Tag Archives: corruption

Muskrat Falls hydroelectric – Who buried the risk assessment report?

Muskrat Falls, Labrador. Site of a proposed hydro electric project by the governments of Newfoundland and Quebec. This is downriver from the Churchill Falls Hydro project in Labrador. Photo by Greg Locke © 2017 DCS Files

Muskrat Falls on the Churchill River, Labrador in 2006 before construction of an ill-conceived hydro-electric project by the government of Newfoundland and Labrador.  Photo by Greg Locke ©2017

ROGER BILL
November 25, 2017

ST. JOHN’S, Newfoundland — The man in charge of finishing the Muskrat Falls hydroelectric project on the Churchill River in remote central Labrador calls the venture a “boondoggle”. The Newfoundland and Labrador government has established a commission of inquiry to determine why the project is wildly over budget and years behind schedule. A good place for the Commissioner, Judge Richard D. LeBlanc, to start is to find out who buried the warning that there was a “very high risk” of a multi-billion dollar cost overrun barely four months after the massive project was green-lighted in December, 2012.

 

The warning came in the form of a risk assessment undertaken by SNC-Lavalin, the engineering company retained by the Nalcor Energy, the provincial government agency managing the project. SNC-Lavalin officials, who were responsible for construction management and procurement on the project, conducted the risk assessment when initial prices for some major construction elements came in well above the original estimates in the $6.2 billion December, 2012 budget. The experts at SNC-Lavalin warned their Newfoundland client the project could go over-budget by an additional $2.4 billion. The warning was buried for four years.

 

Some critics of the Muskrat Falls project argue that warnings were ignored long before 2013but when the SNC-Lavalin risk assessment finally surfaced in June of this year it was too much to ignore and according to Newfoundland and Labrador’s premier Dwight Ball too late to put the brakes on the project

 

 According to Nalcor Energy’s CEO, Stan Marshall, the Province is now staring at a total cost of $12+ billion to bring the megaproject in two years behind schedule and the Province wants Judge LeBlanc to inquire into “any risk assessments, financial or otherwise” and whether “Nalcor took possession of the reports” and “made the government aware of the reports and assessments”

 

Judge LeBlanc will find that, yes, there was a risk assessment done by SNC-Lavalin in April, 2013 and maybe Nalcor Energy took possession of it or maybe not, and according to the provincial Minister of Natural Resources in April, 2013, no, the provincial government was not made aware of the SNC-Lavalin risk assessment.

 

Ed Martin, former president and CEO of Nalcor Energy. Photo by Greg Locke © 2017

Ed Martin, former president and CEO of Nalcor Energy. Photo by Greg Locke © 2017

What is a matter of public record is the following: Ed Martin, Nalcor Energy’s CEO, parted company with the provincial government in 2016. Whether he was dismissed or resigned is still a bit of a puzzle, but he was succeeded by Stan Marshall, a very successful executive with the private energy company, Fortis Inc. Stan Marshall says he heard about the 2013 SNC-Lavalin risk assessment from a former SNC-Lavalin engineer, but could not find a copy of it in Nalcor Energy’s files. Finally, Stan Marshall says he asked SNC-Lavalin for a copy of the risk assessment, received it, gave it to the provincial government, and it was released by the Premier and Minister of Natural Resources on June 23, 2017 (External Link to CBC story)

 

A spokesperson for SNC-Lavalin told The Telegram newspaper and www.allnewfoundlandlabrador.com that they “attempted” to hand over the risk assessment to Nalcor. Ed Martin, the former Nalcor CEO told the media the risk assessment was never “presented” to him. Premier Dwight Ball told the media that he had been advised that the risk assessment results were presented by SNC-Lavalin at a meeting attended by Nalcor officials including Ed Martin. Obviously, either Premier Dwight Ball has been poorly advised or Ed Martin is not telling the truth or the word “presented” has a very narrow and specific meaning in the world of engineers and consultants that outsiders fail to understand.

 

The expression “attempted to hand it over” makes one wonder if an official of SNC-Lavalin held the nine-page risk assessment document in their hand and reached out to give it to a Nalcor Energy official who refused to accept it. Or, maybe there was a meeting where the SNC-Lavalin, motivated by what is described in the risk assessment as a sense of “urgency” to convey their findings verbally briefed Nalcor Energy officials on the results of the risk assessment, but did not have the report in hand. When engineers are under oath and lawyers from Judge LeBlanc rather than journalists are asking questions about who told who what and who gave what to who then the people who will ultimately pay for the “boondoggle” will know who buried what.

 

What does not take any clarifying are the words of Tom Marshall, the provincial Minister of Natural Resources in 2013. When the SNC-Lavalin risk assessment surfaced in June, 2017. I asked Tom Marshall if he saw the risk assessment in 2013. He said, “I never saw that report.” Asked if he had been advised of the risk assessment findings Mr. Marshall said, “No.” Did he think Ed Martin, the Nalcor CEO who he met with regularly at the time, held back the risk assessment’s findings Mr. Marshall said, “That would be terrible. I can’t fathom if that is the case.” Would it have made a difference if he had known? “It would have rung all kinds of alarm bells”

 

Eleven months after the SNC-Lavalin risk assessment warning Tom Marshall’s successor as Minister of Natural Resources, Derrick Dalley addressed the House of Assembly to reassure members that the government’s oversight of the Muskrat Falls project was “robust.” Mr. Dalley said, “senior staff with the Department of Natural Resources and Finance have met regularly with Nalcor’s CEO and their staff. As well, the provincial cabinet has had regular meetings and ongoing reports from the CEO of Nalcor”

 

For those who gamble on political affairs the question Mr. Dalley’s assurances in 2014 raise is this; what are the odds that Judge LeBlanc will hear testimony from one single senior staff or cabinet member who met regularly with the CEO of Nalcor who will recall hearing the words, “SNC-Lavalin risk assessment” or “serious concerns” or “very high risk of cost overruns” in any of those meetings?

 

Two days later the Minister again sought to reassure the members of the House of Assembly that there was no very high risk of cost overruns, “Nobody is putting my signature on a paper that costs my children $6 billion and $7 billion into the future. I can tell you the work is done. The oversight is there” he said.

 

When the Muskrat Falls Inquiry releases its schedule of witnesses make a note of the date of Mr. Dalley’s appearance.

 

Copyright Roger Bill 2017

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Facts, and Opinions, that matter this week

People film with their phones and cameras during a flag-raising ceremony at the Tiananmen Square in Beijing, China June 4, 2016.   REUTERS/Damir Sagolj.

Taiwan tells China not to fear democracy. Above, people film with their phones and cameras during a flag-raising ceremony at the Tiananmen Square in Beijing, China June 4, 2016. REUTERS/Damir Sagolj.

Reports:

Shelter the focus at Venice Architecture Biennale, by Joel Dullroy

The Venice Architecture Biennale is usually a showcase of prestigious architecture projects from around the world, but Germany’s entry this year has taken a different angle, focusing instead on simple shelters used to house asylum seekers.

Emily Dickinson’s garden, “native” plants, and climate change, by Janet Marinelli

A plant from the homestead of poet Emily Dickinson is challenging basic precepts of conservation practice, such as what is the definition of “native”? Are climate refugees that hitchhike north via horticulture less worthy of protection than plants that arrive on their own? Do they pose a threat to existing native species? Should native plant gardening, the domestic form of assisted migration, be used to help plants stranded in inhospitable habitat?

Taiwan tells China not to fear democracy, by J.R. Wu

On the anniversary of China’s bloody crackdown on student-led protests in and around Beijing’s Tiananmen Square, Taiwan’s new president told China that democracy is nothing to fear, and Taiwan could serve as an example to China.

Commentary:

Hong Kong activists split over Tiananmen Square, by Jonathan Manthorpe, International Affairs columnist

For the first time, Hong Kong’s Federation of Students, a coalition of student unions, eschewed the Victoria Park demonstrations over the anniversary of the Tiananmen Square uprising and killings. Instead, it focused on democracy and even independence in Hong Kong’s future.

Polls: The good, the bad and the ugly, by Tom Regan, Summoning Orenda column

A few suggestions about what to watch out for in political polls: how you can tell a good one from a bad one, and why you never, ever, ever bet your house on one poll only.

Magazine:

Christopher Park/ ProPublica

Christopher Park/ ProPublica

Gunfight in Guatemala: and insider’s tale of Latin America corruption. By Sebastian Rotella

Big or small, leftist or rightist, rich or poor, with only a few exceptions, Latin American nations struggle with a crime problem that threatens political stability and security; many are in a struggle between the rule of man and the rule of law. This is one man’s story in the large, long-running war.

 

Notebook:

This fall’s US presidential election will affect the world. Barring a cosmic event or supernatural intervention, Republican Donald Trump will be pitted against either Hillary Clinton or Bernie Sanders. A campaign milestone  —  the Democratic party primary in California — will occur Tuesday June 7. Some polls place Sanders and Clinton in a statistical tie. The latest developments include a remarkable letter released Friday by Green party contender Jill Stein urging Californians to support Bernie Sanders, unless already registered with the Green party,  to support “the agenda of economic and racial justice shared by Bernie’s and my campaigns.” Robert Reich, one of Sanders’ most vocal supporters, urged Democrats to put aside their differences no matter who wins. “I can’t criticize anyone for voting their conscience, of course. But your conscience should know that a decision not to vote for Hillary, should she become the Democratic nominee, is a de facto decision to help Donald Trump,” he wrote on his blog.

Follow the campaigns at these credible outlets: New York Times; Politico; Reuters; Bloombergthe BBC; the Guardian; the Economist.  Here are the campaign pages for Sanders, Clinton, and  Trump.  America’s two dominant parties are not the only ones in the running, though all others typically are ignored by pundits and political journalists and — in a Catch 22 — receive precious few votes. Here are the pages for the Green’s likely presidential candidate Stein, and for Gary Johnson of the Libertarian party.

Elsewhere:

This is good: Muhammad Ali, a feature and a video documentary on the New York Times about the fighter who died this week.

“Muhammad Ali was a three-time world heavyweight boxing champion who transcended sports and helped define his turbulent times. He entertained with his mouth as much as his fists, narrating a life of brash self-confidence full of religious, political and social stances.”

And THIS is surprising, and important: A criticism of neoliberalism by, of all organizations,  the International Money Fund

Neoliberalism: Oversold? Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion….

There has been a strong and widespread global trend toward neoliberalism since the 1980s, according to a composite index that measures the extent to which countries introduced competition in various spheres of economic activity to foster economic growth….

“There is much to cheer … however:

“An assessment of these specificpolicies (rather than the broad neoliberal agenda) reaches three disquieting conclusions:

•The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.­

•The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.­

•Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.­…

As Maurice Obstfeld (1998) has noted, “economic theory leaves no doubt about the potential advantages” of capital account liberalization, which is also sometimes called financial openness. It can allow the international capital market to channel world savings to their most productive uses across the globe. Developing economies with little capital can borrow to finance investment, thereby promoting their economic growth without requiring sharp increases in their own saving. But Obstfeld also pointed to the “genuine hazards” of openness to foreign financial flows and concluded that “this duality of benefits and risks is inescapable in the real world.” (my emphasis.)  Visit the IMF site to read the  analysis 

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Note to our readers: F&O’s weekly blog post was delayed this weekend by a technical glitch. Thanks for your patience.

In Case You Missed These:

 

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Facts and Opinions is a boutique journal of reporting and analysis in words and images, without borders. Independent, non-partisan and employee-owned, F&O is funded by our readers. It is ad-free and spam-free, and does not solicit donations from partisan organizations. To continue we require a minimum payment of .27 for one story, or a sustaining donation. Details here; donate below. Thanks for your interest and support.

F&O’s CONTENTS page is updated each Saturday. Sign up for emailed announcements of new work on our free FRONTLINES blog; find evidence-based reporting in Reports; commentary, analysis and creative non-fiction in OPINION-FEATURES; and image galleries in PHOTO-ESSAYS. If you value journalism please support F&O, and tell others about us.

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The Dictator of Eritrea — Manthorpe

“Fellow Africa hand Remer Tyson and I were huddling behind the thickest wall we could find one bad morning in the Somali capital, Mogadishu, and, as one does as the bullets fly, we grew philosophical, recalls International Affairs analyst Jonathan Manthorpe of a day in 1991. “If Africa had any sense,” said Remer, correspondent for a major American newspaper group, “it would give Somalia to the Eritreans to run.” “Trouble is,” he added, “the Eritreans are far too sensible to take it.”

306px-Isaias_Afwerki_in_2002That was then. Now, Eritrea is called “the North Korea of Africa” writes Manthorpe. An excerpt of today’s column: 

After being the driving force behind the liberation of Ethiopia, the Eritreans gained their own independence in 1993. This was a time when many African nations were overthrowing the rule of “Big Man” dictators and embarking on the stormy transition to forms of democracy. In this sea change, Eritrea, with its compact and resource-rich territory and highly motivated people, was seen as potentially the most successful.

Instead, quite the reverse has happened. Eritrea is now often called “the North Korea of Africa.” That neatly sums up the reality of today’s Eritrea as a grim totalitarian state with prisons crammed full of dissidents, shunned by its neighbours, forced into diplomatic isolation, and with its economy buckling under United Nations sanctions.

No wonder that Eritrea’s diplomats in Canada, as they do elsewhere in the world, try to strong-arm emigrant Eritreans into donating two per cent of their incomes to the government in Asmara back home.

So what went wrong? The answer is President Isayas Afeworki … read more (subscription required)*

*Log in on the top right of each page (or click here to purchase a subscription or a $1 site day pass) to read:

Eritrea: the failure of Africa’s most promising nation

Jonathan Manthorpe’s columnist page is here.

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