GILBERT BENNETT AND THE CONSEQUENCES OF CRONYISM

The take down of Gilbert Bennett by the Commission of Inquiry began in the opening days when he was no longer under the protection of either Danny Williams or Kathy Dunderdale.

“I…spent some time with Cable Atlantic”, Bennett told Commissioner Richard LeBlanc, perhaps not needing to add that it was Danny Williams’ company. “I was approached by (Dean) MacDonald directly (Nalcor Board Chair)” he said.

“And was this a competitive process?”, Inquiry Co-Counsel Kate O’Brien, asked. Replied Bennett, “I don’t know what other process Hydro had to look for the position.” “So…there wasn’t a posting for this position?”, O’Brien followed up. Bennett replied “I didn’t see a posting…”

Her next line of questioning was vintage O’Brien, a no-nonsense lawyer (now on the Court of Appeal). “Now just to be clear, so at that time did you have any hydroelectric experience at all? O’Brien asked the sullen Nalcor Second-In-Command. He replied: “In a significant way? No.”

Gilbert Bennett was appointed NL Hydro Vice-President and, upon formation of Nalcor Energy Inc., became Vice-President responsible for the Muskrat Falls Project.

When Commissioner Richard LeBlanc reported in 2019, he found that Bennett had employed deceitful and unethical practices – “unprincipled” was the Inquiry Commissioner’s word – in conjunction with then CEO Ed Martin and the Project Management Team, “to conceal information that would undermine the business case” for Muskrat Falls. He stated that practices were visited upon “the public…GNL and…Nalcor’s board of directors”. Enabling by GNL politicians is another story.

The Commissioner also found that Bennett and co. engaged in narrowing the terms of reference of Consultants to “forestall independent review”, following which he and others interfered with the conclusions of those consultants, edited their Reports, and altogether engaged in a process to “systematically …overstate the Project benefits, understate its cost and disregard alternatives.”

If any one thing is certain, had he been any other public servant, they would have been drubbed out of their position, visited by the police, and that would have been just a beginning.  

Bennett was permitted to stay in the job, despite it being clear to the Government, and to everyone else, that his decisions along with those of his cohorts led to a debacle that now threatens the very economic survival of the province.

Recently, he was allowed to leave Hydro complete with a $1 million golden handshake. Reason for leaving? “His job is done”, said NL Hydro.

In effect, NL Hydro declared his work honourable and and competently completed; “job done” presumably means that he had run out of things to do.

$1 million is not bad a farewell for a fellow whose work performance represents one of the principal reasons why a $17 million Public Inquiry was needed, or one who failed so badly in his job that, without admitting the fact, NL Hydro is still trying to define the mess that he (and others) has left behind.

If the public isn’t disturbed by the failure of the Dwight Ball and Andrew Furey Administrations to act in this case, the Tory Administrations of Danny Williams, Kathy Dunderdale, Tom Marshall and Paul Davis even far more culpable, you need not worry: The Province won’t survive our stewardship.

“Job done” by Mr. Bennett means management of a public enterprise sanctioned on the dasis of project estimates of $7.4 billion, which doubled to roughly $15 billion (possibly higher if the figure was independently audited based on Nalcor’s original assumptions).

He leaves us with a project that doesn’t work because it was badly managed; it is not suited to the Island grid, the Labrador Island Link is both under designed and unreliable; other major components of the system at Soldier’s Pond are seriously faulty, too.

“Job done” represents a national rescue package, which while inadequate and misrepresented, too, was necessary, nevertheless, to forestall ratepayers freezing in the dark under the weight of impossible power rates, and to avoid default on the Muskrat Falls debt.

“Rate mitigation” includes a $3.2 billion Hibernia Net Profits Interest (NPI). The Muskrat Falls debt has been “reprofiled” because Hydro can’t afford to make its Sinking Fund obligations; an additional $1 billion Federal Guaranteed loan has been raised to underwrite a revenue shortfall, which is estimated to run out in 6.5 years, all of which extends the term of repayment and the size of the Muskrat Falls debt.

More serious problems await as the original Bonds are replaced with new debt at higher interest rates.

What else does “job done” represent? NL Hydro’s Auditors will eventually degrade the book value of the Muskrat Falls project by billions of dollars, ensuring that valuation is based on appropriate accounting standards. In other words, it will be valued not on what has been spent on the project to date, but on the sum that the project’s meagre revenue generation can support.

“Job done” represents years of potential litigation. Nova Scotia’s UARB, the equivalent of our PUB, is watching the interruptions occurring in the flow of power contracted to that Province by Nalcor/Hydro. If Nova Scotia coal plants remain in operation due to Hydro’s failure to perform, Emera may be left with a doubtful asset in the $1.57 billion Maritime Link. More disruptions may cause the Agency to decide that Nova Scotia ratepayers should no longer support an unreliable electrical service. Emera Energy has just under $600 million at risk in the LIL – another problem for Hydro when the subsidies run out. (There are many monuments to greed and stupidity in the Muskrat Falls project: Emera and the UARB have their share to answer for, too.)

On Friday, November 4th Hydro informs that only a third of the rated capacity of the project can be delivered – 315 MW of the rated 927 MW facility, barely enough to supply the Nova Scotia Block – because shoddily built synchronous condensers – the rotating mass that regulates voltage – won’t work.

Only a few weeks ago, Hydro announced it was seeking PUB approval for another $0.5 billion to helping make the system more reliable – absent any certainty that other features of the “mess” will ever be corrected.

Mr. Bennett shares the distinction, together with Ed Martin, Paul Harrington and the Williams and Dunderdale Governments, of having written the greatest “Newfie Joke” in history. Problem is, as much as Bennett and his cohorts will wear the shame of Muskrat Falls, the public will have to pay for it.

Gilbert Bennett did not deserve to leave Hydro with a $1 million handshake, any more than did CEO Ed Martin with $1.4 million, and V-P Derrick Sturge with $900,000. A responsible Government would have offered them the address of the Supreme Court and suggested that they plead their case for severance in front of a Judge.

What has occurred stems from cronyism – the reward for being a protégé of Danny Williams. Giving proof to how this Province operates, Liberals and Tories alike bend to the former Premier. If you are an ordinary public servant, you will be denied such deference.

Gilbert Bennett is gone. We should worry about the legacy he and the others have left – which we will never be able to pay for.

Even more, we should worry about our collective failure to express outrage over this travesty of governance.

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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