If there are still surprises hidden deep within Nalcor’s crumbling walls, recent information obtained by this blogger under ATIPPA has brought at least one more of them into the light. (Another is that the oncelimp Muskrat Falls Oversight Committee is exhibiting serious signs of life!)

Documents obtained from the Oversight Committee suggest that Nalcor may have maintained a secret “Management Reserve” budget for a category of risk known as “Strategic Risk”. The Reserve was kept out of the estimates for the project and placed under the control of the “Gatekeeper”, presumably the former Nalcor CEO, Ed Martin.

Nalcor evidently understood that such an allocation had important budgetary implications for the project – and for their ability to sell the scheme. But its importance was too great to let the public know anything about it.

The fund was not revealed to the PUB during examination of the DG-2 estimates or later. 
But, in addition, Nalcor also did not disclose any allowance for Strategic Risk in their DG-2 estimates, DG-3 estimates, or any estimates provided to the public prior to 2016.

Why would any category of project costs have been kept secret, or excluded?
Former Nalcor CEO Ed Martin
Let’s begin here. If real “oversight” had been provided from the very beginning by a skilled and independent review group rather than by compliant public servants the public might have received some measure of protection from Nalcor  officials and their PR Machine, who persistently shielded the public from the critical information to which they were entitled. 

Professionals with real expertise and an intricate knowledge of heavy civil construction, mandated to assess assumptions, analysis and management decisions made by Nalcor, could have saved the province millions, or even demanded that Muskrat be halted. In contrast what we received was the “token” act of oversight put in place under Premier Tom Marshall.

That conclusion literally jumps off the pages of correspondence from Independent Oversight Committee Member, Jason Muise, P.Eng. to fellow Committee Members. You might remember that Muise was one of the independent members appointed by the Premier in April 2017.

Evidently, Muise has been asking some very probing questions of Nalcor, though if the 450page tome that comprises the response to my ATIPPA request is proof of anything, he has received few answers.

Still, it seems Muise has extracted at least some of Nalcor’s secrets. If correct, the very idea of a secret “Management Reserve” to account for unallocated “Strategic Risk”, i.e. that it kept out of publiclyrevealed project estimates, is the biggest bombshell we have heard since the “Anonymous Engineer” spoke of concerns about jiggerypokery with the estimates. .

Muise zeroed in on how Nalcor managed its “Risk Management Plan”, which was divided into both “tactical” and “strategic” risk categories.

“Tactical” risks were described in his letter as those uncertainties associated with “the base capital estimate” including scope omissions, construction methodology, issues of performance, and price escalation. “Strategic” risks, on the other hand, were defined as those outside the controllable scope of the project, including regulatory and financial. At issue is this latter category.

In his letter to the Oversight Committee, Muise made reference to a Nalcor document that gave “guidance as to how strategic and tactical risks should be allocated in the Cost Estimate for the project”. He noted that “tactical” risk had been included in the “Original Control Budget and every revised budget… over the last four years.” He added that “… it was contained within the DG-2 Estimate… provided to the PUB… in 2012.” The allocation was $526 million or “about 16% of the estimate at the time.”

Then Muise unleashed his shocker. He told the Members of the Oversight Committee,
However both the Project Controls Management Plan and the Risk Management plan clearly references that the Strategic risk would be covered by a Management Reserve which was owned not by the Project Team, but by the Gatekeeper of the project (ie; CEO of Nalcor).

This assertion is demonstrated in the following exhibit contained within Nalcor’s “Project Controls Management Plan” (see Figure 14 below).

Muise mused about the allocation and observes:

I do not believe that any cost estimate provided to the public included any allowance for Strategic risks, and I have never heard of a “Management Reserve” until I read the attached document. It is unclear if Nalcor ever maintained a Management Reserve” outside the control budget at any time since the project was sanctioned?

Muise correctly noted that at DG-2 (when Nalcor was trying to do a snow-job on the PUB with project estimates that were preliminary – at best having a high margin of error) they had not included a reserve for Strategic risk. He suggested that this was due to “the potential upside offered by the FLG (Federal Loan Guarantee)” which many members of the public will recall Nalcor talked up with great effect. The FLG caused the project savings because the ratings assigned to the debt by the Bond Rating Agencies were the same as those of the Federal Government.

Muise also stated that at DG-3 the potential upside offered by the FLG was also included in the comparison analysis giving Muskrat an advantage over the Isolated Island option. In contrast, complete silence followed the failure to include an allowance for Strategic Risk in the DG-3 costs. 

That the “Gatekeeper”  the CEO of Nalcor  potentially held a secret Reserve Fund for Strategic Risks – keeping it out of the project Budget – is certainly a new revelation. But the revelation that Nalcor failed to account for adequate riskrelated costs is not.  The problem has received attention by at least three parties. 

Within the ATIPPA release, Muise noted that the Independent Engineer, acting for the Government of Canada under the provisions of the Federal Loan Guarantee, viewed the contingency fund as too low in their November 2013 Report. Section 5.1.5 of the Report discusses the Contingency used in Nalcor’s financial model. On page 86, the Independent Engineer comes to this conclusion:

The Independent Engineer continues with comments that unequivocally state, based upon similar projects reviewed, that Nalcor’s contingency allowance is aggressive. Here is an excerpt with the the direct quote:

Within the ATIPPA release, Muise also referenced the 2016 EY Report, ordered by the then-new Ball Liberal Government, which reviewed Nalcor’s 2015 Forecast. Paraphrasing the Report, Muise stated that Nalcor ignored “… costing strategic risk in their estimates,” and added that EY also “took exception to Nalcor’s methods.”

More precisely, the EY Report stated in paragraph 1.3 on page 1: “… the 2015 Forecast is not reasonable.” On the  matter of Strategic Risk, the Firm added its observations in para 1.5. The Firm’s recommendations followed in para 1.6 and are shown, in part, in the following excerpt:

Indeed, within the 2016 report, EY concluded that “the crystalisation of risk classified as strategic was the main driver for the cost increases seen to date on the project”. 

Of course, neither of those two citations caused a public stir as much as that did the nowinfamous 2013 Risk Assessment Report conducted by SNCLavalin. The Report is infamous because it did not come to the attention of the public until current CEO Stan Marshall reported its existence to the Ball Government in 2017, and because Ball stated that it had been delivered to former Nalcor CEO Ed Martin, though he denied having received it. 

“I hadn’t seen it. I hadn’t received it. It hadn’t been transmitted to me. So, you know, I have no recollection of anything like that,” The Telegram reported Martin as saying during an interview on June 27, 2017 leaving some to wonder if he had received it with clenched fist. The CBC also quoted Martin as stating that he had no personal knowledge of the SNC-Lavalin Report.

The SNC Report and the others by the IE and EY, taken together, comprise substantial evidence that Nalcor may have engaged in practices that were designed to keep the project cost estimates, at sanction and after, unrealistically low.

As if to underscore this assertion, Muise noted that the financial impact of the risk, as SNC had assessed it, “was an order of magnitude higher than the contingency allowed by Nalcor within the DG-3 estimate.” Though that figure was slightly higher than the 2013 estimate, Muise asserted, “it did not reflect a contingency at levels recommended by SNCLavalin some 6 months prior.”

Having read the “Project Controls Plan”, Muise’s discovery that a separate “Management Reserve” had been omitted from the original project Budget gives authority to allegations that Nalcor may have fudged the project costs from the very beginning. Little wonder that the Independent Oversight Member expressed his frustration to the other Board Members. Here is Muise again:

Like most followers of this project I am deeply troubled by the allegation that this report was presented to senior Nalcor management back prior to financial close of the project. But I am also troubled by the notion of a Management Reserve which was documented to be held by the CEO of Nalcor, but to my knowledge never communicated to the Public, or included within the financial reporting. I would like Nalcor to offer commentary on this Management Reserve, however I acknowledge this historical review may be outside the remit of the Oversight Committee.”

In a concluding epistle, Muise told the Committee:

“Clearly we must all agree that future reporting by Nalcor must meet recognized accounting standards for project cost control. We must also agree that for the Oversight Committee to serve any real value, that Nalcor need to provide full transparency on the future project forecast to complete, which is inclusive of any and all elements which will contribute to the final cost of the project, and have a potential impact of rates to the Newfoundland consumer.”

If a sense of frustration pervades Muise’s missive, it is one shared by many who have followed the Muskrat Falls saga. Obviously, knowledge of a “Management Reserve” was known to more than a few within Nalcor, the matter having shown up in Nalcor’s “Project Controls Plan”. This is clearly a matter for the Commission of Inquiry. 

But such an assessment does not assuage the very real fact that, from the very beginning, few gave a damn and few still do, from the CEO on down that the public deserves to know the truth on a timely basis. Such information still has to be extracted by a process equivalent to rummaging in the dark. And, by the way, it’s not as if Nalcor was the one that pressured the Government to create an Inquiry so that it could tell all!

Finally, this new revelation should serve as a reminder to the public and this is especially directed at former Premier Tom Marshall that no matter how much they trust their politicians, token efforts at oversight will never stand the trial of discovery.

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.


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.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?


  1. Mr Turtle Head,(don`t you see it in his face, head, neck and shoulder….although the slow moves back and forth at the AGM meetings is the best to watch), gets his picture on UG,
    Now a turtle has a great defensive structure of a hard shell, allowing it to withdraw his exposed head. A hard shell to crack, so kind of like teflon, nothing much sticks. No slouch to screw up so bad to likely bankrupt the province, yet walk away with 6 million for a job WELL DONE, and no public outcry. Mnay said he was entitled to every cent.
    I mean his exit contract was in place, and much better planned that Muskrat. And as we learned from HQ, a contract is a contract, unless fired with cause. No cause it seemed, at least Ball was not on the ball enough to find cause.

  2. Interesting Post. What is troubling about this SNC document was that if the CEO was properly doing his job, would he not have asked the EPCM contractor (SNC) to actually produce it? Would the CEO not want the opinion of his world class experts in where they thought the project was going? Ed Martin not knowing about the report is one question. Ed Martin not asking for it in the first place is perhaps even the bigger issue.

    How could anyone involved with the project not known the potential for the massive overruns in this project in 2013/2014?

    Was this included in a Management Reserve. This is a question for Mr. Leblanc.

    • Agreed. A company like SNC lavalin doesn't just do a feasibility study on a project that another lead organization is embarking on without prior knowledge by the lead organization. This is another lie by NACOR mafia to cover their tracks.

    • The Nalcor mafia!
      Comey describes Trump demanding loyalty like a mafia don. Makes one wonder if much of our government is run like the mafia,inappropriate relationships with private companies.
      Look at 2 million dollars per bed for new hospital construction. How much is that padded with reserve amounts for shady purposes. Even the Inquiry budget is padded well above what Leblanc estimates.
      As Maxwell Smart would say, there is a cone of silence at work here. If only only our elected representatives worked for good instead of evil.

    • Anom@22:55
      There are areas where democratically elected governments shouldn't venture and one of them is resource and industry development. Even though Muskrat Falls is the biggest and worse case scenario this is about the 10th time we have seen this play out here in NL with the Upper Churchill, Com by Chance Oil Refinery, Labrador Linerboard, the hundreds of fish plants, middle distance gillnetters, wharves, Greenhouses, Offshore Oil and several more. The concept that government needs to develop these resources and industries for the common good is a fallacy and one that needs to be debated, addressed and stopped.

    • It is the Mega Project madness that grips NL. We have had the UC, Come by Chance, Labrador Linerboard, Sprung Green Houses, Hibernia, Hebron and now Muskrat Falls-all of which were schemes to keep the over pid construction worker and devious contractors going at the expense of all of NL.

  3. Information posted on UG gradually seeing the light of day is but a mere speck of what is to com–methinks! The public of this little province never had a chance. We were doomed right from the start when Nalcor was "created" and conveniently stocked full of little "cable guys" by DW whom he had control over.
    We are to understand that this Commission of Inquiry doesn't have the mandate to recommend that charges be laid BUT surely to God someone has to take the lead and have a criminal investigation started if it even looks like corruption (which it does). Unless those responsible for this debacle are punished we will forever be at the receiving end of antics of people like DW, KD, TM,and Fast Eddie looking to feather their own nests. I wonder how many paper shredders are smoking these days.

    • Why not use your influence in your community and House? Get a citizens group of like-minded progressives, and try to get a few elected, to oppose the Tory-minded crowd, who are capable of doing again to poor old NLers, what they have done repeatedly for over 100 years. Whether branded Liberal or Tory, they represent the same crowd.

    • That's a good point Wayne, and no one has ever called out those "little cable guys" for what they are… a bunch of gutless wonders who knew just enough to be dangerous, and who cut and ran as soon as the wheels on the monumental fiasco they instigated began to come off in public.

      Vile, reprehensible cowards.

  4. Ed said….“I hadn’t seen it. I hadn’t received it. It hadn’t been transmitted to me. So, you know, I have no recollection of anything like that,”. I wonder did his severance cheque meet the same fate? Ahhhh, NO!

  5. Keep a watchful eye on M. Ball. His knee jerk on the AB/BC pipeline flare, contravenes the "Free Trade agreement", that all Premiers have signed on to. This kind of province against neighbour silliness works both ways. Hopefully your opposition in the House will slap the premier, where it hurts, (politically, of course:-). NS is in the driver seat as most goods move West to East.

  6. What is good for Alberta is good for Nfld says Ball. So he supports the pipeline to BC, that we market the dirtiest oil known: tar sand oil. Nnot surprising , as we at times now import coal fired electricity form NS.
    The Capelin, cod, our fishing industry industry, and rural Nfld and Lab be dammed, but Ball says this in not about the environment vs the economy. It is a win win, according to Ball. And he expects the Feds to help increase local oil production.
    That countries like New Zealand has banned further off shore drilling, to counter climate change, does not apply here as they are on the bottom of the world , while we are on the top. I missed that logic, but the map on my globe seems to support Ball. Besides , climate change is a hoax made up by China, according to Trump, and supported by Ball.
    And our planet too is but a round ball. Depending on which way you view it, up is on top and down is on the bottom. So just turn the Ball upside down and everything reverses.
    Now we humans generally think and reason with our head, and discard the waste from our arse. But is this a fixed law of nature….
    Is it possible that some may think with their arse, and discard the waste from their head, by the things they say…..
    Just asking! We are still learning things about the human body, apparently a new organ has just been found that is just below the skin of humans.

  7. As to that new organ, a little research showed it to be inter- shit- ual , and so I thought,with the shit part, Ball must be full of it. But a closed read, identified it as interstitaul, or pockets of space containing fluid, and may make up the largest organ of the body, if it is indeed an organ.Apparently the skin is the largest organ,and 16 percent of our body weight, and I never thought of it as an organ.If the interstitual is an organ, it will comprise 20 percent of our wt. Our bodies have about 80 organs.
    Now it is well known that some men think with their penis, so not far removed of thinking with one`s arse……..
    Surely NL needs leaders thinking with their brain, to avoid boondoggles. In my books, Vardy, Sullivan and a few others are rare birds, who do think with their brain.
    Is there a screening test to separate how one thinks, who can lead and be a MHA….

  8. Folks!!!

    It is obvious that the inquiry into MF's is going to be a whitewash and a failure with nothing being done except a dust gathering report at the end and we will be stuck with the bill very very soon so that has got me thinking. How in the hell are we going to pay for this without bankrupting this province?

    I think we need a form on how to either sell the power and make money or sell the dam and pay for it. For starters, here is my take on a possible solution that can be found in Sweden. Only problem is it will lock horns with our cash cow known as the offshore oil industry.

  9. Hi Anon 15:10,

    There is one problem in your idea… You can not sell that boondoggle. It does not worth a single dollar. The entire problem is right there. Despite Newfoundland engaged for up to 13 Billions in that project, it does not worth a single dollar.

    There are articles on this blog and some others that explain how MF can not float, even after bailout. The sole operation cost will be above the value of the power MF will produce. With cheao shale gaz, large surplus of hydro power in Quebec and more, there is an over-supply of power. An over-supply translates to a reduced price.

    An increase of demand in Newfoundland will not change anything. Your market is not big enough to make a difference on the North – East market. Also, the increase being in Newfoundland, it would increase costs for Newfoundland only. What you would need would be a large increase every where in the North – East area of North America for MF power to acquire a significant value. A change that big will not happen before very long time….

  10. Keep your eye on the gas pump price folks. AB, with sheep like support from Ball and Moe, are following a "policy" which will drive gasoline above $1.50/l. Actually, this will promote sales of electric vehicles, a good thing, (yes, your food trucks from NS, will get smart and find alternatives to oil cartel).

  11. Hi guys,

    About the judgement from the Supreme Court : A case for which they gathered the required signatures on the 6th of April will be released this Friday. They had the signatures for CFLCo vs HQ almost a month sooner and still no date for publication.

    The only reason for me to have these delays is for the parties to have asked for it. I think this delay is evidence that as of now, HQ – Qc and CFLCo – Newfoundland are involved in secret discussions and negociations, in order to be able to achieve a kind of Win – Win instead of the Win – Loose in favor of HQ that the audience announced. I also noticed an increase in Qc – Newfoundland public relation and policies in the medias, also pointing in that way.

    As such, only them know when they will reach agreement or give up and ask for the judgement…

    • Note the irony; The pipeline will get built; Muskrat, and the "juiceless" transmission lines will get built. Future generations, you will pay. Ball's petro plan supports both strikes against a low carbon future. The Inquiry is a total waste of time, and resources. It will just conclude that the leaders were themselves duped into doing what was thought appropriate, "based on the best information we had at the time". Debt to infinity supports re-election of the few, benefitting the Banks, feeding an elite small group of Workers and Business interests.

    • Hi Robert,

      "It will just conclude that the leaders were themselves duped into doing what was thought appropriate"

      I agree that is highly probable… So what ? Don't do anything and ensure the next one will have a free way for his next stupidity?

    • Speaking of an increase of Qc/Nfld PR activities in the medias, they indeed both announced an "une entente de coopération en matière d’infrastructures routières et de mines" a few days ago.

      Among other things, it aims to improve land access to Labrador ressources, while eventually we get a better use of the recently much upgraded Sept-Iles/Pointe Noire deep water port.

      At the end of the article, they also mention of an expected SCC decision around June. (But like Heracles, I also heard it could be much sooner)

    • Ex-Military Engr:

      I think the port upgrades were financed by Tata and LIM working near Schefferville for their exports as part of a deal with TSH and IOCC.

      Not sure there was really anything in that announcement other than the photo op.


    • Anon 11:34 Don't you get it? Unless there is a direct change management strategy, very soon, "the next one will have a freeway for another stupidity", that is assured. Inquiry will do little in my opinion, to affect needed change in Governance. The hope is that new leadership, sensitive to rational economic and socio needs of future generations, will emerge, or she's gone bye. Give me your best shot at a change management action for your own grandchildren. What would you put on the agenda for the change management team to consider?

    • To PENG2:

      There was an intense saga surrounding the rail access to the upgraded multi-users Sept-Iles deep water port. The Quebec Gvt was very much involved in resolving an "hostage taking" situation created by (RIP) Cliff Resources.

      It got resolved by the "the signing in late 2016 of a long-term commercial agreement between the Port and its new partner and client, the Quebec government-backed Société ferroviaire et portuaire de Pointe-Noire (SFPPN). The latter is a limited partnership that was created to own and operate assets purchased from Cliff’s Natural Resources operating under protection from its creditors. These assets include rail lines, access to port facilities, rail yards, a pellet plant, administrative offices and about 1200 hectares of land. The Port itself was successful with the acquisition of 400 hectares of land to unlock the future growth of the sector.

      For years, Cliff’s refusal to negotiate service on its rail network giving access to the port stymied development in the sector and led to years of acrimonious relations and highly-publicized lawsuits. Quebec economy minister: “Thanks to this (SFPPN) acquisition, companies engaged in the mining of iron ore on the North Shore can benefit from the access they will now have to the new multi-user dock in the port of Sept-Îles.”

      Based on the same approach that inspired the 2012 agreement for the construction of the multi-user wharf, the agreement between the Port and SFPPN called for a sharing of the SFPPN’s loading equipment, storage and handling facilities at Pointe-Noire, and the construction of a 300-metre-long galleried conveyor belt that would finally link the multi-user wharf with the laydown area for users’ stockpiles. The Quebec government also promised to provide $15 million in financing to ensure those final links were built and operational.

      (above was extracted from: )

      Ex Mil

    • Ex Mil @ 13:44:
      There was more to it than that-and none is new info, mostly dating 2-3yrs at least and as I said photo op only.

      There were minor concerns of CNR being able to disrupt rail and port activities in Feb 2015 but considering CNR was a minor user and Rio/QCM had already signed on with the Schefferville players there was nothing to worry about.


    • "There were minor concerns of CNR being able to disrupt rail and port activities…"

      I would agree with above sentence by changing the word "minor" to "considerable"…

      All the info we got (from the medias, Qc gvt, the port (Feds), or the five original partners that built the multi-user deep water Warf) was not indicating this was a minor concern.

      Anyways, Quebec spent $68M to acquire Cliff's (CNR) assets in Pointe-noire (thus "liberating" the rail access to the new wharf…), plus a further $15M to finalize links infrastructure that run on that same property. (Here, even Nfld wanted the Canadian Transportation Agency to force CNR to allow access to the new deep-water wharf)
      => "Formerly owned by CNR, Block Z had been a bone of contention between the Port and the mining company for the past several years, with Cliffs refusing to recognize its obligations as a common carrier and to allow competitors to use its rail line, blocking access to the Pointe-Noire shipping facilities." <=

      The good news is that this new deep water wharf is open for business, and would welcome any new additional cost sharing partners. (Tata Steel Minerals Canada + Champion Iron Limited were the latest additions; last October I believe)

      Ex Mil

    • Ex Mil:
      When considering the players involved (Rio, ArcelorMittal, Tata etc), Cliffs were the poor sister partner then and had neither the ability nor the legal standing to idle the facilities. Concerns of rail access were minor in the Lab West area and a commitment was secured within a couple of hours of the Wabush Site idling to continue moving material. As far as I know, there wasn't even 1hrs delay on moving ore out among the operators.

      I will agree that the media and government did play the issue up-mainly for public support (pensions, lost jobs etc), but industrially there were no concerns.

      Maybe the Quebec government is no better ours when it comes to playing the 'sad face card'?


  12. On the Liberal Policy agenda in Hfx;

    Subsea tunnel to Newfoundland

    The Liberal Party of Canada in Newfoundland and Labrador is calling on the Liberals to encourage the government to consider all funding models for building a Newfoundland-Labrador fixed link. The resolution suggests that long-distance subsea tunnel technology has advanced significantly and the creation of a fixed-link would be an economic boon.

    See what I mean? Change management gone astray.

    • In addition to ferries, tugs, barges, rafts and all other manner of floating conveyance, a tunnel may also be needed so as to help accommodate the massive hordes of economic refugees fleeing this tortured rock when the Muskrat bills start arriving in the mail and the bondsmen finally call in the loans.

    • The NDP in BC are very hypocritical when it comes to environmental issues. They don't want the big bad oil companies to build pipelines but they conveniently find it ok for the province to build a hydro dam that floods some of the best farmland in Canada. Friendly to the environment in name only.

  13. I'm calling this article to the attention of UG readers for their consideration and discussion….

    Two questions…

    These tariffs are levied against Kruger, nor against the province. So why are NL taxpayers footing the legal bill to challenge these tariffs… for a private company that has already received million$ in corporate welfare subsidies from NL taxpayers? Subsidies that the U.S. Dept of Commerce considers unfair under NAFTA, to the degree that it has taken action with the imposition of countervailing duties.

    Second question… with NL taxpayers picking up the tab for legal costs to fight tariffs imposed on a private company, wouldn't that merely reinforce the U.S. Dept of Commerce view that Kruger continues to be unfairly subsidized by government in some manner, therefore the imposition of countervailing duties is a right and proper action?

    Notwithstanding that NL taxpayers on continuing to subsidize an aging paper-mill operation that's no longer economically viable without the infusion of taxpayer-funded life support… but the optics here with regards to how the province is going about trying to mitigate these tariffs just looks all wrong, too.

    Comments welcome…

    • Hi Anon 20:04,

      The situation is more complicated than that…

      About private company versus governement. It is important to understand that such a private company is paying a lot of taxes to governement. Also, this company has many employes who are also tax payers. As such, to save these jobs is of importance for a governement. Even more for jobs that are not related to a traditional domain like oil, fish, etc. So Yes, the governement probably has a strong enough interest to justify taking some actions.

      About re-inforcing the case in the US, again, it is more complicated than that. If the US action is not justified from the first place, the US themselves are using governement's power to favor and support their local business, against the North America free trading agreements. As such, to involve governement in the response is justified.

      Here, the reality is amplified by the small size of Newfoundland. In Quebec too we have this kind of problems with the US, mostly about wood. Luckily for us, we are bigger and stronger, so it is easier for us to fight back. Considering the size of both parties here, Newfoundland versus US, is a direct fight back at the US the appropriate reaction ? That I can not say.

      Overall, I can not tell you if this action from Newfoundland's governement is appropriate or not. What I can tell you is that it may very well be, despite the reaction you expressed in your post.

      Nice to talk with you,

    • Salut M./Mme. Heracles31,

      The $110 million "loan" to Kruger (of which government now does not expect to be repaid) likely negates the amount Kruger may have paid in corporate taxes over most if not more than it's operational time span. Indeed, if saving tax-paying jobs is the issue, why not just bypass Kruger and the depressed global newsprint markets altogether, and dollop out the $110 million in corporate welfare directly to the employees, and save all the legal fees for drawing up the loan terms? Besides, all companies, including Kruger, must pay taxes… it's just the cost of doing business. But that cost is absorbed in a myriad of corporate tax write offs and credits and what not. And then Kruger also owns the Deer Lake generating station to boot, an attractive asset.

      As for the US government using it own "power" to support local business, that's not quite accurate… the USDOC in fact specifically cited the $110 million "loan" in the countervailing action. But the action was not initiated by the USDOC out of the blue as a result of Kruger's "loan", it was initiated in respect of the USDOC's obligations and mandates in support of US industry under the NAFTA, in response to a complaint filed by an American company, North Pacific Paper Company, regarding unfair subsidies to Canadian producers, subsequently asking the U.S. to add duties of 25-50 per cent.

      So the situation may possibly be somewhat more complicated, as you allude.

      But not by much.

    • At Anom 22:10
      As for the US government using it own "power" to support local business, that's not quite accurate…

      That is entirely accurate. Te US government regularly places America first provisions in contracts that limit foreign suppliers and contracts when dealing with infrastructure contracts (the Wynne government of Ontario is now embroiled in a dispute with the state of NY over just that) and especially defence contracts. It was defence department that enable the 25% and 10% tariffs on imported steel and aluminium.

    • To anon 06:43… no, not similar at all… the federal government actually MADE money on its investment in Hibernia, rather than flushing it down the toilet… which is effectively what the NL government has done with taxpayers’ money with regards to propping up a floundering paper-mill operation… see

      From the FP article… “The federal government, which got its equity stake for free but spent $430-million to finish the project’s construction, was paid back in full and in addition has received $1.8-billion in dividends since oil started flowing in 1997 — an average of about $100-million a year.”

      So like I said, not similar at all to the $110M in corporate welfare plus $500K and counting in legal fees, all provided by NL taxpayers of course, the NL government has provided to Kruger so far, with nothing to show for it except an ailing papermill… so no, not similar at all to the fed's investment in Hibernia, an investment of public monies that actually paid off.

      But of course local politicians such as Ball, Byrne and Joyce don’t give a fiddler’s f***K about how much they fritter away on a losing bet such as Kruger, because it’s NOT THEIR OWN MONEY that they’re pissing away, it’s taxpayers’ money. And those cynical SOBs know that they’ll likely get a tidy political return from the injudicious wretches still inclined to vote for them as a result of this reckless “investment” in Kruger. Compliments of NL taxpayers of course… those reliable suckers are always good for the cash, right Dwight?

      To anon 07:18… you’re conflating the wanton and excessive exercise of government “power”… with the obligation of the USDOC to take the appropriate action upon receiving a legitimate complaint from a client American company the USDOC is mandated to serve… specifically, that North Pacific’s ability to compete has been unfairly compromised by the NL government’s subsidies to Kruger, in contravention of the terms of an abiding contract between the US & Canada known as the NAFTA.

      So with regards to the notion of government “power” within the context of this discussion, I would suggest that both you and Heracles31 are comparing apples to oranges.

  14. Today on Thursday the 19th April 2018 the Supreme Court will render its decision on the Gerard Comeau case whereby it will be decided if restrictions on movement of beer across provincial boundaries are unconstitutional or not. I am wondering if this decision will also affect the free movement of fish(NL`s restrictions on processing could end today) dairy (could end the dairy farming and processing today), poultry (is Country Ribben going to survive), spirits, (labour-restrictions such as those with Bull Arm that favor Nlers first)) and yes the transmission of electricity. It could prove to be an interesting day.