So is the Muskrat fat finally in the fire?
We’ll have an inquiry into Muskrat,
he says, and it will even start before the site is deserted. We are working on
the Terms of Reference, he says,
... and this employment contract
mess will be included and, of course, we cannot delay the project.
Opps!
A curious turn of logic. Big
problem – long finger.
Premier – you are on the mark
with the need for a Public Inquiry but you need a road map to get there.
Moreover, Nalcor’s use of thousands
of individual paper contracts has, Nalcor says, created a nearly impenetrable
thicket of paper – contracts in an easily retrievable digital format having
been apparently beyond Nalcor’s world class technical capabilities.
Tackling this pile of paper out
of the gate could develop into a very time consuming sidetrack – something better
covered in Phase Two of any Inquiry perhaps.
Because when you are going
hunting for tigers best not to be distracted by rabbit tracks – particularly
when there are so many of them.
Inclusion of such matters would
certainly bedevil the Terms of Reference drafting process – “protection of individual privacy” legal
arguments would see to that.
No, best to cut to the chase –
The first order of business of any
Muskrat Inquiry must be to address whether the Muskrat Project has been
warped by some sort of serious high level corruption or actionable civil deceit.
And who in a position of Trust
and Power has knowingly participated in or deliberately turned a blind eye to
that situation, if indeed that is what has been going on.
But why think that such could
be the case?
After all, this is a horrible
thought – that this small society could be home to such “world class” organized
crime – with such devastating effect.
No, facing the mere possibility
this may be true does not come easy.
But we simply have to look at
it objectively.
For a start, I think everyone
can accept that those billions of “excess” oil revenues, brought to Provincial
coffers by temporarily sky high oil prices, had to be like the sweetest honey
to people whose stock and trade is theft. So much money in so few newly rich hands.
And we did engage SNC Lavalin
to play a central role in the Muskrat project at a time when they were
definitely going through a “dirty” period.
Indeed, SNC Lavalin has over
the last few years made much of all the measures that the new management team
has taken to clean the company up from the bad old days.
Indeed, they were so bad that
for a period SNC Lavalin was even disqualified from bidding on Canadian Federal
Government contracts which given their political connections was really
something.
Indeed, the two main lads that
Nalcor management were dealing with (SNC Lavalin CEO Pierre Duhaime and SNC
Lavalin VP Riadh ben Aissa) were the very lads fingered as the main corporate
culprits and are still in various states of incarceration.
Their escapades are of direct
interest to us. Sure Aissa for a time was working out of Mount Pearl.
According to La Presse,
Quebec’s foremost French language newspaper, as just one of their corrupt
ventures, SNC Lavalin set up a $56 million bribery fund for two unnamed projects.
They then laundered that cash around the banking world a few times and used $22.5
million to bribe their way into a $1.3 billion McGill University hospital construction
contract in Montreal.
For a rather breathless account
of the adventures of Duhaime and Aissa in Montreal and Libya see this Globe & Mail article.
These lads were definitely
“players” and still had $30 million or so in the Bribe Fund to grease up
Project B which has never been identified.
The possibility that some or
all of that $30 million was used on Muskrat Falls should be covered off in
paragraph 1 of the Terms of Reference.
Because unless the Terms of
Reference state very specifically that SNC Lavalin’s activities are covered, any
time an intervenor or Inquiry lawyer goes near that question, SNC Lavalin’s lawyers
will be objecting and appealing like crazy.
And make no mistake a Judicial
or Public Inquiry will be like that -- long, detailed, tedium punctuated with evidence
invoking sheer public outrage - and crawling with lawyers.
But, of course, without more
evidence than a feeling in the pit of one’s stomach that something may well be very
rotten in the State of Denmark, politically a Ball Government is not likely to
focus on SNC Lavalin in the Terms of Reference based on the notion that dirty
in Montreal could mean dirty in St. John’s – as reasonable as that may sound to
many.
SNC Lavalin is a major
corporate pillar of Quebec with many friends in Ottawa – no - something more
will be needed.
Which brings me to the Horse and
the Cart and their well known proper order.
The Horse, in this case being a
wide ranging, skillfully conducted Forensic Audit and the Cart being an equally
vigorous Public Inquiry.
Because, is not the SNC issue
and how it should be handled but one example out of many which demonstrate that
it is impossible to properly draft Terms of Reference for a Muskrat Public
Inquiry unless you have at least some idea of the range of problems you are
dealing with?
And if this could be a case of
massive fraud or massive civil deceit that situation will become quickly
obvious to any Forensic Auditor worth their salt -- provided they have previous
extensive, hands-on experience with fraud on major construction projects.
NOTE TO PREMIER: Newfoundland has never been through anything
like this before so you need to go outside the Province; best to call Madame
Justice France Charbonneau of the Quebec Superior Court. As head of the recent Charbonneau
Commission into corruption in the Quebec Construction Industry, she knows the
“dirty” version of SNC Lavalin well (especially Duhaime and Aissa); she can, I
am sure, recommend Forensic Auditors with the right background.
 |
| Madam Justice France Charbonneau earned a reputation as a fearless Prosecutor. As Quebec Superior Court Justice, in 2011, she was asked by the Charest Government to head an Inquiry into corruption in Quebec's construction industry. |
But the Premier should not let
the trail grow cold because this will be hard enough anyway and even an interim
report on the possibility of corruption would certainly be helpful to those
drafting the Inquiry’s Terms of Reference.
In other words, a Forensic
Audit first would help focus, not unduly delay, the results of a Public
Inquiry.
Interestingly enough, addressing
clearly the civil deceit possibility may also serve to provide guidance as to
how we might negotiate or litigate our way out of this Muskrat mess at a lower
cost.
Back on May 15, 2017 I posted a
piece on civil deceit in relation to Muskrat on Uncle Gnarley.
My main point was that under
Canadian law (as expressed by the Supreme Court of Canada in the 2014 case of
Bruno Appliance and Furniture against Hryniak), contracts founded on civil (let
alone criminal) deceit are not valid and cannot be enforced.
And that applies, in particular,
to Nalcor’s dealings with Emera over in Halifax where their rate payers are up
in arms that the delay in completing Muskrat is costing them money; it won’t be
long before Emera will be asking Nalcor (us) to start compensating them (ie. another
rate increase for us !).
At the risk of totally putting
you to sleep, at this point I’d suggest you at least flip through my May Uncle
Gnarley post entitled Of Deceit, Emera and Muskrat Madness.
Note that to properly base a
case of civil (as opposed to criminal) deceit, evil intention need not be
proven. So even if Emera was “only” reckless about their cosy arrangements with
Nalcor that could be enough to ground a successful action in civil deceit.
That is, in such a case, the
Province – and you rate/taxpayer - would in great part be off the hook for the
consequences of stopping the project in its tracks – now - something that the
North Spur situation demands anyway.
In other words, if deceit of
any kind were shown to be involved, all the “End of the World” arguments one
hears bandied about re the impact of stopping the Project would be swept away
and the cost of stopping the project would be drastically reduced.
This position rests on the fact
that those projected big “stopping” costs are based on the assumption that we
must pay in full the claims by contractors under the cancellation and penalty
clauses in Nalcor’s many contracts plus perhaps even larger Emera damages.
However according to the
Supreme Court of Canada all these cancellation clauses must meet the test of
reasonableness by industry standards. Emera and any contractor who knew (or was
reckless and should have known) that such penalties had been inflated for
odious purposes would not have a legal leg to stand on.
In summarizing the law in this
area, Judges and Lawyers often quote the Greek philosopher Sophocles who way
back around 420 BC said – Things gained
through unjust fraud are never secure.
The reader is forgiven at this
point for wanting to turn away in disbelief – it all sounds too grim; too much
to contemplate.
But if the Anonymous Engineer
did in fact see people on the Muskrat project deliberately cooking the books to
achieve Project Sanction (and his account has never been refuted by Nalcor or
anybody else in spite of the most widespread dissemination via the Uncle Gnarley Blog), is
it really implausible that someone would also play fast and loose with cancellation
penalties to help make sure the Project was not stopped once started?
No, sorry, but we must bite the
bullet - we need a Forensic Audit first before we rush off into drafting Terms
of Reference for a Public Inquiry.
We need to set out clear and proper
Terms of Reference for our Muskrat Public Inquiry – Terms of Reference fit for the
purpose.
And to do that, we need to know
in particular if we are dealing with “just” another (though hideously massive) Government
“Boondoggle” -- or something altogether more sinister.
This all sounds too impossible to pull off, too traumatic, too earthshaking, just plain too much?
Then what do you think living with
the costs of Muskrat is going to be like if we don’t pull off a Hail Mary pass ?This all sounds too impossible to pull off, too traumatic, too earthshaking, just plain too much?
And by costs, I do not mean
“just” our increased light
bills,
or “just” our increased provincial
debt,
or “just” our future sky high
taxes,
or “just” the population loss,
or “just” our weakness in the
face of every two-bit hustler who will descend to pick us clean,
or “just” the predictable price
that Ottawa will extract when we have to go to them cap in hand to stay afloat.
No, all that to be sure, but I
am also talking about the cost of the loss of our very souls as a people.