The public
is constantly bombarded with political "spin" as governments,
institutions, politicians, and those who profit in one way or another by
supporting those views, attempt to win the hearts and minds of the
ill-informed.
But enormous
sums are being wasted at Nalcor, and "spin" can't mask a project that
has doubled in cost. That has been confirmed by a multitude of engineers.
The bevy of
emails that arrive in my Inbox — from professional engineers — describe the
problems in detail.
For me,
having followed years of blather from the likes of Ed Martin, Gil Bennett, and
politicians too, those engineers counter their "BS" in its many
forms.
Mismanagement
rankles the best engineers; they don't want an unsuccessful project appearing
on their resumes. Besides, they resent being a part of something that is
causing the province financial ruin when they know that bad politics,
misinformation and contrived assumptions were merely precursors to a mismanaged
project.
And while
poorly-written contracts, ill-chosen managers, incompetence, and inexperience
all take their toll, no problem is as offensive as conflicts of interest. Many
professional engineers believe the crown corporation is rife with them.
Concerned
Newfoundlander and Professional Engineer (who published on this Blog on January
12, 2016) referred to “conflicts of interest” in his "Open Letter" to
Bernard Coffey, Clerk of the Executive Council.
Another
engineer, in an email, drew attention to the problem of “nepotism and cronyism”
in Nalcor's recruitment practices.
It deserves
attention now, because the issue has been raised in emails and other
communications with a frequency that I find disturbing.
The problems
arise from two sources.
First,
Nalcor permits many of its senior project managers to be employed via their
private holding companies. The holding companies provide cover for huge
compensation packages awarded by the project management team. The amounts and
their recipients are shielded from public view under ATIPPA rules even though
some suggest the compensation packages would make CEO Stan Marshall seem
substantially underpaid.
A second area where large sums of money are involved
relates to the employment of recruitment agencies. Nalcor has a preferred list of companies who
supply Muskrat with professional hires. A recent release of documentation by
Nalcor, in response to a third party request under ATIPPA, suggests others — in addition to those who have contacted me — share those concerns.
States Nalcor:
In other
words, Nalcor claims it has no relationship with those hires except that of
paymaster. Of course, the relationship is far stronger in reality, and
especially if a conflict influenced the hire or the choice of recruiting
agency.
That is a
big concern for some. How would we know of the conflict anyway, unless some
hires report the problem? And, anyway, under ATIPPA the recipient and the level
of remuneration are hidden from public scrutiny. Nalcor confirms, in its ATIPPA
reply:
A recent
phone call from a Professional Engineer informed me that some personnel are
"directed" by Nalcor to recruitment agencies. That struck me as odd.
After all, recruitment agencies are paid to recruit — not to be the easy
beneficiaries of big fees.
Finder’s
fees for recruiting and screening for a specific skill-set are the raison
d'etre of the recruitment business. The companies also claim a “cut” of the
salary of each hire — for each day of their employ. A megaproject is a magnet
of revenue opportunity.
Appendix E
(below), copied from Nalcor's reply to the ATIPPA request mentioned earlier,
contains the number of hires via recruitment agencies 2011 to 2015.
When one
considers that the "Day Rate" (see Exhibit below) is as high as
$1,938 and that rates in excess of $1,000 per day are common, it is obvious
that recruitment services on the Muskrat Falls project involves fees totalling
millions of dollars suggests that the activity deserves diligent monitoring for
potential conflicts.
One Muskrat
engineer recently suggested that the recruitment agency's compensation is in
the range of 15-25% of the amount of total compensation paid to each hire.
Another claimed that his recruiter actually got 25-30% — noting that not all
recruitment firms are compensated equally, as personal relationships between
Nalcor and the recruiter can result in a higher cut for the latter.
This Blogger
cannot verify the veracity of those claims. But when, in yet another email, a
Professional Engineer contends that, within Nalcor, “nepotism is rampant” —
including with respect to recruitment agencies — the allegation cannot be
ignored.
Nalcor has
dealt with those allegations before.
Among the
items of information sought in the ATIPPA request is this one:
Nalcor
provided this response:
:Nalcor's
Internal Audit Department was evidently dealing with an anonymous complaint
made in 2014 claiming "unethical and/or fraudulent hiring practices"
though the writer was "not personally aware of the legality of these
claims...".
Nalcor's
summary of the facts includes this assertion
To clarify,
this complaint did not apply to a traditional “head hunter” but to one of those
opaque and private corporations alleged to have been acting as a recruiter.
Nalcor's Internal Audit, which wound up on 18 February 2016, evidently
dismissed the claim as unsupported. The Internal Auditor concluded: "LCP
Human Resources, which manages the recruiting function, is operating with [I
assume the word should have been "within"] a sound control
environment".
The
information obtained under ATIPPA also confirmed that Nalcor investigated a
second case in 2014 — involving a recruiting firm. In Nalcor's summary of the
facts of the case, after an internal investigation had been conducted, the
auditor confirmed "there was some merit to the complaint and steps were
immediately taken to rectify the situation".
Nalcor is
clearly aware of potential conflicts, having investigated at least two. But the
issue has not gone away. Several engineers believe that conflicts still exist -
that some agencies are favoured. They assert that the only reason the issue has
not become public is that complainants risk losing their jobs.
Perhaps this
is an introductory field for the new Nalcor Board of Directors as they try to
find their feet amidst a plethora of problems that have become Muskrat's
insignia. Certainly, they must know that conflicts of interest are among the
most corrosive - because they undermine morale in any office or on any work site.
Had the
government established an “oversight committee” — one that is independent and
that had earned the public trust — the engineers writing to the Uncle Gnarley
Blog might have been willing to share their experiences and concerns with the
Oversight Committee first. No worker who reports such concerns, whether
professional engineer or from some other profession, wants to be considered an
outlier or a malcontent.
Besides, the
low-morale environment under which Nalcor has long suffered might have been far
different — possibly one in which workers believed they could share confidences
with senior management and make important personal contributions beyond their
professional skills. Now, there is only secrecy and reminders of the
consequences of talking.
And my Inbox
proves how well that regime is working.
