Monday, 12 May 2014

POLITICAL COVER-UP OR DYSFUNCTIONAL GOVERNMENT?


Premier Tom Marshall says he had no part whatsoever in the decision of the Minister of Transportation and Works, Nick McGrath, to cancel the Humber Valley Paving (HVP) Contract.   He also said he is confident the Minister handled the matter properly.

The Premier is not believable.   

No one should be casual about casting aspersions on the Premier’s integrity.  But if he insists that the public ignore both the historical and the institutional framework within which major governmental decisions are made, taking into account well established limitations on Ministerial latitude, he is inviting expressions of incredulity. 

In order to assess the HVP decision in context, it is important to look at the process of decision making in Government.  On any level, except governmental dysfunction, the Premier’s assertion doesn’t add up.

Why?  The fact that the issue involves a $19 million decision is important; but it isn’t the only reason. 


I can think of five others:

First, by all accounts, it is precedent setting.

Second, it has public policy implications involving the principle of fairness for all Bidders on Government Tenders.  

Third, the issue contains legal implications; HVP had already been granted an extension, without penalty, in consequence of the June 2013 forest fires; the opportunity for a “force majeure” evidently could not be justified.  It was not sought anyway.

Fourth, there is the matter of the money – isn’t there always!  On this there are two critical issues:


A) The Minister unreservedly states that had his officials called the Bonds HVP might have gone bankrupt. Isn’t that a critical point?  What differentiated HVP from any other of the many Companies that had a Bond called?

B) The Government and HVP settled on an amount of compensation for the work HVP had completed on the Trans Labrador Highway Project.  The settlement included an award for aggregates stock piled and for unfinished roadwork.  This is a highly irregular practise which singularly requires scrutiny and verifiable proof that the Government received value for money.   


Fifth, it is impossible to divorce the element of a potential conflict of interest involving the incoming Premier, Frank Coleman. 

Clearly, the issue had multi-dimensional consequences – policy, financial, legal and political.

Indeed, on the political level alone, properly handled the HVP decision might not have been taken by just the Premier or even the Cabinet. Given the involvement of Frank Coleman, his family and associates, the Auditor General might have been asked his opinion, by the Premier, before the release of the Bonds became official, just to give the decision a level of sanitation.

When an inventory of the fall-out from the HVP issue is rendered, it is hard to see why Nick McGrath is still in the Cabinet.  We can draw that conclusion only having weighed the matter on a public policy level. 

We have yet to assess the decision in the context of whether the normal process of governance - the accountability structure - was adhered to.  On this level, the Premier’s position is even less tenable. 

It is standard operating procedure for large Companies to impose administrative and financial controls on executives. Major decisions require reference to a person more senior or to a Board of Directors. 

The process is similar for Ministers of the Crown.

Just imagine that $20 million solo decisions could be rendered in a system where 15 or more Ministers frequently change.  Without reference to oversight groups like the Treasury Board, the Departments of Justice and Finance, programs, regulations and the budgetary process would be in a constant state of disarray.

Notwithstanding periodic instances of insanity (Muskrat Falls), governments, including the Government of Newfoundland and Labrador, are not managed that way.     

The HVP phone call, under normal circumstances, would have been deflected to an Executive Assistant or to officials in the Contract and Tender Division (unless the caller had very significant political cache.) 

Likely, it would either have landed on the Minister’s desk in the form of a letter from the Company’s Owner. Otherwise, if officials ascribed to the request a modicum of justification, it would have received his attention via a written Report (not a verbal one).

That the talks with HVP were undocumented suggests there existed a plan to deliberately avoid a paper trail which would implicate all who were copied.

Based upon my days on the “Hill”, a normal chronology of events would have included a briefing of the Premier by the Minister if only because it had a connection, however moot, with the incoming Premier, Frank Coleman. 

The Premier might decide if the matter should be reviewed by senior Ministers (called the Planning and Priorities Committee) or go directly to Cabinet. 

In either case the Minister would instruct his officials to prepare a written brief containing an analysis of the issue including the reasons Government should dissolve the Contract.
A legal opinion would be sought from the Dept. of Justice.  Its financial implications required a submission to the Treasury Board.
Later, analysis by the Cabinet Secretariat might add to that offered at the Departmental level. A lengthy factum would have found itself on the Cabinet agenda.
If the matter progressed at all, certainly it would have been removed from the Minister’s desk early in the process.   Besides, the current Minister of Transportation and Works is not a heavyweight; he doesn’t get to make important decisions on his own.
At the Federal level, a Minister might make that decision.  But Newfoundland and Labrador is not Ottawa. $19 million is a lot of money for a small provincial government; so all the normal management and accountability mechanisms ought to be employed.    
The Premier’s suggestion that the Minister acted singlehandedly and properly in spite of cost, policy and political implications, defies established practice as well as common sense. The Premier’s remarks constitute political cover. 
Had the Minister acted alone, having broken all the rules of governance, a prudent and responsible Premier would have fired him. 
Nick McGrath is still in Cabinet.  The Premier believes he acted properly.
That can only mean the Premier was a party to the decision in the first place.  
Opposition Parties should have another busy week in Question Period.


3 comments:

  1. As a general comment I do not think it would be good practice for the Government of Newfoundland to put this company out of business. There are however a couple of facts which I am unsure about. 1) Did the minister over-rule the recommendation of his staff? 2) Did the government prior to paying the 60% of the contract value get a list of all the cost incurred by HVP. Did they just only pay for cost of the work done, or did they also pay for a element of profit. They may not call in the bonds, but it would be entirely suspect if there was any profit paid. Was their an audit trail of actual cost. 3) Who the hell is HVP now sold to. How can any company doing work with the province not have it's list of primary shareholders known to the government? Has Danny Williams bought HVP for example? This story stinks, but I think it is more an issue of pure incompetence, rather than corruption. But the Opposition need to help in this evaluation of the 2.

    ReplyDelete
  2. The central question is whether there was a personal benefit obtained by Mr. Coleman or a member of his family.

    The normal practice for any construction bonding company, is to require a personal guarentee from someone prior to supplying a bond. That way, if they pay out, the "owner" will be required to repay them. If the bond was released it's not the company that benefits as much as the guarentors.

    ReplyDelete
  3. The central question may be whether or not Mr. Coleman and his family benefited from this decision, but the overriding issue is that it smacks of unmitigated arrogance, incompetence, and secrecy. That a government of NL, in this day and age, continues to act in such a secretive and painfully arrogant manner is beyond the capacity of words to describe. That the Premier….. while evidently believing that his Minister acted in good faith and with good judgement…... continues to support said Minister, is ample proof of his inability to govern this province. Indeed, the actions of this administration, from the start of their mandate, have been a charade and designed to bamboozle us, primarily on the Muskrat Falls project, and their lack of integrity and decency decreases daily. They are, in some ways, to be pitied in their arrogance but will never be forgiven for the callous manner in which they have systematically gone about destroying the opportunity that existed when oil made the province rich(temporarily). Like the drunken sailor or stupid lottery winner, they spent unabatedly in the intervening years and continue on the same path.

    It is clear that they have no idea of how bad a mess they are leaving the province in…..or do they?? I have to think that they genuinely do not realize their folly…because, if they do, the implications are staggering. To saddle the province with a massive financial debt in order to complete a project that could never be successful is one thing….to do so in a wilful and arrogant manner borders on criminal neglect….and should not go unpunished. That none of them, including those who have crossed the floor of the HOA, has ever questioned the merits of MF, suggests to me that there was, and is, a collective "taking leave of their senses".

    ReplyDelete