It isn’t hard to tell that it is public money about which the
Nalcor Board of Directors is so cavalier, not their own.
The previous Board gave former Nalcor CEO Ed Martin $1.38 million
severance even after having resigned for “personal” reasons, “to spend more
time with his family.” Fired “without cause” soon replaced the well-worn excuse
of the empathetic family man booted out the corporate door. The Board, caring
not a whit about Mr. Martin’s behaviour — or record — as CEO, used the
contortions of legal camouflage to justify the decision; even Premier Ball
allowed that Martin was awarded severance in accordance with Nalcor’s
contractual obligations, until this Blog caught him out in the lie.
Neither the Premier nor the new Nalcor Board of Directors have
learned anything from that tawdry spectacle, which played out in 2016. That the
public is left to grapple with a $12.7 billion disgrace is… well, their problem.
|Nalcor V-P and CFO Derrick Sturge|
Vice-President and CFO Derrick Sturge’s send-off of $900,000
severance is justified in the same fashion afforded Ed Martin. Nalcor’s Press
Release stated that “Nalcor Energy has severed [Sturge’s] contract without cause and is obligated to
fulfil the terms of Mr. Sturge’s contract [making him] legally entitled to a compensation package of approximately
$900,000” (emphasis added).
The neatly written Press Release is quintessentially “Nalcor”.
“Legally obligated” to pay the $900, 000 gives no deference to an impecunious
public. Neither does it offer a single reason why Nalcor was “legally
obligated”; it makes no effort, notwithstanding Sturge’s self-indictment at the
Muskrat Falls Inquiry, to assure the public if anyone considered whether Mr. Sturge
had met “his” legal obligations.
As if Nalcor has a single reason to be believed, the use of
the words “legally obligated” constitutes little more than advice to the media that
the severance issue is not a matter for public discussion. Perhaps that is why
the only comments offered constituted the usual carping on Twitter. Like
Muskrat itself, Nalcor expects the taxpaying dopes to just accept $5 billion, $6.2
billion, $7.9 billion, or whatever handy figure or explanation (however untruthful)
fits the circumstance.
That, of course, is what we would expect from them. But the
public, possibly expecting that the new Board of Directors was not as bad or as
deferential as the old one, has reason to be disappointed again.
PREMIER NOT TELLING TRUTH ABOUT SEVERANCE DEAL WITH ED MARTIN
The incredulity of their laxity is found in a single
fundamental question. It is this: was Mr. Sturge just some mid-level accountant
having neither the role nor the responsibility of a senior officer of the
Corporation? Of course, the answer is “no”.
Mr. Sturge was a Vice-President and the Chief Financial
Officer. In that position, he had duties that were “fiduciary” — his
professional training would teach him what it means. He was responsible for
assessing Nalcor’s financial condition, including the “risk” to which it was
exposed by Muskrat. He had a duty to ensure that he was in possession of solid —
not fabricated — information, both to understand and to assess that risk (and
all aspects of the business plan) including as the risk changed. He had a
responsibility to report his findings — minimally — to the CEO and to the
Finance Committee of the Board. Did Mr. Sturge perform that most fundamental duty
as an Officer of Nalcor Energy Inc.?
Are we talking about Derrick Sturge — the same CFO who admitted
to the Inquiry Commissioner, under Oath, that he did not keep himself “in the
loop” regarding project costs for Muskrat Falls?
Is this not the same Mr. Sturge who admitted that he wasn’t
even in the game at the very time when a Chief Financial Officer gets to play a
key role: “Financial Close”? As it turns out, that was when he was supposed to know
that Muskrat was over budget by $300 million, and had he been “in the loop” —
which was his duty — he might have (however unlikely it may be) advised turning
back or putting the Project on pause, pending further assessment. In short, Mr.
Sturge missed a critical decision point when the larger debacle might have been
Sturge testified at the Inquiry on March 27, 2019 that an
independent engineer’s report mentioning $6.5 billion “never resonated” with
him. According to The Telegram’s report of his evidence that day, he told the
Commissioner that he may not have even read the drafts of the report. A CFO
with whom $3oo million doesn’t resonate!
Like the current Board — and the last one — Mr. Sturge
probably thought it was only public money, too.
Mr. Sturge might have requited himself better on the Witness
Stand had he indicated that he warned Ed Martin verbally or in writing of the
early deterioration in the Project’s finances and of the need for a complete
review. As a CFO, he ought to have been able to show proof of his concern and
his diligence. But, for him, even as to who should be informed it was, he said,
Knowing this, the Nalcor Board of Directors (with Government’s
support) still saw fit to hand over to Mr. Sturge $900,000 of public money. Accordingly,
this decision is less a reflection on Sturge as it is on the current Board of
Directors. This was their decision, not his.
The money not being their own, it probably never occurred to
them — as in the case of the prior Board, who gave Ed Martin $1.38 million — to
say to Mr. Sturge: ‘take us to Court, let a Judge decide if you have lived up
to the terms of your contract.’
No one will be surprised that Nalcor will take every
opportunity to relieve current and former senior management from responsibility
for the debacle which they devised. That this situation will be
permitted to occur is due not only to another weak Board of Directors but to
the unfortunate reality that the Province has no political leadership either.
A wimpy Ball Administration contrasts only with a wimpy
Opposition and, in the case of the Tories, a complicit one at that.
Hence the public can expect similar severance packages to be
doled out, not just to Ed Martin and Derrick Sturge, but to Gilbert Bennett and
Paul Harrington and others, too.
Particularly offensive is the Nalcor Board’s decision to not
even wait for the Report of the Commission of Inquiry, which is only weeks away.
$900,000, $1.38 billion or $12.7 billion? Why should anyone
It’s only public money, after all!