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Saturday 11 June 2016


Written By David Vardy

The adjournment of the House of Assembly and the inquiry by the AG into the Nalcor CEO’s retirement benefits should be a springboard for pro-active, revitalized initiatives to chart a new course and to reverse the damage arising from a reactive governance strategy.

When the resignation of the Nalcor CEO was announced on April 20, 2016, I wrote to Nalcor, under ATIPPA, to secure a copy of his severance arrangements and his employment contract. I received this information on May 19, 2016. Since then I have submitted nine other access to information requests on this matter, relating to the payment of over $6 million to the retiring CEO. The most recent reads as follows:

Please provide a list of Nalcor employees covered by employment contracts with severance arrangements modelled on, or similar to, those contained in the contract with former CEO Ed Martin.

David Vardy
As a result of the conflicting information as to whether the CEO resigned voluntarily or was terminated and the ensuing public fury, the government has asked the Auditor General to conduct an inquiry into “the appropriateness of the severance benefits”. 

The benefits in question include a lump sum payment of $4.7 million arising from a supplementary executive retirement plan (SERP), a non-contributory plan which is fully indexed to the consumer price index, a $1.4 million severance payment, eligibility for pension under the public service pension plan, access to an executive car for two years as well as other benefits.

In addition the CEO received large performance bonuses which added to his severance benefits. These bonuses are questionable, in light of Dark NL, the decision of the PUB to rule that certain costs incurred by NL Hydro were not prudently incurred, combined with the fact that Nalcor can provide no final cost estimate for Muskrat Falls and no completion date for the project, 42 months after government’s sanction.

I have also asked for an allocation of the $6 million plus in benefits among the lines of business of Nalcor, including the amount that will be charged to customers of NL Hydro and Newfoundland Power. How much will this retirement package add to our light bills?

Government needs to take a pro-active rather than a reactive approach. The inquiry into the retirement benefits of the Nalcor CEO should not detract from the urgency of a full inquiry by the AG into the Muskrat Falls project opening all contracts and change orders to public scrutiny. Nor should the inquiry into retirement benefits prevent government from taking immediate action to reform the benefits to which Nalcor executive are entitled, including bonus payments, which appear to be paid without regard to performance.

These generous benefits to Nalcor executives are not consistent with the measures taken by government during this financial crisis, one in which our deficit as a share of GDP is 13 times higher than the average provincial deficit of all provinces Will government be seeking to recover the severance payments, given that they are not an “entitlement” under the contract in the event of a voluntary retirement, which is how both the government and the CEO characterized the separation? Must such recovery await the final report of the AG and how long should the people be prepared to wait for such pro-active measures? The inquiry should not justify indecision or paralysis, of which there has been too much.

Now that the House has closed the people will be demanding that government take immediate control of the public policy agenda. Government must take assertive and decisive action to reverse the “entitlement” culture at Nalcor and, more importantly, to make public the latest information on costs, contracts and scheduling at Muskrat Falls.

David Vardy