$900,000 TO STURGE: NALCOR BOARD AN ECHO OF THE LAST ONE

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. 



Related:
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
prevented.

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,
“Ed’s choice”.

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
care?

It’s only public money, after all!

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.

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23 COMMENTS

    • The whole issue of large compensation packages for public institutions needs an overhaul. Anything over $200,000/yr and any contract with a guaranteed termination bonus exceeding $100,000 should be subject to public debate.

      What is so special about the CFO of Nalcor that requires such a compensation package? Derrick was either a asleep at the wheel or willfully negligent to allow his cronies to plunder the public purse.

      What is so special about the Ed Martin other than he was doing Danny's bidding?

      What is so special about MUN that the president ($469,200) needs to make more than the president of the University of Toronto ($398,737.41)? Does a president really need a car and housing allowance and two years extra pay and benefits worth close to a million when he quits?

      These salaries are paid for by tax payers. As a tax payer, I feel this is an ongoing robbery with is aided and abetted by a corrupt political system.

      How many more people in this province have million dollar bonuses waiting for them? Do any of them deserve it?

    • They "NALCOR" can't come to an agreement on contract negotiations that's been going on for over 2 years but they can fire this guy for reasons unexplained and give him $900,000 to go away. Someone needs to launch an inquiry I think.

    • Great article Des! Time for the Nalcor gang to be ousted…I've seen the nepotistic and patronage attitudes first hand.
      Dig into Menihek dam.. its Nalcors party spot! They send helicopter loads of bigwigs including engineers,managers etc up there for big parties and double dip on the per diem allotments…small fish in the big sea but it adds up.
      Keep digging!!

  1. A timely and well written fleshing out of my comment (below) on David Vardy's November 7th article:–

    Maurice Adams 16 November 2019 at 15:06

    Letting Sturge go — now— supposedly without cause, is a way to preempt what Leblanc's report may say —, i.e., that Sturge failed miserably in his financial duties/obligations.

    By acting now, Nalcor can argue that it had no reason (ostensibly) to withold Sturge's $900 K.

    As I said when Stan was appointed — Ball merely changed horses.

    Pile it on boys. Why not keep following the PC government's mantra and keep on screwing rate/taxpayers. UNQUOTE

    I would also add this excerpt from my even earlier November 7th comment:–

    Political expediency, loyalty and benefit to the few, not a clear and substantial sense of duty to the people and the province, drove the sanctioning of Muskrat.

    What evidence is there that the top-down political/power structure that brought us Muskrat Falls has changed?

    The system has not changed. Unquote.

    So it is not just (or perhaps even primarily) the Nalcor Board that is at fault — it is our elected officials and the party hack system that they serve.

  2. have you ever known a government who were not robbers of the public purse you will not hear any outcry from the opposing parties in the house of assembly because they are just waiting their turn to get their hands on the purse strings its an old boys group where the rule is you scratch my back and when your turn comes I,ll scratch yours

    • https://www.heritage.nf.ca/articles/politics/riot-april-05-1932.php

      Every window of the Colonial Building is glassless: the Prime Minister practically a refugee, the law of enforcement of the city turned over to the authority of ex-service men, as the result of discord which marked the culmination of weeks of protest and dissatisfaction with maladministration of the government. A huge demonstration of citizens in peaceful and law abiding protest yesterday afternoon witnessed a sudden transition, through tactless management by those in authority, to an outbreak of violence that was understandable if it could not be condoned. …

  3. I was looking through the spending problem outlined in the presentation linked below and found this unusual slide. Anyone here hear Doug May's talk ? I didn't and I am curious as the the ungovernable part.

    "In June 2017, Doug May gave a talk at the CEA meetings in NS on Newfoundland’s Economic Future?

    As the Ungovernable Staples Colony. Ungovernable:1-2 degrees of separation uncontrollable political resistance led by local elites to any reduction in local spending and/or delivery of services.

    https://www.mun.ca/econ/about/NL_Provincial_Debt.pdf

    • "Local Elites", who are they? Where are they? Are they in hiding? Do they live next door? Are they conspicuous? Do they have names? Does anyone know their names? Are they few in numbers? Are there hundreds of them? Are they white, black or brown? Can they be identified? The govt was able to publish the sunshine list, over a hundred thousand per year, not really rich if they pay normal taxes. So maybe we need the moonshine list. Or the ELITE LIST. Would Dwight or Ches be among them? Probably not. Are they million ears, billionaires, multi millionaires. Ungovernable 1-2 degrees of separation, uncontrollable political resistance led by local elites. Does Halifax, have any. How about Montreal, Toronto, Calgary or Vancouver, etc. Or are they only local termites ask average Joe.

    • Joe, they most likely are represented on the Boards of the University and Board of Trade. You know, the very people who screen out us "Radicals for Change", and who are left off payrolls, with "No fault" Contract clauses, guaranteeing Bonuses like NALCOR mgmt oversee.

    • Joe, I agree that both the Boards of MUN and Board of Trade, and some likely at the 500 a plate Ball dinner, and too at law firms.
      I would suggest some names :Ed Roberts, Clyde Wells, Stan Marshall, Danny Williams and brother Tom, many others, yes and Ches and Ball likely. Recall Roberts "I can't comment, I'm acting". So many elites under the cone of silence, they benefit form the public tit, as the province sinks.
      Winston

    • AJ, you question the role and existence of local elites and their role. This an important issue.
      I did a bit of research and reach some conclusions, as to this as the impact of our situation, and leading to the boondoggle etc.

      Here's my sources of general understanding as to "elites"

      1. Google Elite Theory, this gives a history of elite theory from 1848 to present. last item there. I found most relevant > theory of Thomas Ferguson.
      2. Then Google "Investment Theory of party competition" this is the political theory of Thomas Ferguson(the role of wealthy investors, and the role of ordinary voters, etc).
      Maurice Adams has often mentioned that change of PC to Liberal and change of Ed Martin to Stan Marshall is merely a change of horses, and we see the same pattern of Sturge, like Ed Martin, both incompetent but getting the golden handshake, as this present piece on UG shows.
      3. Google "Thomas Ferguson" : has details of his book the Golden Rule, : The Investment Theory of Party Competition and the Logic of Money -driven political systems.
      4.Google " Manufacturing Consent" by Noam Chomsky, : The political economy of the mass media. …..why the main media here fails the pubic, often commented on UG, and it real.

      Seems to explain everything, or most everything, why the public was misled and voted for MFs.
      I recommend this to PENG2 and others.
      MA has studied political science ? Perhaps he could review these sources and write a piece for UG? Why all his letters to the Telegram had little impact.

      Winston Adams

    • Think you are reading me wrong Winston, or just confirming what you already know. Yes, I believe we have local elites, and no doubt for all the other provinces. Maybe the question is do we have a disproportionate number and do they have a greater effect on our politics and governance. I don't really know. So my questions were if they do have a great or greater effect then at least we should know if they are few in numbers or in the hundreds. So was suggesting a list be compiled, similar to the sunshine list. Otherwise, even if local elites exist and affect our goverence then we should know, and not just figments of our imagination or inundo that has no basis in fact. So not really agreeing or disagreeing until I see the facts, and a list might be a starting point, since we have a sunshine list, why not an elite list and how many control our political and governance, like muskrat or the election of political parties. Don't think Sturge might be one, but just a benificier of that system as it exist. Joe blow.

  4. Kudos to Uncle Gnarley!

    I just watched your CBC interview with Anthony Germaine.

    Although I did get the feeling that Germaine wanted your information kept brief.

    We can squeeze this in before the weather?

    Please keep up the great work!