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Monday 24 December 2018

DUNDERDALE DROPS TWO BOMBSHELLS ON INQUIRY

Readers of the Uncle Gnarley blog have probably heard enough of the Muskrat narrative since the Inquiry began in September. Likely, most have broken out the Christmas cheer — including the legal weed — which is sensible, as long as the car keys are buried.  Sobriety may not be good for your health right now. 

In what other way, I wonder, could the drip-drip-drip of mind-numbing testimony extracted by Commission Co-Counsel be suffered by a decent citizenry, however necessary? 

Fortuitously, O’Brien and Learmonth have been gifted the skills of interrogation, each one displaying the painstaking artistry of the dentist’s drill. It is a useful tool, too, so many of their subjects having exhibited excessively large memory cavities. Poor mental dentition was repeatedly the politicians’ escape. Ignorance of cavernous proportions was also on display, overlain with unbridled hubris. Ed Martin even elicited from the Commissioner an unscheduled interim report — actually a tongue-lashing — which described him as “rude”, though I expect an even harsher assessment awaits.
Co-counsels’ artful dentistry aside, for a public still suffering bewilderment that Danny was little more than a pamphleteer as other politicians and bureaucrats were reckless or just plain dumb, the outpouring of proof that the Muskrat narrative was contrived has the capacity to shake our faith in parliamentary democracy.


Last week alone, two bombshells were dropped from the perch of an unrepentant, though less vituperative, former Premier Kathy Dunderdale.
Photo Credit: Chronicle Herald
The first allowed that, at sanction, she believed that the Federal Loan Guarantee (FLG) had been locked down when it was not. She had based this conclusion, she said, on assurances that Sanction of the Maritime Link by the UARB — the equivalent of our PUB — would not be necessary.
Even in Dunderdale’s world, where the concept of risk is neither fully understood nor accounted for, such misapprehension is unforgivable because the public ordinarily expects that even the dullest politician will be propped up by legal and other technical advisors. In this case, her testimony confirms that not one of her Cabinet colleagues — not even Jerome Kennedy, the prolific note-taker who exhibited neither leadership nor usefulness — was sufficiently alert to prevent such a fundamental error. In short, Dunderdale’s testimony is hard to believe.

The seriousness of the issue is magnified by the fact that the former Premier testified that she would not have sanctioned Muskrat absent the FLG. Yet Sanction allowed contracts worth hundreds of millions of dollars to be issued: exactly what Nalcor wanted to ensure that there would be no going back.
Dunderdale was on the stand saying, “… Here we are and this issue is not resolved… There was nothing to prepare me for this information.”
I’m not buying what Dunderdale is selling!

All the Premier had to do was read the Term Sheet which described the conditions under which the FLG would be granted.
Section 3 (particularly 3e) requires UARB approval before Sanction of the Maritime Link can take place. In addition, Section 3.5A (vii) of the Federal Loan Guarantee agreement of November 30, 2012 requires sanction of all projects, “including the Maritime Link,” as a condition precedent.
Accordingly, she knew that Emera’s sanction was dependent on the UARB. But Dunderdale thought NS Premier Darrell Dexter was going to neutralize the UARB, and there is evidence before the Inquiry which establishes this expectation. It follows that Dexter was also expected to change the conditions of the Term Sheet.  But in contrast to Nalcor’s and Dunderdale’s disrespect for the PUB, Premier Dexter had no such latitude or intention. He had merely suckered a bunch of novices on the path of Muskrat — regardless of the cost.

That is bad enough, but the admission of premature Sanction is also an example of massive dysfunction by the Government. Little wonder that Sanction was dubbed a “charade” by critics. Doubtless, Ed Martin knew the difference. Perhaps it is not the least bit strange that there is no record of Emera’s undertaking; there is only one of NL’s expectation.

To add insult to injury, the cost of the Energy Access Agreement (EAA) that the UARB later extracted from NL was an estimated $700 million – $1.4 billion. It requires, among other benefits, an average annual offer to NS of 1.2 TWh of electricity until 2041. The deal jeopardizes the ability of the Province to provide this power to NL industry or to Labrador mining as “firm” energy unless we are prepared to underwrite the development of additional sources.  
As David Vardy writes, “we were snookered by NS at every turn. We gave them more than 20% of the power in value terms, agreeing to supply during our own peak demand. We left the strategic risk out of the cost estimate allowing NS to pay 20% of grossly underestimated costs. NS did not share our overruns but we had to share theirs. We gave them a prime investment in the LIL at a guaranteed return. We neutralized our PUB and empowered the UARB to make the final decision.”

Vardy is right, except on that account we have no one to blame but ourselves.
The second bombshell dropped by Dunderdale was her assertion that Ed Martin told her in casual conversation that the worst-case scenario for Muskrat overruns was $500 million. While $500 million pales against the $5.3 billion of overruns now racked up, the revelation is disturbing because it makes a mockery of the importance of accountability as well as the processes of decision-making. In contrast to the former Premier’s recollection, Jerome Kennedy testified that he believed that $6.2 billion (plus financing costs) was a hard number.
How does even the potential for overruns of a half-billion dollars not make it to the Cabinet table? What kind of Premier discusses such a huge sum of money at the water cooler without demanding from the then-CEO a formal submission to Cabinet detailing the admission? And on what basis does Dunderdale think the disclosure did not warrant telling the public?   
I will give the last word to David Vardy:
“If there are no consequences for the architects of this folly then justice is but a charade.”
Merry Christmas to all.