first Tory
Government, following Smallwood’s defeat. 
The Smallwood era was notorious for its ‘cost plus’ contracts, awards to
Liberal Party supporters and, especially, for the corruption that always
accompanies secrecy.

The Public
Tendering Act provides, more than a level playing field for contractors.  It eliminates favouritism to friends and partisan
supporters; it is a system, when allowed to function, that finds essential integrity
through the fundamental act of public disclosure. 

No
contractor, whether a successful bidder or not, disputes that its name and bid
price will become public knowledge.  This same information Nalcor now deems ‘sensitive’.  Obviously, Nalcor has
never weighed the value of transparency as a fundamental underpinning of good
governance.

Such
deference to Nalcor began with former Premier Danny Williams and his relationship
with CEO Ed Martin.  It has always been a
mystery, to me, how a person plucked out of Petro Canada’s middle management could
be made an instant hydro and megaproject Czar, given responsibility for
billions of dollars of public money. That is another storey.

But, one
thing is clear: Williams wanted an ‘energy powerhouse’ and he wasn’t about to
ask the public its permission or inform them of the pitfalls of such a venture,
financially or in terms of its impact on other public policies. Premier
Dunderdale has never objected to Nalcor’s ambitions. But, then she has never boasted
an original idea or questioned one of Williams’. 

This matter
is not just about contracts and whether, by a fair bidding process, the public
has received ‘value for money’.  It is
also about the amount of money committed and spent, and how the expenditures
relate to previously determined Budgets; it is about cost-overruns which, in
this case, threaten the finances of the whole Province, it is about a host of
technical issues, like the North Spur problem, markets for the surplus power
and a host of other issues, to which the public has a right to have answers.   


The public
may need reminding that when the idea of building Muskrat Falls was incubated,
the Government, on their behalf, held to an arrangement that allowed 100% of the
capital cost to be paid for, by rate payers, through a ‘take or pay’ contract, for
only 40% of Muskrat Falls power. Revenue generated, if any, for the other 40%, (20%
is given Emera for the Maritime Link) is destined for Nalcor’s coffers.  It is not designated to offset the high power
costs of Nfld. rate payers. 

Of course,
Nalcor has also been given a wide role in the Province’s oil industry, which
has escaped much public discussion, too.  
The upshot is that Government has permitted non-elected bureaucrats
authority, not just to spend without disclosure, but to aggregate public money outside
of Government’s budgetary process. 

One should
rightly ask: has the Dunderdale Administration given de facto permission to
Nalcor to act as “a state within a state”? 
Whether by specific direction or passive acquiescence, has the Government
permitted this Agency to bypass a public contracts system not even available to
itself?

Given the
high-handed approach by CEO Ed Martin, to legitimate citizens’ questions and
concerns, it would have been a reasonable expectation, following Nalcor’s AGM, for
the Premier to have stepped forward and publicly issued instructions to Mr.
Martin.  She ought to have told him that Nalcor “must” operate under the same rules which now apply to Government Departments, like Transportation and Public Works, that it “must” provide for complete public disclosure.

But, the Premier did no such thing.

There is a
great tragedy of wilful and structured secrecy playing out in this
Province.  It has the acquiescence not
just of the Government; many members of the media have neither noticed it, as a
fact, or its implications.  It does not
get noted by even one civic leader, in an election year.  The two Opposition Parties still pull their
punches in mortal fear that they will find themselves on the wrong side of
history. 

Given its
enlarged authority, access to public money and Government-sponsored secrecy, Nalcor
now represents ‘a clear and present danger’ to the economic and social
viability of Newfoundland and Labrador. 

When a Government does not behave rationally or in its own best interest (which is the public interest), it earns the term ‘rogue’.  It is a harsh charge, for any government, especially one based in a democratic society.  Public unease and distrust of Premier Dunderdale is already manifest. Worse Polls may be in her future, before she comes to her senses; the fear is that by then, Nalcor’s dreams of ‘statehood’ will have cost us far too much.
Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.

TEN YEARS AFTER MUSKRAT FALLS SANCTION – We will have to think abandonment of the Labrador Island Link

Put simply, whether Muskrat Falls come online or not, it cannot be relied upon. Without admitting their gross negligence at the start, Hydro is essentially saying that that we should try to salvage Muskrat Falls at an undefined cost and for for however short the duration it might operate.

THE PROOF MUSKRAT FALLS IS NOVA SCOTIA’S PROJECT

The substance of Hydro’s mission is to satisfy the contracts with Emera to get large amounts of power flowing into Nova Scotia for the betterment of that province and its ratepayers.  The Island could easily live without the Muskrat Fals project and in fact, other than for the onerous Emera contracts, NL ratepayers would be best off if it was abandoned and left to rust.

FIRST YEAR OF OFFICIAL ENERGY DELIVERY NOT QUITE WHAT EMERA BARGAINED FOR

PlanetNL52: Happy Anniversary Emera on 1 Year of Official Energy Delivery Not Quite What Emera Bargained For Despite all the bad news related to Labrador Island...

7 COMMENTS

  1. During the 2013 AGM Ed Martin received questioning from Jim Morgan regarding the value of the SNC Lavalin Contract. Ed Martin refused to disclose the value, citing commercial sensitivity. Jim Morgan challenged Ed Martin lack of disclosure on the contract value. Jim Morgan was right. There is no reason to not disclose the value of this contract. It is not abnormal in industry to disclose contract values. If Nalcor adhered to the publically tendering process, the values would be required to be disclosed. Furthermore, SNC Lavalin as a company do not seem to have an issue with public announcement of contract values. A short internet search revealed the following:
    1. Mine Tailings Project in Chile http://www.snclavalin.com/news.php?lang=en&id=1876
    2. Power Plant in Poland http://www.snclavalin.com/news.php?lang=en&id=1950
    3. Transit Line in British Columbia http://www.cbc.ca/news/canada/british-columbia/story/2013/01/29/bc-evergreen-contract-snc-lavalin.html
    4. Mining Project in Panama http://www.newswire.ca/en/story/1139437/snc-lavalin-debooks-cobre-panama-project

    Therefore the question must be asked if there is a standard clause in Nalcor’s form of contract which precludes public disclosure of contract values? Was this implemented by Nalcor, or at the request of SNC Lavalin? Who does not want this information disclosed to the taxpayer and why?

    All of this brings me to the biggest question of all. The entire project will be recovered in the rate base of the island consumer. The budget has not been approved by the regulator, and there is no oversight provided by the regulator. The shareholders are unable to get access to information. I would suspect that calls by the opposition in the House of Assembly would return similar results. Who are minding the gatekeepers?

  2. Your article summarizes precisely my strong concerns about the way this project is being foisted on us. I have asked the question recently if these elected officials and NALCOR bureaucrats can be held liable for the financial mess that is almost certain to follow its completion. It is still not too late….but there seems to be no will or courage in government for anybody to stand up and object.

    Had the PUB process been fair and even-handed, I would have fewer concerns….even if I can never reconcile the gigantic expenditures involved in this development with the reality of a mere 500 MW of power.

    Your comments about the Opposition echo my concerns as well. Nobody has come out and voiced strong and specific opposition to DOING this project. They are all afraid to be wrong, despite all kinds of evidence that we are going down the wrong path. Where are the politicians of principle and courage? Who will stand up for us as a people and as a province now?

    I am fully convinced that, if this project gets done, all of us will rue the final outcome, and it will cause the "legacy" of Danny Williams to go down in history as one of the worst decisions ever taken.

    Thank you for putting it out there.

  3. I believe that because Danny put the whole liability on the people of NL, he should take full responsibility for it if it fails. If they had released all the information publicly and consulted the public in a meaningful way, there could be a case made for him to escape liability. It was secretive and remains that way. I feel that if it turns out to be a disaster, his assets should be expropriated and put on auction to fund the failures he put in place. Usually when a third world dictator brings a project like this into completion, and it fails, they personally fail with it. Danny was able to set up this mess, and walk away with no liability. That should be addressed by any incoming government, by no means do I expect any government member to be liable for their government decisions if they follow the rules properly. When a government like Danny's does everything in it's power to keep secret these decisions and information, then I believe they should be held personally liable. Just as you would check with your boss when you need to make a difficult decision, we the people are the boss here. The "public servants" have made decisions and felt that the boss didn't need to be consulted fully. They only presented the information that fit their narrative. Any judicial review of their process would show a PR game designed to obfuscate and prevent real debate. They should pay for the mistake if/when it fails. With the right court challenge, you could have a ruling on bill 29 as it relates to Nalcor being nothing more than a attempt to override the spirit of NL democracy. Even if there is no political will by the party that eventually takes control, I believe that Danny's estate would be liable if a Private citizen brought a class action lawsuit against him for public malfeasance. He has publicly taken credit for getting the project done, that would be enough of an admission to hold him liable for it. Without too much trouble you could make a case to the courts that he ran this project outside the scope of his mandate, changed the rules of government enough to prevent all the checks and balances from acting as they should. Someone should investigate this action now, to put a hold on his estate before he moves it offshore or to other people in his family. It was not done according to the spirit of the law. That is the least to be said about it.

  4. Cathy Bennett was recently appointed as a director of New Millinium Iron, as they needed a local high profile director. They had plans to ship iron by train, but this method fell through when CN dropped out of the plan. But the other primary plan was to move it in a pipeline as a slurry. Lot of electric power would be needed for that it seems. Any wonder Cathy became a director, as she is a promoter of Muskrat and was previously a director of Nalcor. When she announced her run for the Liberals last week she resigned as a director of the Iron company. Danny set Muskrat in motion , then became a director of an iron development company. Cathy became a director for iron development, and resigned this to seek the premier's job. These iron companies sure know how to get people with influence to get the public to bare the cost of their hydro power needs. Wonder if Cathy will resign her directorship of Bell Aliant or Shaw? Bell pays her 145,000 a year for 12 meetings, that's 12,000 per day, plus expenses. This is paid in deferred shares, so probably avoids taxes, and the shares gets her another almost 11,000 per year in dividends, taxed lower than regular income. This is info from the Bell Aliant reports. Cathy wants her full story told. Hope this helps true liberals know more of her business interests. A year ago I thought she only sold hamburgers. I guess she would sell anything, as long as it's good for Cathy. Another fox looking to guard the henhouse?

  5. Muskrat Falls is one of the many poor decisions that Mr. Williams made while in office. People have looked at him as Newfoundland and Labrador's savior, when I reality, he did very little while in office to warrant the support given him. The fiasco with the mill in Stephenville (Not on My Watch), the fiasco with the mill in Grand Falls, lowering the flag (everyone should remember that Memorial Day just passed – while we weren't a province of Canada, people did die to protect the free world which Canada belongs) and finally, he gave us Kathy Dunderdale. Muskrat Falls is just one nail in this province's coffin. The others were slowing inserted over the 10 years of Williams reign and the final few driven in since Kathy took power.

  6. Good article. You don't mention the impending decision on the constitutionality of thewater management agreement currently before the Supreme Court of NL. As the person that filed and faught the lawsuit I can tell you that Nalcor's hired legal team led the defence, and the government's team was rather defferential – to say the least. I can also inform you that as of tomorrow it will be six weeks waiting for a decision from the court. Believe it or not, the water management agreement is far more critical to Nalcor's plans than any other single issue. Without it the project IS finished.