Guest Post by David Vardy
Nalcor and government officials transgressed against the law or have they
simply neglected their duty to serve the province, notwithstanding the
consequences of their actions? That is the question.
7 of the terms of reference of the Muskrat Falls Inquiry reads as follows:
commission of inquiry shall not express any conclusion or recommendation
regarding the civil or criminal responsibility of any person or organization.”
suggests that any action based on legal transgressions must begin outside of
the Inquiry. As the Inquiry progresses through its second phase there may be
evidence which will point clearly to violations of civil and/or criminal law.
The question now is whether sufficient information has been compiled to
determine what recourse the people of the province have as a result of the
injury and damage to the public good.
Premier Kathy Dunderdale boasted that Muskrat Falls had more review than any
other project. Even this were true, which is doubtful, should the assertion
include “independent” reviews manipulated and edited by public officials to
achieve a predetermined outcome?
to build Lower Churchill
Energy Plan affirms “a plan to develop the Lower Churchill. The evidence
emerging from the hearing is that there was a determination to undertake either
Gull Island or Muskrat Falls. To support
this plan demand forecasts were exaggerated and the opportunity afforded by
conservation and demand management programs and other alternatives were
dismissed. Up to 2010 most of the focus was on Gull Island either for sale west
or to attract energy intensive industry such as aluminum. In 2010 the attention
of government shifted to Muskrat Falls as part of a deal involving the Maritime
Link to create an Anglo-Saxon Route which had up to then been deemed
uneconomic. Muskrat Falls was driven not by demand for electric power but as
part of a geo-political strategy to bypass Quebec and to seek redress from the injustice
of the Upper Churchill. Without growing demand the replacement of Holyrood was
used to justify the cost of Muskrat Falls.
have we learned from the Muskrat Falls Inquiry? The Joint Review Panel (JRP)
told us they were not convinced that the project had a viable business case.
They called for an independent review of the financial viability of the
project. Sadly this fell on deaf ears.
Stephen Bruneau made a strong case for natural gas. Government retained Ziff
Consulting to take a critical review. Nalcor officials took control and ensured
that the Ziff report strongly rebutted natural gas as an alternative to Muskrat
Falls. This undue influence exercised by Nalcor came out clearly in the
examination of Nalcor witnesses. Wood Mackenzie did another study on natural
gas and its discussion on liquefied natural gas was removed on the direction of
the Minister of Natural Resources.
were commissioned by Nalcor to give their seal of approval. They reported in
2011 when only DG2 cost estimates were available, based on less than 10% of the
PUB was asked to conduct a review, one whose terms of reference were carefully
contrived to prevent the Board from examining all options. They too were given
only preliminary cost estimates and they were denied additional time in order
to access more refined cost estimates.
pressures to intimidate the Board they held fast to their independence,
concluding that the evidence presented to them did not allow them to reach a
MHI, the PUB’s consultant, was engaged to review the project and to confirm
that it was the “least cost option”. They were given access to the later DG3
cost estimates based on more engineering design. They were denied access to the
risk report prepared by Westney which had recommended inclusion of $500 million
in strategic risk. They were not asked to review the business case. Officials
consciously intruded into the editing of the MHI report, which was touted both
by Nalcor and the Government as the definitive endorsement of the wisdom of
sanctioning the project.
Estimation were engaged to review the cost estimates but they raised questions
about the risk assessment. They never completed their report for Nalcor despite
the fact that Nalcor quoted positive comments from a draft report written by
John Hollman and cited it out of context to pretend that the cost estimates
were “best in class”. Validation
Estimating called for a risk factor higher than a P50 which would have raised
the cost estimates and Nalcor did not want to hear this criticism of their work.
Consulting CEO and owner Richard Westney told the Inquiry that Nalcor should
have used a P75 cost estimate for contingent and strategic risk and that both
should have been included in the estimate. This would have increased cost by
Grant Thornton forensic audit relates how a group of experts was convened to
undertake an expedited Independent Project Review (IPR) within the time frame
of a week and given selected files by Nalcor personnel. They recommended that
strategic risk be included in the final project cost. Nalcor personnel
attempted to edit their report so that it would seek “recognition” of strategic
risk rather than “inclusion” of the $500 million within the cost estimate. The
group resisted this attempt to influence their independent report.
the process there were repeated efforts to edit documents and to remove
anything negative about the project and to understate the risks. In its phase 2
report Grant Thornton identified numerous efforts by Nalcor to edit reports
from the Independent Engineer to put a more positive spin on the IE’s
observation that contingency reserves were too low.
to Finance Minister Jim Flaherty
independent review which the Joint Review Panel called for never happened,
despite the great profusion of documents relied upon by Premier Dunderdale and
others as assurances that the government had done its due diligence. In point
of fact they did not allow an independent review to be conducted, nor did the
federal government see fit to listen to the advice we gave in a letter signed
by Richard Cashin, Roger Grimes, Dr. John Collins, Cabot Martin, Ron Penney and
the undersigned to the Federal Finance Minister calling for a “full and
transparent” before the federal loan guarantee was given.
picture is emerging of contrived cost estimates and manipulation of
“independent” reports by officials and Ministers. The people of the province
were deliberately misled. At what stage must citizens take legal action to
ensure that those who attempted to mislead the public are brought to justice?
information is withheld and independent reports are edited, manipulated and
distorted to achieve a given end are there sanctions which can be invoked other
than penalizing the governing party at the ballot box? Processes have been
subverted and normal checks and balance overruled. The effect has been to
increase the risk of injury to the public good. This has led to an enormous
financial cost to the people of the province.
it fair that the perpetrators of these damaging acts are not held responsible?
Is there any way to hold those who exposed the province to these huge losses
and environmental damages to account and to make them financially responsible?
These are fundamental questions especially for those who believe that the
Inquiry should be about more than the chronicling of irresponsible behavior by
both elected and non-elected officials. It is true that if the project had been
aborted the Lower Churchill Project group would have had to fold its tents. They
had an interest in ramping up a Lower Churchill Project, whether it be Muskrat
or Gull. The Inquiry has yet to hear evidence that those officials personally
benefitted from their actions other than as paid public employees and
there is no smoking gun pointing at criminal behavior there is clearly evidence
that the norms of due diligence and best practices were overruled. Fraud is
defined as wrongful or criminal deception intended to result in financial or
personal gain. It appears that the Inquiry has no mandate to deal with the
issue of civil or criminal responsibility. If not the Inquiry then who will
take this up? We invite readers to offer their opinions as to how those
responsible can be brought to justice, given that this matter has been excluded
from the Inquiry’s terms of reference.