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)

Saturday, April 28, 2012

The Gift That Keeps On Giving - 1999 Shareholder's Agreement

March 9, 1998 the government of Newfoundland and Labrador, through its crown corporation Newfoundland and Labrador Hydro (NLH), entered into a Guaranteed Winter Availability Contract, and a Shareholder's Agreement with Hydro Quebec. The Premier of the day was Brian Tobin, and the Chair of NLH was Dean MacDonald. While both agreements remain confidential, the Tobin government described them as http://tinyurl.com/7xuw7wq :




  • The 1969 Power Contract granted Hydro-Quebec the right to make good any cash deficiencies incurred by CF(L)Co by purchasing more shares in CF(L)Co. Hydro-Quebec could have gained voting control of CF(L)Co through this process. The Shareholders' Agreement gives NLH a similar right. Hydro-Quebec can never gain control of CF(L)Co as along as NLH is prepared to make additional investments in the company, in accordance with its 66 per cent share holding.
  • The CF(L)Co Shareholders' Agreement also ensures a power supply at reasonable rates for Western Labrador. Under the 1969 Power Contract, Hydro-Quebec had the right to acquire, at 1969 Power Contract prices, the 225 MW block of power dedicated to Labrador West when the current arrangement expires in 2014. With this new agreement, Hydro-Quebec no longer has that right. Instead, CF(L)Co will distribute the power in Labrador West at reasonable commercial rates. This means a secure power source for Labrador West and the profits will stay within CF(L)Co.


  • On its face the agreement seems to be a defensive move by NLH to protect CF(L)Co from a hostile takeover by Hydro Quebec, and at the same time garner more revenues from the terribly one-sided Upper Churchill Power Contract. However, as is always the case when dealing with Quebec, the medicine is almost always worse than the disease. It is also worth noting at this time that a new deal for the Lower Churchill development was being negotiated behind the scenes between Premiers Lucien Bouchard and Brian Tobin. Were these agreements a necessary first step in that process? The answer is yes. Hydro Quebec effectively said:If you build on the Lower Churchill we want our water rights protected. And so it was agreed to.

    The down side to the agreements is what Quebec received in return. We don't know that answer completely right now as the documents remain off limits to the public, but some interesting tidbits have been leaked out:

    Part of the Shareholders Agreement among NL Hydro, Hydro-Quebec, and CFLCo June 18th 1999

    Article 3 Board of Directors

    3.4 Special Majority Decisions of the Board of Directors

    The following decisions will require the approval of a majority of the directors on the Board of Directors, including at least one director nominated by NL Hydro and one director nominated by Hydro-Quebec on the Board of Directors:
    3.4.6
    ...the entering into, amendment or termination of any Material Contract to which CFLCo or any Subsidiary of CFLCo is a party or to which CFLCo or any Subsidiary of CFLCo may become a party, unless such entering into, amendment or termination has been previously approved in a budget approved under Section 3.4.2 or 3.4.3;
    Material Contract defined: "Material Contract" means (i) any contract involving a monetary commitment of CFLCo or having a value to CFLCo of $10 million or more in the aggregate and (ii) any contract which restricts CFLCo from carrying on its Business, including the contracts listed on
    Schedule E;
    Business defined: "Business" means the business of CFLCo which shall be limited to the following purposes and objects:
    (a) to produce or otherwise acquire and to transmit and to sell electricity;
    (b) to harness or otherwise make use of water for the purpose of producing hydroelectric and hydraulic power and for any other purpose;

    In other words, Hydro Quebec and NLH both received vetos over moves by CF(L)Co that could impact the business.

    Fast forward to November 10, 2009, and Nalcor's application to the province's Public Utilities Board (PUB) for an order establishing the terms of a Water Management Agreement between Nalcor and CF(L)Co with respect to the Churchill River. Nalcor, at the direction of then Premier Danny Williams' government, had decided to proceed with the Lower Churchill unilaterally. To do so, however, Williams would have to overcome Hydro Quebec's veto on water rights established by the Shareholder's Agreement.

    Rather than renegotiate with Hydro Quebec, which would have likely resulted in failure, the Williams' government decided to try and do an "end run" around them. Thus Nalcor's application to the PUB. As part of the hearing process both Hydro Quebec and Nalcor requested and agreed not to make the Shareholder's Agreement public http://tinyurl.com/786cmno .


    Hydro Quebec's response came quickly on November 20, 2009:
    http://tinyurl.com/8yfcnet
    Hydro-Quebec wishes to express to the Board its position that any water management agreement
    to be established by the Board must recognize that the CF(L)Co/Hydro-Quebec Power
    Contracts have the benefit of Section 5.7 of the EPCA.
    We note that the Nalcor Application, as well as the Nalcor and CF(L)Co submissions of
    December 10, 2009, acknowledge that the CF(L)Co/Hydro-Quebec Power Contracts are
    protected by Section 5.7 of the EPCA, as does the water management agreement proposed by
    both Suppliers to the Board.
    In such circumstances, Hydro-Quebec has decided not to intervene in the Nalcor Application.


    Essentially, Hydro Quebec states that under the Electrical Power Control Act 1994 (EPCA) http://tinyurl.com/7jnhfqr any decision of the PUB must not interfer with their right to operate the Upper Churchill facility at full efficiency - which would obviously include all the water they need to do so. They refer to:

    3(b) all sources and facilities for the production, transmission and distribution of power in the province should be managed and operated in a manner
    (i) that would result in the most efficient production, transmission and distribution of power,

    The problem with Williams strategy is two-fold. First CF(L)Co, whose executive and a majority of directors being appointees of the Newfoundland and Labrador government, essentially ignored Hydro Quebec's veto that was granted to them in the Shareholder's Agreement as evidenced in CF(L)Co's written submission to the PUB http://tinyurl.com/6q247af :



    10. The shareholders of CF(L)Co are subject to a Shareholders' Agreement which requires a
    12 Special Majority Decision of the Board of Directors in certain matters, including those in
    13 the nature of the proposed water management agreement.
    14 Reference: Nalcor Application, Vol. 11, Exhibit 9
    15
    16 11, On October 27, 2009, CF(L)Co notified Nalcor that the required CF(L)Co Board approval
    17 to enter into a water management agreement with Nalcor had not been achieved.

    Subsequently, CF(L)Co had to pull out of the challenge. That left Nalcor on it's own. Secondly, Williams' ignored the legal protection that both the Shareholder's Agreement and the EPCA granted Hydro Quebec's interests in the Upper Churchill. A bull in the china shop, damn the torpedos, I'm getting my own way approach. The kind of approach that is fine until it hits reality.

    In the end the PUB approved the Nalcor/CF(L)Co Agreement  http://tinyurl.com/83ubynq .
    It dismissed a challenge put forward by the Quebec Innu - which has just recently been revived in a court challenge. It ignored the fact that essentially CF(L)Co was ignoring the terms of the Shareholder's Agreement by proceeding with an agreement against the formal statement.

    The end result is a new court challenge to the Muskrat Falls development by the Quebec Innu, which they will very likely win. The other, more quiet, perhaps more ominous result is Hydro Quebec's contractual rights being ignored. Will this result in a court challenge by Hydro Quebec? Surely that must be in the cards. Will Hydro Quebec allow the project to proceed and then use it's special veto to deny Nalcor/CF(L)Co the water it needs, especially for winter production, by asserting its special veto? Hard to say which way they will play it other than this - you can be sure they will play it. Would their aim be to stop Nalcor from becoming an exporter of power? No. Their goal will be to run the Upper Churchill the way they want it done - protected. They aren't worried that Nalcor's 800 MW from Muskrat will do anything in the marketplace against their 40,000 MW of production. There is no contest there. They just want to protect the asset they were given, and if the shoe were on the other foot could you blame them?

    Bottom line, Williams and those like him, who fancy themselves as Newfoundland and Labrador's savior, have done more damage to this province than any frenchman ever did. Quebecers didn't come in here and steal the resources - they were given them. The 1969 Power Contract, and then the 1999 Shareholder's Agreement.  If the Williams/MacDonald crowd get their way you can add Muskrat Falls to the list. Shortsighted agreements meant to benefit the few with devestating long term consequences. A group with a penchant for ignoring the obvious, and wrapping themselves in the tri-colour while they sell that so beloved place to the best bid.  


     

    Sunday, April 22, 2012

    Nalcor's Chief Lies on Air - another Muskrat moment

    This week the public was given a rare opportunity to ask questions of Ed Martin, CEO of Nalcor, regarding the Muskrat Falls project on province-wide radio - VOCM Openline with host Randy Simms. Having asked questions to both Nalcor, and Jerome Kennedy in the past on the Altius Royalty Trust proposal to fund Muskrat Falls, and having those questions ignored, I took the opportunity to phone in and engage Mr. Martin on the subject.

    I had submitted a Twitter question that same morning covering the Altius proposal, but anticipated it may not get covered - so I phoned in as well. Just before I came on the air, host Randy Simms put my question to Mr Martin :

      " Can Ed Martin comment on the Royalty Trust financing option with Altius?"

    Mr Martin answered as follows:

    " It was news to me...uh...in terms of where that came up, and, uh. So I tried to do some research into what's happening there...Let me say first off there is no Royalty Trust agreement with Altius. There is no offer of financing involved. There is nothing to that. We are doing traditional financing to this point."

    Mr. Simms asks him:

    "So Where does this story come from?"

    Martin answers:

    "I think where this comes from, only speculating, but I look back to 2003 or so, I wasn't there (Nalcor) at the time...uh...But there had been a request for proposals that had been asked for to help develop the Lower Churchill. A couple had come in for the actual development and a couple came in for the financing arrangement. One, Altius, was involved in one of those with a royalty trust arrangement, they had suggested and there's another group, I forget who they were, uh, but both of those finance proposals were put aside, uh...and really it hasn't been looked at ever since...its not anywhere near what we are trying to achieve."

    Later in my telephone conversation Martin adds:

    "From the Altius perspective, um, Brad, I just have to say to you I had you know that came up, somebody mentioned it to me, there has been some, uh, what do you call, uh, blog, twitters stuff going on about that and I had to ask my people is there any, you know, what, what's been talked about here? As I mentioned earlier that was something I think happened previous. We haven't looked at it for five years, six years, its been put on the back shelf and I really wasn't aware of it, so to my knowledge, and, never will...This Altius thing, uh, I can tell you it's just not on my radar screen at all, coming out of nowhere."

    Mr.Simms sums up with:

    "I've never, I've never heard of it or seen it but that doesn't mean it doesn't exist. But you (Mr Martin) are saying you've never heard about it, you're saying?"

    Mr Martin answers:

    "That's correct."

    There you have it. Ed Martin at one point of the interview says he was unaware of the proposal to the point he had to ask staff about it. Then he states it was an old proposal from 2003 when he wasn't CEO of Nalcor. Then in his final answer to Randy he states he's never heard about it. Forget for a moment all the obvious contradictions in these statements. Take a look at the truth instead.

    From the Government of Newfoundland and Labrador press release August 8, 2005:

    "As we proceed with these proposals, we are also keeping our options open regarding the ownership structure for the development ranging from a 100 per cent NLH owned and led development, to a lease/franchise option, and a variety of equity partnership options,” added Mr. Dean MacDonald.

    Ed Martin stated that he is excited to lead Newfoundland and Labrador Hydro at such a critical time in the province. “I am very pleased to have the opportunity to contribute to an organization that will work with the province in developing this tremendous hydro resource,” said Mr. Martin. “Today, we are narrowing down the field of proponents coming out of phase one of the EOI who we will be engaging as we consider our market and development arrangement options. In addition to the full development concept and financing submissions, the proposals involving services and products will remain on file for future consideration.” 

    "Finally, an innovative financing option in the form of a royalty trust has been proposed by Altius. This concept will be explored later in the process."

    A few things are evident from the press release. Firstly, Ed Martin was head of Nalcor when the decision was made to push Altius's proposal through to the next level. Secondly, he was obviously familiar with it, and referenced the financing options in his quote. Third, the royalty trust proposal was given a distinct nod from the other submissions, and specifically referenced: "...This concept will be explored later in the process." Finally, it is all but obvious that Mr. Martin did not hear about the Altius proposal from "bloggers and twitterers."

    In fact, Mr Martin's comments regarding the Altius proposal were false - a lie. Not only were they a lie, he framed the entire idea as something coming from bloggers and twitters. In essence, he mislead the listening public and tried to turn the entire Altius proposal into some sort of flight of fancy, misguided attempt of bloggers to muddy the waters. The problem with Mr. Martin lying about his knowledge of the proposal is it casts even more doubt on the credibility of his word in regard to the rest of the mostly behind closed doors planning on Muskrat Falls. If he is going to lie about one issue in public, without hesitation, what else could he be misrepresenting? As a public servant, is he not duty bound to answer questions truthfully? The public are shareholders after all in Nalcor, and they will be the ones who have to pay the enormous cost of this potential project.

    Mr. Martin goes on to say that the financing portion of the project will be put out to tender. He doesn't say what the specifications of the tender will be. Will there be a Newfoundland requirement in the financing? We just don't know. What I do know, as of my two short questions to Mr. Martin, that Nalcor is prepared to deceive. It is prepared to put out half truths, slanted/stacked requirements, anything to push Muskrat Falls to fruition. Apparently that now includes the very head of Nalcor misleading the public on the airwaves of this province. 

    Here's the entire Ed Martin show on VOCM - my conversation with Mr Martin starts around the 1:20 mark 

    Saturday, April 7, 2012

    The Loan Guarantee: "WE GOT IT!"

    Last week, in response to the Commissioners of the PUB refusing to endorse his Muskrat Falls project, Danny Williams released a statement. It was a rambling document that appeared to be crafted as a story as opposed to a straight forward personal statement. In case you missed it, here it is:

    "News Release
    April 3,2012

    Williams disappointed by indecisive PUB report on Muskrat Falls development
    Former Premier Danny Williams said today that he is both disappointed in and disturbed by the recently released Public Utilities Board (PUB) Report on the Muskrat Falls development. Williams said the inability of the PUB to reach a recommendation after 9 months and millions of dollars is unacceptable; and that past statements had already shown a bias against the project.
    'When I read the report brought down by the PUB, I was deeply disappointed in the indecisive nature of the report; and more so I was troubled by the conclusions put forward by the board largely based on opinions of private citizens as opposed to the experts at Nalcor and Manitoba Hydro,' said Mr. Williams. 'Unfortunately, if you look back at the comments made by Board early in this process it became clear that opinions had already been formed. I have never before seen a quasi-judicial body make such negative and prejudicial statements in the middle of a review. It concerned me greatly at the time, but I had hoped those careless comments would not have carried over into the final report. Clearly, those opinions formed the basis of the final document as the board had backed itself into a corner several months ago with such strong statements.'
    Williams went onto say that he still fully supports the Muskrat Falls development, and is troubled by some of the irresponsible commentary that has been put forward in the public domain - much of which appears to be held in high regard by the PUB in their review. While legitimate concerns and questions serve to bring about the best project possible, inaccuracies and fear mongering serve only to inhibit progress and future prosperity for the province.
    'I have a serious concern that the PUB quotes extensively the personal opinions of former bureaucrats and academia, while ignoring the world-class experts at Nalcor,' added Williams. 'They even ignored their own hired experts at Manitoba Hydro. The team at Manitoba Hydro asked some responsible and appropriate questions in their review of the project, but ultimately confirmed the fact that Muskrat Falls is the least cost option. It makes absolutely no sense to me for the PUB to ignore the people at Nalcor who have the experience, the knowledge, and the education to make the right decisions. These professionals have absolutely nothing to gain by moving forward with a project that is not in the best interest of the province.'
    Given the endorsement of the project by the Consumer Advocate, Manitoba Hydro (with conditions) and representatives from all political parties, the abdication of the PUB in making a recommendation is baffling, said Williams. 'I am concerned that perhaps the board wanted to wash their hands of any responsibility of this project in the very unlikely event that something goes wrong. The history of the Upper Churchill is a powerful force in this province and some people are just simply too fearful of the ghost of 'Churchill past' to move forward with what is a great project. But we must never fear making bold decisions for great rewards.'
    Williams asserts that there has never been a better time in the history of the province to move forward with the development. 'The stars are aligned. We have in place the agreements with our Aboriginal partners; we have a federal loan guarantee worth up to a billion dollars; we have passed the environmental assessment; the world markets make financing the project very feasible; we have an agreement in place with our Atlantic Partners to circumvent Quebec; and we have an incredible opportunity to make Newfoundland and Labrador a province based on almost 100% clean, renewable energy. And the icing on the cake is that this project puts Newfoundland and Labrador in the energy business. We need this power and we need this project.' "

    There you have it. A nasty, manipulative attack on the credibility of the Commissioners of the PUB from the former premier. This from the very man whose PC government appointed every one of the four Commissioners to the Board. From the man whose PC government placed the PUB in the position by tasking them with the job in the first place. A diatribe so flawed in its logic, and so spurious in its commentary that it requires challenging.

    Firstly, the PUB did not ignore Nalcor, Manitoba Hydro, or its officials. In fact, evidence given by these groups is evident and referred to throughout the PUB's decision. So to accuse the PUB of :
    "   ignoring the world-class experts at Nalcor,"added Williams."They even ignored their own hired experts at Manitoba Hydro." is in itself ignoring the facts and stating apparent falsehoods.

    Secondly, to frame Nalcor as a "world class" organization is at best a dramatic overstatement. Manitoba Hydro itself pointed out that Nalcor was not even living up to NERC standards. That's North American industry standards - let alone world standards. Williams would also know that Nalcor's power generation assets, and particularly income from those assets, places Nalcor behind even regional companies like New Brunswick Power. So to call Nalcor a world class organization is a shameful attempt to fan Newfoundland nationalism for the purpose of getting his own way. There are plenty of things Newfoundlanders and Labradorians can be proud of without shamelessly exaggerating the status of a crown corporation like Nalcor.

    Thirdly, Williams cites endorsements of the project by representatives of all political parties. A disingenuous statement if there ever was one. Both the Official Opposition Liberals and the Third Party NDP have come out against Muskrat Falls. During the last federal election federal parties supported the notion of the project, if it was economically and environmentally viable. The provincial parties, and their representatives are very publicly against it. Their votes in the House of Assembly are obviously more relevant than what their federal cousins might say in the pursuit of votes during an election. In so far as Manitoba Hydro goes, their report specifically states they came to their conclusions based on Nalcor's assumptions and they would not warrant the report to third parties. Again, more cherry picking of facts while dismissing or ignoring the facts.

    Finally, and most shockingly, Williams states:

    " we have a federal loan guarantee worth up to a billion dollars"

    I found that little statement the most interesting of Williams commentary. Apparently, without the public of Newfoundland and Labrador knowing it, the provincial government has in fact secured a federal loan guarantee. Not only that, but the dollar figure of that guarantee is apparently up to $1 billion. When did that happen? Some questions I have on that little gem: 1) When was the loan guarantee granted and why was the public not informed?; 2) How did Williams know about it considering a short while ago he claimed not to be able to get the cellular numbers of ministers since his departure?; and 3) Why is the loan guarantee only "up to a billion dollars"?

    A billion dollar loan guarantee would only cover 20% of the province's share of the Muskrat Falls project as currently envisioned. Has the project been scaled back, and the people not been informed of that? Has the project been revised to a dam only project with assorted transmission lines, but no sub-sea links, and therefore no power to the Island? If that were the case, the $1 billion loan guarantee might cover 25-30% of the estimated cost. I am somewhat at a loss to understand why the Newfoundland and Labrador media has not been asking the government and Mr Williams why he would make such a statement. Certainly, the fact this province has a loan guarantee in place for up to a billion dollars would be considered news by most.

                                       
                                                  

    Wednesday, April 4, 2012

    Dean MacDonald on a Go Backwards Basis

    There has been much ado about Dean MacDonald now that his scheduled time to come has arrived. He has been rumoured to be circling the provincial Liberal Party like a vulture waiting for it to be dead enough to eat. He has been touted as "the great savior" of the Party, and the only saving grace for a force that would otherwise be dusted to the annals of history. The truth, however is alot more premeditated and ugly than the Messiah story so often floated to the public.

    In truth Dean MacDonald is a product. A product created, funded, and promoted primarily by one man - with another man assisting from the inside. Dean MacDonald graduated from Memorial University in 1981 with a degree in Commerce. He held several junior positions typical of a freshly minted graduate until he was picked up and made President of Cable Atlantic in 1985. The same Cable Atlantic owned by one Danny Williams. Although most might balk at placing an undergraduate under the age of 30 in charge of a corporation, Williams did not. Williams not only placed him as President of Cable Atlantic, he agreed to make him a very junior partner with a 4.9% stake. On the face of it, and apparently despite MacDonald's Liberal association, Williams decided to take it upon himself to mentor and establish Dean MacDonald in the corporate world.

    MacDonald made no secret of his Liberal connections. He was known as an organizer, and in later years as a bag man for another close friend of Danny Williams - one Brian Tobin. MacDonald dutifully carried out his obligations to Cable Atlantic and Williams until 2001. While still President of Cable Atlantic, and still Williams minor business partner, then Premier Tobin appointed MacDonald as Chair of Newfoundland and Labrador Hydro and Chair of Churchill Falls Corporation on January 13, 1999. Macdonald was by then an established figure in the Liberal Party and a protegee of a prominent Progressive Conservative who was himself angling toward the provincial PC leadership.

    On December 17, 1999 Brian Tobin's Liberal government announced Cable Atlantic was granted a five-year, $12.5 million contract with Cable Atlantic that started May 1, 2000, and included the provision of local centrex phone services.  

    Then, in November of 2000, Danny Williams sold Cable Atlantic to Rogers Cable. The deal made Williams over $200 million, and gave MacDonald his seed millions as well. Part of that agreement appeared to be moving MacDonald into the next step of corporate mentorship in Rogers, which named him Senior Vice President of Government Relations of Roger's cable subsidiary. In other words, it gave MacDonald the opportunity to add a high profile position to his CV, and be further groomed in corporate/government relations. It also, no doubt, satisfied his mentor that his protegee was taken care of. When John Tory left Rogers, to pursue the leadership of the Ontario PC Party, Dean MacDonald was slotted into his position as the corporation's new Chief Operating Officer.
    However, and in a sign of things to come involving Danny Williams, Rogers took Williams and MacDonald to court over disagreements on issues stemming from the Cable Atlantic buyout. The matter was settled just before Christmas 2003. Three months later MacDonald resigned all duties from Rogers. As he put it:
    The resignation is "as planned," MacDonald told www.cablecastermagazine.com this morning. "Edward and I have been talking about this for a little while. We knew I was leaving at the end of March."

    MacDonald also resigned from his positions at Newfoundland Hydro and CFLCO in 2002. He stated publicly that he could not in good conscience stay on after then Liberal Premier Grimes arranged a deal to develop the Lower Churchill with Quebec. Despite his Liberal allegiance, despite the majority of the Board members agreeing with Grimes, despite the fact that the opposition to the deal came mostly from the new PC leader Danny Williams, Liberal Dean MacDonald left. Williams rewarded his protegee for his loyalty by naming him to again head Newfoundland and Labrador Hydro in September, 2004.

    It didn't take long for MacDonald to change gears when he, and  Dallas-based Hicks Muse Tate & Furst Inc. (now HM Capital), TD Capital Canadian Private Equity Partners (now Birch Hill Equity Partners) and CIBC World Markets Inc. formed a consortium to purchase Persona Communications for $406 million. Persona, which was a publicly traded company, was then taken private. Obviously, MacDonald was the front man with a minor stake in this deal. Although he made good money on the sale of Cable Atlantic, he could not possibly do this deal on his own. In an interesting aside, Birch Hill Capital Partners, the same partners involved with MacDonald in the Persona takeover, named him CEO of the year in 2007 - which he often cites in his many biographies.

    MacDonald, Williams and Persona came into controversy in that same year when the provincial PC government awarded Persona a cable contract. In 2005 Persona made a powerpoint presentation to promote a redundant cable line between Newfoundland and Nova Scotia. The government chose to award the contract without public tender. The Liberal Opposition campaigned against the deal. In September, 2007 Persona was sold to Bragg Communications for an undisclosed amount. The Liberal Opposition again attacked the deal, and even suggested that Williams granted the untendered $15 million contract to Persona to assist in its sale. http://tinyurl.com/82ny6pp   Certainly it almost echoes the circumstances and timing of the earlier Cable Atlantic deal.

    In any case, MacDonald padded his personal fortune quite handily, and moved on as is the trend. Since 2004 he, and his partners founded a private company which would go public as Newport Inc. in April, 2011. Three months later the shareholders approved a name change to Tuckamore Capital Management Inc. In November of that same year, former PC Prime Minister Brian Mulroney was named to its Board of Directors. At the same time MacDonald has kept his own privately held company Deacon Investments Ltd.

    In 2004 Deacon Investments purchased the Paramount Building in St. John's for $3.23 million. Today that building houses, among other tenants, the law offices of former premier Danny Williams. In 2008 MacDonald's Deacon Investments purchased the former head office of FPI for $3.35 million - despite the fact it was assessed at a value of only $2.2 million by the City of St. John's. MacDonald was left with an empty building (other than old, used office furniture - more on that coming) and no tenants. That problem was solved by the provincial PC government when it took a multi-year lease on the building in April, 2009 for the Centre of Health Information. The result was an increase of rent overhead for this public agency from $291,904 per year to $911,744 in MacDonald's new building  http://tinyurl.com/6qaptag . The kind of return an investor can only dream of with total cost of your investment returned in essentially 3 years at the taxpayers expense. By the way, both these buildings are up for sale now. The irony does not stop there though. In an apparent case of selling ice to an Eskimo, Dean MacDonald sold all that old, used furniture FPI had left behind when they exited the building to his new clients. In fact, he sold that used furniture to the provincial government for $87,450. The sale was untendered, and explained like this:

    Used Office Furniture, 70 O'Leary Avenue.

    3(2)(e) only available source

    FPI Limited, previous tenants, left much of its

    furniture when it vacated the building. Deacon

    Investments Ltd., offered the Centre this

    furniture at industry standard costs.

    http://tinyurl.com/7wh7pum  For a man who says he is all about new leadership for Newfoundland and Labrador, Dean MacDonald seems to be building his fortune the same way many have before in this province.

    The bottom line of the Dean MacDonald story is this: He was groomed, established, set up, and looked after by Danny Williams. His political map has been chartered by Danny Williams. His current attempt to take over the Liberal Party is being, and was always meant to be, orchestrated with Danny Williams systematic destruction of the provincial PC Party. Hand in hand as it were. When Dean MacDonald speaks you can hear Danny Williams. Whether it be their near identical condemnation of the recent PUB decision on Muskrat Falls, or MacDonald's use of the term "on a go forward basis". Its not that they are great leaders simply imitating each other by their greatness. Its a case of the puppeteer pulling strings on the puppet. Mr Williams is, and always has been, obsessed with control. Mr MacDonald is only too keen to reward his mentor with obedience. Their journey together has been a classic example of "adding value for the share holders." Mr. MacDonald does not represent new leadership for Newfoundland and Labrador, nor for the Liberal Party for that matter. What Mr. MacDonald represents is a continuation of the insular, corporate boy's club in St. John's. It's an old story that has always ended in heartache for the common people of Newfoundland and Labrador. However, as the most attentive followers of this province's politics will have noted recently, there are always bigger clubs.







     

    Tuesday, April 3, 2012

    PUB - Reshuffling the Cards

    The Public Utilities Board (PUB) handed the Newfoundland government its long awaited decision on Muskrat Falls at 8:00 pm Friday night. The decision read as follows:

    “The board concludes that the information provided by Nalcor in the review is not detailed, complete or current enough to determine whether the interconnected option (including the Lower Churchill development) represents the least-cost option for the supply of power to island interconnected customers over the period of 2011-2067, as compared to the isolated island option.”

    The PC government, in a near state of shock, revealed the decision to the rest of the province this morning. After the expenditure of $2 million dollars of public money on the exercise, and nearly a billion dollars on preparation for the Muskrat Falls project in general, the PUB concluded it could not render a decision one way or the other.

    The non-decision is shocking in a number of ways. Firstly, the PUB 's four commissioners are appointed by the Newfoundland and Labrador government. In this province that translates into obedience. Anything less is a guaranteed ticket out of the graces of the government and, in a small province like Newfoundland and Labrador, out of the circles of influence and money. The province is therefore not accustomed to decisions made on principle and honesty. Party line is so strictly enforced one could be forgiven for thinking that anything involving the government more resembles a banana republic like Cuba than a democratic province in Canada. Such is the feudal nature of politics in this province.

    Secondly, the PUB ignored the government's agenda, and carefully orchestrated timeline, to render a decision based on common sense. Anyone who actually watched the PUB hearings would have witnessed Nalcor officials constantly trying to portray half truths and unsubstantiated commentary as truths that could be projected 50 years into the future. I for one found myself questioning: Why not wait for the Decision Gate 3 numbers to bring this before the Board? Decision Gate 3 would at least bring the estimates for the project into the plus/ minus 20-30 percent range. As it was, the government was trying to force the PUB to give a favourable decision based on project definition of 5-10 percent. In other words, project guesswork and give it a green light. Something the PUB found itself uncomfortable doing - to their credit.

    Finally, the PUB refused to accept its own expert's opinion. Manitoba Hydro International (MHI) was hired by the PUB to go over the project, and endorse either Muskrat Falls or the Isolated Island Option. MHI picked Muskrat Falls as the least cost alternative, but with many caveats. The PUB essentially questioned the validity of many of Nalcor's practices and projections, which MHI had based all of its advice on. Of course, all studies of Muskrat Falls have been based on Nalcor's numbers, which has severely limited the accuracy of some components of the project. The most glaring this author is aware of is the demographic projection for the province's future. Nalcor simply accepted the Department of Finance's rosy demographic projections despite the fact they are deeply flawed. There was not one independent or scholarly demographic study of Newfoundland's population submitted to the PUB hearings - a point that I brought to the PUB's attention in my submission. Given that Newfoundland and Labrador Power estimates 50% of all sales are residential, an independent and logical population projection is really a no-brainer. The old saying goes: when people see one thing wrong they begin looking around for others. In the case of Muskrat Falls nothing could be closer to the truth.

    So, after being caught not being able to win approval from a Board where the fix was supposed to be in, Premier Dunderdale and her Natural Resources Minister Jerome Kennedy have been forced to do that which which they had both refused to do until now - grant a special debate on Muskrat Falls. As recent as 10 days ago Kennedy stated:
     “The problem right now is that I’m not sure these opposition parties are going to provide quality debate on anything,”
    He went on to say the Opposition could use the 30 minutes a day they get for Question Period to raise concerns over Muskrat Falls. If that wasn't enough he suggested they use their time allotted to scrutinize the provincial budget for questions on the project. Anything, but give them a special debate on Muskrat Falls. Today, after being caught with his proverbial pants around the ankles, Kennedy came out with:

    “Members opposite have been demanding a debate. Your request is now being accommodated.”

    He, and the government, did not grant this concession to the Opposition out of a sudden conversion to the principles of democracy. They granted it in a cynical attempt to blunt criticism over the failed $2 million dollar PUB non-decision. The sad reality is that a special debate in the House of Assembly is ultimately controlled by the government and its majority, and is therefore doomed to be an exercise in futility. An exercise in democracy to be sure, but one that is controlled by those that want to see Muskrat Falls go ahead.

    The second face saving grace announced today was a new study of natural gas and other potential options. Opposition groups have been demanding this for some time. Just last week, Dr Bruneau of Memorial University, declared there was enough natural gas deposited off Newfoundland and Labrador's shores to satisfy all the provinces power needs for some time. Minister Kennedy announced today that Ziff Energy from Calgary would conduct the "independent" review of natural gas as an option. However, the Minister's own words from Hansard on the 6th of March, 2012 cast some question on that impartiality:


    MR. KENNEDY:
    Mr. Speaker, I say to the Leader of the Opposition: What other options is he talking about? Refurbished Holyrood is the best of the other options, Mr. Speaker, with small hydro and wind. Manitoba Hydro International clearly concluded that there is so much wind that can be used, but it has to be integrated into the system.

    We have looked at natural gas, Mr. Speaker, extensively. In fact, I can say to the Leader of the Opposition, I met with Ziff Energy out of Calgary on the weekend while in Toronto on another matter. They concluded, clearly, that the importation of gas from the United States is not economically feasible. Mr. Speaker, we know, clearly, that the building of a pipeline from the Grand Banks is not feasible. If the Leader of the Opposition has other options, I would like to know what they are.

    An obvious questions posed from this honourable mention is what matters was the Minister discussing with Ziff Energy that were unrelated? Does the government or Nalcor already have any commercial ties with this company? What does the importation of natural gas from the US have to do with this province, and is Ziff Energy inclined to the use of natural gas? The Minister's statement doesn't give that impression.

    As if to reinforce that notion that the government has a preexisting relationship with Ziff Energy, and that Ziff's mind may already be made up on the natural gas option, check out Ms. Dunderdale's comments to the House of Assembly on the 15th of March, 2012:

    "The world is full of expertise. The Leader of the Third Party could get herself to Brazil to investigate how Vale Inco operates in Brazil; surely, God, you could contact Wood MacKenzie, or Ziff Energy, or PIRA – internationally renowned experts in the energy field – and ask a few questions. I am sure that they would give you the same answers that they have given us, and that the minister gives you day after day that are available to you on Nalcor’s Web site, on the PUB’s Web site."

    "I am sure they would give you the same answers they have given us." The Premier's own words are damning. These aren't a new, cold set of eyes on the options. This is a company that already is in line with the government's point of view, and Ms Dunderdale plans on putting it out there as yet a new piece of evidence to back up her plan for Muskrat Falls.

    Bottom line, the Dunderdale PC government is reshuffling the cards. They are taking away any future influence the PUB could have over this project by not returning the matter to the PUB with new guidelines and a new time frame. The Premier even went as far as to attack the Chair of the PUB for "sending negative messages", because he wanted information that Nalcor, in his opinion, was denying. Dunderdale blamed him, and the PUB, for wasting $2 million tax payers dollars by not rendering a decision. Of course she fails to understand accountability, and the fact that it was her government that established the narrow rules that put the PUB in the position of not reaching a decision in the first place.

    What we are left with is a government, a junta, that is without conscience re engineering its own fixed process to have Muskrat Falls "sanctioned" at all costs. It has become a comical public display of ineptitude and folly that is beginning to rival the farcical Elizabeth Mathews appointment to the CNLOPB. Cover up. Get disclosed. Shoot self in foot. Change story. Shoot self in other foot and buddy in the both feet. Repeat process until all clowns have left the building. If it weren't for the fact that entire generations of Newfoundlanders and Labradorians, most not yet born, are going to have to pay for this lack of common sense ... well, it would be the Key Stone Cops all over again. Yet it is very serious. There are entire industries and economies at stake. Danny Williams, stand and be proud b'y.