SECOND FORENSIC AUDIT REPORT: EVIDENCE OF MALFEASANCE?

EVIDENCE OF MALFEASANCE?: A REVIEW OF THE FORENSIC AUDIT REPORT INTO THE MUSKRAT FALLS PROJECT (PHASE II)

The second Forensic Audit Report prepared by the accounting firm of Grant Thornton has now been released to the public. It will constitute the major focus of Phase II, the “Construction Phase”, of the Commission of Inquiry into the Muskrat Falls Project (MFP).

This Report builds on the main conclusions of the first one released in September 2018, prior to the beginning of public hearings presided over by Judge Richard LeBlanc. It concluded that, at the time of sanction, a “combination of…potential misstatements may have resulted in the Interconnected Island Option (the Muskrat Falls project) no longer being considered the least cost option at the time of sanctioning.” In other words, had the Cumulative Present Worth (CPW) – the present value methodology used to compare the Isolated Island and the Interconnected Island options – been  objectively assessed, the Muskrat Falls Project was probably not then, or ever, “least-cost”.


What had GT uncovered in order to come to that conclusion?

FORENSIC AUDITOR CONFIRMS NALCOR UNDERSTATED COST ESTIMATES FOR MUSKRAT

This post co-authored with David Vardy

The Forensic Auditor's main conclusion was that based upon its “findings and observations, at the time of sanctioning” a “combination of…potential misstatements may have resulted in the Interconnected Island Option (the Muskrat Falls project) no longer being considered the least cost option at the time of sanctioning.”

In coming to this conclusion, Grant Thornton has confirmed long held suspicions that Nalcor planned to advance sanction of the MFP regardless of the consequences. Essentially, the Forensic Auditor chronicles a narrative that suggests recklessness on the part of Nalcor Energy. The Forensic Audit was made public by the Commission of Inquiry September 21, 2018.