EY REPORT CONFIRMS NEED FOR FORENSIC AUDIT SAYS WHISTLEBLOWER

“Falsification
of information on a massive scale.” That’s what the Anonymous Engineer told the
Uncle Gnarley Blog in January, 2017 about the estimates for the Muskrat Falls
project.

The public
now awaits follow through by the Premier and the Minister of Natural Resources
on his call for a forensic audit. The audit would detail the origins and extent
of the “low-balled” estimates and confirm whose signature(s) authorized their
use.

In a
conversation with him recently, the engineer reflected upon his disclosure and the
response of the Government. Said he:

“Even though Minister Siobhan Coady
has already indicated she accepts what I have said as part of the narrative and
that she has questions, too, the Minister must know my warning was completely supported
by the EY Interim Report, which the Government commissioned.”

The engineer
continued:

Essentially she had the same information
nine months before I spoke out on why Muskrat was failing so badly. And EY
actually said a great deal in what was just a preliminary report…the proof is
all there…it needs only the forensic audit to confirm time-lines, how the
detailed estimates evolved, and who signed off at each stage. But the outlines
of the low-balled estimates are there. Read the EY Interim Report and you’ll
see how deeply concerned EY was over the $7.65 billion forecast that Ed Martin announced
in September, 2015 which EY termed “not reasonable.””
   

Of course,
the Nalcor whistleblower was correct.

Following his
advice, I again reviewed the document EY gave the Ball Government on April 8,
2016.

Its
principal conclusions are well worth noting: 

  • “…that the
    September 2015 Forecast is not reasonable.”

  • “…there is a
    risk of multiple-month delay to completion of the …transmission line… and risks
    associated with the remaining scope…”

  • “risks on
    cost and schedule are not adequately reflected in the September 2015 Forecast.”

  • “the current
    contingency level…is low…”

The Report also
noted that the all-important Schedules had not been updated in three years. 

They were exactly
the observations which the Anonymous Engineer discussed with me back in January
2017, and more recently with CBC’s Anthony Germain. They constitute part – but
only a part – of the basis for having called Nalcor public utterances “Falsification
of information on a massive scale.”

A couple of
points need illumination.

The Premier
and the Minister would have received a verbal Briefing from EY and possibly
other documentation, too that was not available to the public. They would have
been informed by April 8
th, 2016 – likely earlier – that something
was seriously amiss at Nalcor.

Ed Martin
left the Nalcor CEO Post on April 20
th. Stan Marshall was introduced
by the Premier the following day, telling the media he was “deeply troubled” by
the delays and cost overruns.

A key limitation on EY was that the Consultancy did
not have a mandate to review or investigate the development and approval of the
alleged $6.2B fake estimate used to obtain project sanction.

In his
recent CBC interview, Stan Marshall added what EY did not: “The estimate
was way, way too low. They would have never built it for that price.”

Commenting
on Marshall’s remark the anonymous engineer suggests
“estimates are not catastrophically low due to a mistake by a junior
employee. They are low by policy, design, intent, and decisions made at the
highest level in the organization.”

Nevertheless, the EY Interim Report served a second function beyond even its explicit warning
that project costs would dramatically increase.
In essence, EY had readied Ball
and Coady for the statements of the anonymous engineer. When he made his
allegations they had heard much of it before!

Still, for
some reason, the Premier and the Minister chose to stay quiet until the CBC put
a microphone under the Minister’s nose. Even then she said precious little
except to acknowledge that his remarks were credible and that she would await
direction from the Auditor-General.
For the
public it must be galling that the Premier is quiet not just on the long string of
falsification at Nalcor but on what may turn out, at the start, to have been as serious
as malicious fraud.

______________________________________________________________________
Related to this article:
Muskrat Falls: Allegations of Phony Cost Estimates 
Muskrat Falls Interim Report


_______________________________________________________________________
Ultimately the
public needs to understand that the observations which both the anonymous engineer
and EY reported are only the ‘results’ of what actually transpired. Those
reports do not confirm the origins – nor do they reveal what caused Nalcor to
engage in such a high stakes and protracted course of falsification or who
instigated the chain of decision-making.

The anonymous
engineer is careful to repeat his very simple message: “the cause of the
falsification reported on the Muskrat Falls project can be established only
through a Forensic Audit.”

The Government – the Premier and the Minister of Natural
Resources, owe an explanation to the people of Newfoundland and Labrador of
their long long silence
  As the Minister
said, the people need to know, and she needs to know.

The only way to know is to initiate a Forensic Audit.

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.

NALCOR (Masquerading as ‘Hydro’)LIVES IN AN UPSIDE DOWN WORLD

If a Big Mac costs McDonalds $10 to produce and it is sold for $1.50, McDonalds will go out of business. They would not declare a profit!

REMEMBERING BILL MARSHALL

Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.

21 COMMENTS

  1. I really don't understand how people are not going crazy, after all, I cant say nothing…I work for the government. Don't want a visit from the rnc or any other bully…but in all seriousness, no media at all? no one cares, and now with the huge giveaway again? all work done in the US. Just the BS work done here…bull work if you will. This place is seriously flawed, and from where im standing, no one cares. The media, the people. We all know media is bought and paid for as well as government. Im waiting for a revolution…if the government cuts my job, ill lead it! 😉

    • People will start to go crazy soon. There are a group of us who plan to really start pushing this issue.
      Getting Beatrice Hunter out of jail was my first priority. Next, is to work on getting Nalcor to drop all charges and get that forensic audit!
      More people need to jump on board though. I know some can't due to where they work etc, but momentum is growing now. Time is of the essence.

  2. Newfoundlanders are too nice. We definitely need a revolution. This would never happen in Quebec….they would have the place turned upside down and it is time for Newfoundlanders to do the same. The government creates a dictatorship and we just shrug our shoulders and say oh well there is nothing I can do about it. If the people of Newfoundland shut the province down and revilted in mass numbers they would have no choice but to listen.

  3. Des, you should win an award for being the most honest man in nf, and the only true Newfoundlander the rest of us can look up to, and only hope to be someday. I truly am thankful for you putting all this out there. We all see through it, but what can we do? no one will listen…we need a revolt! Who will lead it?

  4. There's a complex oligarchy at play here and it needs to be unravelled. But will that happen? I highly doubt it. The media are bought and paid for along with a passive population who are yet to be awakened to the generational plundering of their pockets. Every election shows we replace one dictatorship for another.

    No one is accountable. There is absolutely no transparency.

    We are bafflegabbed continually when it comes to the boondoggle.

  5. It's quite disturbing to know how long the Liberal government has known of such fraud. Both their and the media's silence speak resoundingly to the ills of this project. Where is Fred Hutton? A story that could make a journalists career is a story that could break it I guess. Maybe he's content with his already defined career. You'd think a News Director would be on top of this if nothing more than to hold Ball and Coady's feet to the fire… Or just to keep the public aware of such matters. Sad really.

    • Independent media is the way to go. The others have connections to government/Emera etc.
      Des does a wonderful job of getting the word out. More people need to read his blogs and share them.
      More people need to read and contribute to The Independent.ca
      The more people read and share the faster the resistance will grow.

  6. Newfoundland will probably follow the example of Puerto Rico, which has a massive debt that cannot be repaid by the remaining population (like Newfoundland). They seem to be fleeing rather than fighting because moving to the continental USA is an easy way out, just as moving to Alberta or Ontario is for Newfoundlanders.

    Consider the following excerpts:

    "Economic exodus means two-thirds of Puerto Ricans may soon live in states The Caribbean territory, whose residents are US citizens, is groaning under $73bn debt forcing it to ration water, close schools and watch its health system collapse" – theguardian.com

    "About 84,000 people moved from Puerto Rico to the United States in 2014, according to the report, while only 20,000 moved back to the island, resulting in a net migration of 1.8%. – cnn.com

    "New York – It could be said that Puerto Rico has lost about 164 residents per day since 2010, a "surprising" loss of human capital, but more importantly, a trend that so far has no end in sight, according to several economists from the Federal Reserve Bank of New York (FRBNY)." elnuevodia.com

    I am not sure what the end game for both these islands will be though. A colony or territory used primarily as a base for corporate wealth extraction? Since residents don't take the debt with them when the leave the island they why suffer the austerity when you can flee?

  7. It would take relatively few informed, committed individuals to force a forensic audit and make transparent the MF contracts. It is a stand and plea for democracy and an end to the feudal oligarchy that will doom NL to untold misery and suffering.

    If you love your democracy Stand UP, Act UP now.

    Resist!

  8. Russell at the Telegram continues to disappoint. Today his piece is one of his usual about climate change: shortage of food for lobster in Maine, a large section of the Antarctic about to drop off, CO2 levels still rising etc.
    He blames old men with lots of wealth and who have the most to lose if we tackle climate change, and so they are deny climate change. And he points to Trump as an example.
    Now instead of endangered lobster in Maine, he could mention the invasive green crab in Nfld. And he could mention the offshore oil industry here…….wanting to suck dry the offshore carbon deposits and get them into our atmosphere and ocean. He could mention the cooling climate around Nfld and the effect on caplin , cod , and crab and scrimp, or record fog this year. He could mention MUN close ties to the big oil industry. Or that churches and universities worldwide are pulling investments out of fossil fuel industries.
    But it is always easier to point fingers elsewhere. Are there no wealthy old men here who are unconcerned about climate change …….
    Where is our carbon tax policy…….
    Where is our Efficiency NL……….
    How much ad revenue will Saltwire (the Telegram owners) lose if they write about politics that BITE, as Des Sullivan does.
    Is Russell`s job on the line if he falls out of line, on his opinions…….
    Russell……a environment and nature lover, but who sides with the wealthy old men who deny climate change, because they put food on his table and fossil fuel in his car, and fossil fuel in the jet for his air travel………..
    We all have a carbon foot print, and Canada, per person is among the world`s worst. Individually, some footprints are small. Mine is too big.
    Some have feet like big-foot. Take Fortis employees…….
    How big is Russells………..
    We are all either part of the solution or part of the problem. Surely Russell could say more to be part of the local solution……..or maybe he wants to say more, but is restricted. No political opinions that bite from Russell…….just the rehash of past comments, gentle reminders of what other (people from away) do that cause climate change.
    Locally, we are innocent as the birds…….right on……as Snook would say.
    Winston Adams

    • Great post Robert. Red states leading the way in renewable energy. It is driven by the economics, Wind and sun are now cheaper (and create more jobs) than fossil fuels.

      Where economics matter, where utilities are subject to market forces, wind and solar now win hands down. It is only these miserable taxpayer protected (or screwed) "monstrous hybrid" utilities like Nalcor that keep building unneeded expensive capacity.

      Who will tear back the curtain and expose the wizards at Nalcor for the pathetic failures that they are?

    • The April Plumbing + HVAC magazine says their industry is under attack by various environmental actavists: with wanting the world to go green tomorrow……upset that natural gas is now targeted as a CO2 problem, and upset that Vancouver bylaws intend to make their city the leader with their `Greenest City 2020 Action Plan.
      Fortis BC has filed objections to the Vancover plan (Fortis is a gas supplier in BC).
      The magazine editor says `We need to stand up to the zealots ….our livelihoods are at stake`
      Of course many in the HVAC industry promote geothermal and mini-split heat pumps ……that compete with natural gas, so the editor, Simon Blake does not speak for the whole industry…..but interesting that Fortis promotes natural gas,and objects to the Vancouver Climate Change Plan……. so is part of the problem, hindering progress.
      Does Russell at the Telly know that……or ignore that. Are their directors included in the wealthy old men he refers to………but not all are men….
      Winston Adams

  9. There are 3 on this blog who seem to think that the NS Ecology Action Centre is needed in Nfld, maybe a branch office: Robert G. Holmes, David Goodyear (who is proceeding with a Passive Design house in Flatrock, and myself.
    I thought this ideas might interest at least 10 individuals from this province. Had such a group had input here prior to Muskrat sanction, on the benefits and cost effectiveness of conservation and efficiency for residents and businesses, MF might have been avoided.
    Even now, with the prospect of wasting another 6 billion, and likely bad environmental consequences, only 3 think we need Ecology Action, while Nova Scotia has membership of about 4500.
    So…….might as well start Gull Island, seeing MF is proceeding nicely and on budget. And we can bring on levy tax Part 2.
    Noticed that London based company (who has cast of 12,000 dollars) got a 20 year right to wood on the Great northern Peninsula. And not a peep on this giveaway.
    Winston Adams

  10. Beatrice Hunter……jailed in Goose Bay, transported to St John`s, her family denied the right to see her before leaving Goose Bay, taken to the lock up(a dingy dirty holding cell) at St John`s , then to the men`s high security jail with barbed wire…….back to Goose Bay again,essentially traumatised , and released, as if the judge was very concerned about her……..sure….
    Now Nalcor says they didn`t want to see anyone jailed!
    Did I forget that she was also strip searched …….I think so.
    Maybe she was a Isis member with a bomb in some cavity…….as you would expect from a grandmother, concerned about the impact of Muskrat.
    All in a day`s work for for our police offices carrying out the Rule of Law.
    There is the law of trespass……..which required this treatment, we are told.
    Another law is that of the Constitution, which is supposed to include protection and safety for aboriginal people.
    Nalcor has shown a shocking disregard for safety, whether from the mercury issue on the food supply, or for risk of death from flooding, from the North Spur stability issue, and incidents of flooding already that has happened, and potential dam breach.
    Was there any argument in court of the Constitutional rights, or those rights ignored and trespass issues carried the day.
    There is not just The Rule of Law, but The Rules of Laws. We have seen which gets priority.
    Nalcor`s aim, and that of the Nfld Govn and the police was to make an example of Beatrice………and so, the fishermen that were filmed breaking windows in St. Johns………well, other rules apply.
    And if you are a police officer who commits a crime, still other rules kick in…….different strokes for different folks.
    An old lady who lived through the Depression Days told me that `The law is as crooked as it is straight`. Nice saying, and still applicable.
    Winston Adams