Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.
Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Friday, June 5, 2015

The Corruption Culture in Newfoundland's Politics.

I've been writing on the corruption within Newfoundland's governing circles for years. In fact, I did a series on potentially corrupt practices by Ministers of this government, and its predecessors in a multi-part series on this blog called "All the King's Men". I've exposed the fact that Ben Aissa, convicted and disgraced SNC Lavalin VP, was appointed to a SNC numbered corporation here in Newfoundland during 2007-2008 (during the period SNC was pushing a large LNG project and a refinery to be located in Placentia area), and which mysteriously was dissolved at the end of 2008 when both projects failed. That blog is here.

I've written on a scheme that paid the Innu people $5,000.00 per person days after they voted for the Muskrat Falls project to proceed. That link is here. I wrote on the Innu cabinet minister that figured prominently in that deal, and was then turfed from office over illegal campaign donations - mostly from Muskrat Falls contractors, or those associated with the iron ore mining industry that would directly benefit from Muskrat Falls. His campaign manager was just charged by Elections Canada over the issue. That story was here and here and here.

I've written on the Muskrat Falls contractors who've donated directly to PC Party and its MHAs, including corruptly disgraced SNC Lavalin here. I've even written on the law firms, primarily in Quebec, that have donated to the PCs and received millions from Nalcor and the government in fees over the Muskrat Falls project here.

Over and over again the same patterns appear. Over and over again they repeat themselves. The corruption culture in Newfoundland is beyond the pale. The latest scandal over Muskrat Falls is the realization that Nalcor hired a construction firm out of Quebec, whose owner has admitted to paying  off government officials for contracts with bags of money and free holidays. (here). Now, this morning, in an attempt to turn the channel quickly, Premier Davis is offering up a cancellation in the HST hike because oil is "high". Peculiar given oil rests at $65 a barrel, down from $110 just a year ago... strange for a government that relies on oil for 33% of its annual budget.

Truth is this government and Nalcor will do anything to suppress information, real information, on Muskrat Falls. It is absolutely submersed in corruption and more likely than not influence peddling. It's not a coincidence that firms like SNC Lavalin, Genivar, and now the latest Opron have ended up on the Muskrats Falls payroll. The payroll of Nalcor. All Quebec construction firms. All implicated in corrupt practices. Not "best practices", the term Nalcor likes to throw around like candy to justify its business dealings.

Indeed, corruption permeates our political system here. It is endemic. You scratch my back and I'll scratch yours. It's "just the way it's always been done". In fact, it is a disgraceful indictment of a culture that needs to suffer an immediate and inglorious death. It reflects negatively on all Newfoundlanders and Labradorians. Why? Because it has been allowed to go on for generations with not much more than a wink and a nod. This isn't the first corrupt government here. It's just the latest. The next government, and there will be a next government, best realize that the culture of corruption is detested and disgraced world-wide. We are no different.  

Monday, May 18, 2015

ISIS - Frankenstein or Bait?

ISIS, the Sunni Islamic militant force, is the birth child of a marriage between Saudi Arabia's regional ambition and the United States' geo-strategic interests. It's really that simple. It's ramifications are not quite so simple.

The Americans have always been aware that having Sunnis in charge of a country keeps the lid on things - to their benefit. It's been an ongoing theme now for almost 80 years. Saudi Arabia is the "world headquarters" for the Sunni sect. It has the strategic alliance with the US. It has the money because of that alliance, and it uses the money to arm itself and its Sunni allies. The same is true for Iran - with the exception of who is in charge since the Shah of Iran was overthrown in the late 1990's. There is a common thread throughout this history. It cannot seriously be denied. It's obvious. The United States lies behind Saudi Arabia, and American controlled Sunni governments are kept in power to preserve that alliance.

In recent times, there are two classic examples of Sunni leaders that were brought down by US military power at the behest of Saudi Arabia - Muammar Gaddafi and Saddam Hussein. Both challenged Saudi Arabia's control of the Middle East, and both were overthrown with the decisive assistance, or actual military intervention of the US. Each publicly stated the US would never overthrow them, because to do so would mean Al Qaeda would take over. Both were wrong. It begs the question, why were both so convinced that the US would not overthrow them and let Al Qaeda, a Sunni militant movement, take over?

The answer lies in US "strategic interests", not just in the Middle East, but beyond. ISIS, the new version of Al Qaeda, is challenging for control of Iraq, Syria, and Yemen. In Yemen, ISIS is fighting the Shia Houthi, who have overthrown the Saudi-supported Sunni leader there. In Iraq and Syria, ISIS is aiming for full control of both countries, and the overthrow of their Shia leadership. ISIS is even attempting to destabilize Hezbollah (Shia) in Lebanon, and challenge Sunni Hamas over control in the Gaza strip. In effect and reality, ISIS is the foreign legion of Saudi Arabia and therefore the US.

Now, people will say that ISIS is a threat to the West. That simply is not true. ISIS is a threat to Shia governments in the Middle East, and too-moderate Sunni governments, but has no chance of harming Western civilization. Some will sight the deaths in Canada and Europe at the hands of ISIS as proof that our civilization is under threat, and draconian laws are necessary to stop them. That simply is not true. In fact, all ISIS did was activate two people, in the case of France three, to conduct targeted hits in Western countries that caused fury - but no national damage. It was not there, then it was there, and now it is not. A bogey man so too speak. Enough of a scare that people would get behind their military intervening in Syria, Iraq and Yemen. Not enough to do any sort of damage whatsoever to the security of these Western countries. A slight of hand if you will.

It challenges the mind to think that the combined air might of Western countries could not reduce ISIS in Syria and Iraq into dust within a few weeks at most. It did so when ISIS went rogue and tried to take Iraqi Kurdistan in Iraq's north. ISIS was almost immediately stopped dead in its tracks. Of course, the Kurdish lands in northern Iraq have become almost a US protectorate - and US oil company haven. But, in the rest of Iraq, it seems the air campaign has almost no effect on ISIS operations.

Now, just yesterday the major Iraqi city of Ramadi has fallen to ISIS. And, today, thousands of Shia militia men are gathering to try and take it back. Ramadi is important for several reasons. Firstly, it is very close to Baghdad and provides a major base of operations for ISIS to attack Baghdad itself. Secondly, it is a major psychological blow to Iraq's Shia government and its people. Thirdly, and perhaps most importantly, it is a direct threat to Iran. It is a threat that Iran will no longer be able to ignore. Hence, Iran's Minister of Defence arrived in Baghdad today for "talks". Iran's allies in Yemen, Lebanon, Syria, and now Iraq are being seriously threatened by ISIS, on behalf of Saudi Arabia, on behalf of the US. Its back is now close to being up against the wall. If it fails to militarily intervene in Iraq decisively, and early enough, it risks having the ISIS hordes on its own border. If it does intervene now it risks a counter military intervention by Saudi Arabia in Iraq. It's all in the calculation. Unfortunately for the world, it appears now the calculations are pointing toward war with Iraq being the primary battleground.

So, is ISIS a Frankenstein created by Saudi Arabia, out of control, and allowed by the US, or is it bait to lure Iran into a decisive war and its ultimate defeat. One thing is certain, it's not both. ISIS is not a Frankenstein that once created has left the control of its master, and is rampaging across the Middle East out of control. No. ISIS is a tool to undermine Shia influence in the Middle East. To destroy it. To establish once and for all that Sunnis are to dominate power over all the Middle East, and especially the Shia. It's an ancient battle of the two Islamic sects. Each considers the other heretics. Each believes heretics must die. ISIS is a weapon. A weapon of mass destruction. An invitation to much greater mass destruction on a regional level, and then perhaps a global level. ISIS is bait to lure Iran into war, and then presumably Russia, China, India, etc. ISIS is also a weapon to lure the US into a war against Iran in the "defence" of Saudi Arabia. It's a playbook if you will for a world war.  ISIS is a weapon in the hands of men that don't want peace or stability in the world. In that way, ISIS is a menace to all of us.


Sunday, May 10, 2015

Nalcor Exposed

What's the old saying...people lie, the evidence doesn't? Welcome to the world of Nalcor, our illustrious provincially-owned energy company. And, the truth, or the evidence if you will, isn't pretty. If you want to glimpse that evidence yourself you can see it here in Nalcor's Report.

Here's the bottom-line:

1.  Nalcor is in default of the Federal Loan Guarantee;
2.  Nalcor's corporate debt is now over $10 billion;
3.  Nalcor already owes Emera over $300 million in power sales;
4.  Nalcor can't be sold/privatized for at least 38 years; and
5.  Nalcor can't build Gull Island for at least 38 years.

All these things might come as a shock to you, but in this post I'll detail the evidence.

First, Nalcor is in default of the Federal Loan Guarantee (FLG), and in a big way. The FLG requires that Nalcor have established "at all times" a Debt Reserve Fund (commonly known as "sinking funds") to, at "a minimum" cover interest payments for six months on its borrowings for the Muskrat Falls dam and transmission system, the Labrador/Island sub-sea cable link and the Maritime Link. As of December 31, 2014, or a few months ago, Nalcor had zero dollars in any sinking fund for the money borrowed to fund any of these projects. In fact, Nalcor has borrowed the full maximum $5 billion authorized by the FLG to fund the projects, and did so in 2013. So, in fact, Nalcor has been in default of the FLG for almost two years.

 Nalcor's long term debt now stands at $6,248,900,000. That's up from $1,222,200,000 at the beginning of 2013. Nalcor's total liabilities, as of December 31, 2014 stood at a mind-numbing $10.6 billion. $1.5 billion of that is money the Government has directly invested in Nalcor from the general revenue of the Province. $6.2 billion is long term debt. The rest is deferred payments, power/money owed to Emera on account of the Maritime Link, and so on. To cover all these liabilities, especially the long-term debt, we have sinking funds totaling  $267 million. Now, picture this, Nalcor actually withdrew $126.5 million from its sinking funds in 2014. In other words, Nalcor took money from its own funds dedicated to repaying its debt...instead of adding to it. In a further note, Nalcor has decided to refinance, rather than pay off, $425 million of Hydro's long-term debt when it comes due shortly.

Adding to Nalcor's debt problems is the ongoing commitment to Emera for the Maritime Link. Contrary to what many people may think, that 20% of "free" power to Emera has already kicked in. Nalcor is showing that as of December 31, 2014, it owed Emera $330 million dollars for "deferred energy sales", which means Nalcor owes Emera $330 million worth of power from the date the Maritime Link began construction - which means Emera is collecting that 20% in advance - even during construction. At that pace, Nalcor will owe Emera somewhere near $1 billion in free power by the time the power is switched on at Muskrat Falls. Which, of course, means Nalcor will have to dedicate the Maritime Link to solely giving free power to Emera for several years just to pay off the "banked up" "deferred power sales" it owes Emera on completion of the project.

In another strange, and definitely not publicized twist, Nalcor will not be able to build Gull Island for at least 35 years. The FLG states:

"4.8A Additional Debt: No additional debt may be incurred by the Borrowers during the term of the FLG (other than a $10 million line of credit, and additional debt to finish Muskrat Falls, the Island link, and the Maritime Link)

The there is the stipulation that Nalcor can not be sold during the term of the FLG:

"4.11 Change of Control:   ...There shall be no sale or change of control of Nalcor."

In other words, the taxpayers will remain on the hook for all Nalcor's debt until at least the end of the FLG - which is 38 years from now. No option. Stuck.

Combine all these financial facts on Nalcor with the state of our provincial finances, and it's evident this Province is financially...doomed. The gross provincial debt is now over $13 billion, and the government is projecting $5 billion more in borrowing over the next five years. That $5 billion is on the low side unless the government chops about 20-25% of its annual expenses - which is almost impossible in the near term. Impossible because those kind of cuts would take the Province from its current recession into a depression. With 30% of pay cheques in Newfoundland and Labrador being issued by the government, well, it's kind of obvious the impact those cuts would have.

Unfortunately, if Muskrat Falls is allowed to continue and the government remains on its current spending levels (or even close to them) this place is doomed to financial collapse in the not too distant future. It's simple math. All of this is of course predicated on Muskrat Falls coming in on budget and time. Should those two come off the rails, and many knowledgeable people have argued that has already happened, then that collapse is coming even sooner. Either way, it's coming. Look to 2016, after the provincial election, and the first budget to see just how bad it will be. Nalcor, like its birth parent, has acted in such a way as to sacrifice the economic well being of the Province and its people. Irresponsible, unaccountable, gross negligence.