Spectrol Energy, Danny Williams, and SNC Lavalin-Part 1

To begin, I want to make it crystal clear that I have no personal animosity toward Danny Williams. I met the man but once, and nothing in my writings should be construed as personal or even partisan. My writing is solely driven to get at the truth. It just so happens that many of the truths, as I see them, are very ugly when it comes to politics in Newfoundland and Labrador. This article will be no different - unfortunately.

Whether it be the awarding of a tobacco lawsuit untendered to his former law firm, untendered contracts and leases to friends, vastly under-valued land purchases, etc one phrase captures Danny Williams reign in government as Premier: "conflict of interest, real or perceived."

Seems Danny Williams had an interest in the offshore oil industry for some time before he actually made it into office as Premier. Back in 1988, February 8th to be exact, Williams incorporated a company named Nova Petroleum Services Inc in Newfoundland and Labrador. It was a private company, so no detailed corporate mission, etc was laid out. Its registered office was 209 Duckworth Street, St. John's, Po Box 5236 - the then office of his law firm Roebothan McKay Marshall, which subsequently burnt to the ground June 12, 2011. Directors listed to this company were Danny Williams and Edward Williams.

Additionally, Williams formed another company on September 9, 1991 called OIS Fisher Inc - registered in Newfoundland, with a corporate address of 3 Duffy Place, Second Floor, St. John's. Directors of that company were Danny Williams, Edward Williams, and Tony Hylton.

On December 23, 1999 Abbot Group PLC of Aberdeen, Scotland, issued a release titled: "Abbot Group announces the sale of its share in Canadian Joint Venture." The release goes:

"Abbot Group PLC international energy services group, announces that its wholly owned subsidiary OIS PLC has sold its share in OIS Fisher Inc., the joint venture company in Atlantic Canada, to Nova Petroleum Services Inc. for a total consideration of CDN $3 million, 1 million pounds paid immediately with balances due by December 2001. OIS Fisher has exclusive marketing rights for ACET software in Canada."

Interestingly, Abbot Group, now trading under the name KCA Deutag, is currently 90 percent owned by a group of four investors; Pamplona Capital Management LLP, BlackRock Inc. (BLK), GoldenTree Asset Management LP, and EIG Global Energy Partners LLC, has just closed an $8.9 million civil settlement over corrupt payments revealed by a tax audit. http://tinyurl.com/bl2mydt

In any case, Williams now had complete control over OIS Fisher and Nova Petroleum Services. Happening almost simultaneously Williams entered the Newfoundland and Labrador political scene with his announcement of intentions in 2000, and uncontested capture of the PC leadership on April 7, 2001. On June 19, 2001 he won a by-election and became Leader of the Opposition.

Both companies were subsequently changed to federally incorporated numbered companies: Nova Petroleum Services became 4123987 Canada Inc on November 19, 2002; and OIS Fisher Inc became 2753014 Canada Inc 3 weeks later on December 10, 2002. Then, two weeks later, on December 31, 2002 both federally numbered companies merged into one new company - Spectrol Energy Services Inc/4135121 Canada Inc. It appeared Williams was doing some very hasty consolidation of his two offshore companies into one, but the reason remains unclear.

On October 21, 2003 Williams and the PCs won the provincial election. All new MHAs, including Williams, had to submit their financial holdings to the Commissioner of Member's Interests by April 1, 2004 - which he did. However, the Commissioner felt Williams' interests posed a possible potential for conflict of interest. He gave Williams' financial management team until July 31, 2004 to address his concerns - including the establishment of a blind trust. However, Commissioner Green was frustrated by Williams' refusal to meet that deadline. In an interview in August, 2004 Green said:
"At the end of the day all the pieces have to come together. What's bothering me is, to a large extent, they're independent pieces and what is really hard for me to understand is why independent pieces seem to be all delayed."

Williams, not to be out done, came back with: "I've got to do this right and I'm not going to rush it and come up with a load of agreements or roll out stock at a point in time when its not the right time to do it...I can't give you a carte blanche as to what they are doing for two reasons: First of all, I don't know what they are doing and I really don't care, it’s none of my business. And, secondly, it's in a blind trust, I don't know anyway...It's not something that you can put on an arbitrary deadline and say: OK this is going to happen on July 1, July 31, or April Fools for that matter...It takes time and I'm not going to do it and place it in jeopardy for myself or my family. That's the bottom line on that and people have to accept it."

Williams also noted during the interview that Spectrol Energy Services and Atlantic XL had been in the control of a blind trust for 4-5 months at that time, which would place it around April or May of 2004. The problem for Williams here is the contradiction in his words for starters. You can't say on the one hand "it's in a blind trust I don't know anyway" and then on the other hand say: "I'm not going to do it and place it in jeopardy." Perhaps though for Williams the harder thing to explain would be the obvious change of status he constructed, leading up to the election, of OIS Fisher and Nova Petroleum by removing them from provincial jurisdiction, then days later amalgamating them into one federal corporation. As director of both companies, at the least, he would have had a hand to play in this strategy. Then, and counter to his answer in the interview of August, 2004, Spectrol Energy Services was registered as an extra provincial corporation in Newfoundland and Labrador on October 22, 2004 - a full year after his election win and months after his interview with The Independent. It would appear the registration of the company as an extra provincial corporation was part and parcel of a corporate restructuring he engineered before the election.

Ordinarily one may be prepared to give Williams the benefit of the doubt. However, my experience would suggest that would be foolish. One clear example comes to mind, and I've written on it before. Williams' land purchases to create his new development next to St. John's. In a December 16, 2011 interview with the CBC Williams stated: "It's something I've been putting together for a good 15 plus years...Williams said he bought the land — about 1,400 acres —in the late 1990s, largely from the Newfoundland and Labrador Housing Corp., but put the project on hold while he was in public office. He said his blind trust did acquire some land while he was in office from two private developers as well as some other small parcels of land “But for me, from my perspective, I had no involvement whatsoever in that,” Williams said. “The project was on hold until I finished politics.”

The problem with this statement is this, Williams actually purchased both major parcels of his land himself - no blind trust. He bought the first parcel, some 557 hectares, in October 1998 for the sum of $425,000. That works out to just over $300 an acre. Another parcel of 44.6 hectares, or 110 acres, was conveyed to a numbered company owned by Williams called 10801 Nfld. Inc. for $64,030. That
equates to $581 an acre and happened on November 5, 2003, just weeks after Williams led the Progressive Conservatives to his first majority victory in a fall election. The last bit of land was actually formally registered to him one day before he was sworn in as Premier.

It's these kinds of half truths, or omissions, that bring scrutiny to the dealings Williams has done - primarily while in office. It's what happens when a person acts, while in office, as if they are free from accountability. When nobody would dare challenge them. Where purple files are kept on journalists, and as we have just had confirmed by The Telegram this weekend, public funds are used systemically to manipulate public opinion by fixing poll numbers, and jamming radio shows with partisans, government workers, and MHAs. In this type of environment people in charge often let down their guard and leave trails.

In part two, I will be writing about Spectrol Energy's financial success under the Williams' PC administration, and its sale to SNC Lavalin.

The Twilight Zone

Remember that old show, The Twilight Zone? A place where fantasy imposed its self on reality? You know, "do not adjust your set". Well political events in Newfoundland and Labrador have been playing out that way for some time now, but no better an example can be had than this week's events.

Consider the news given to the province that the end of year fiscal deficit is estimated to be $725 million. That is not the accumilated deficit. That is a one year deficit. Nova Scotia coincidentally announced their deficit rose some $60 million to around $250 million. That is an accumulated deficit. It keeps growing. Then consider the provincial government is estimating next year's operational deficit to be $1 billion. Add the two of them together, and by the end of fiscal 2013 Newfoundland and Labrador will have an accumulated deficit of $1.725 billion, or about 28% of its annual revenue.

To give some context to a deficit that large consider the comparables. The federal government has a deficit of about $25 billion. If its deficit was the same proportion to revenue that this provinces will be by the end of 2013, the federal deficit would be in the range of $80 - $90 billion. Mind blowing. A deficit figure never seen by a federal government in Canada. It would trigger wage freezes, massive layoffs, large tax increases and a downgrade on the federal credit rating. Those actions would increase the deficit even more as unemployment rolls grew, the black market economy expanded, and costs to borrow new funds sharply increased. Wait. You say you've seen this movie before? Right. With a mucher lower deficit Trudeau, the older Trudeau, implimented wage and price controls, increased and expanded taxes, and the economy went into a ten year recession.

This is the new reality facing Newfoundland and Labrador. It is no longer the hypothetical. It is no longer the "naysayers" exclaiming the "sky is falling". Reality is here and the party is over. The inevitable result of gross fiscal mismanagement, flawed 1970's mega project thinking, and politicial corruption has rendered Newfoundland and Labrador as the proverbial "dead man walking". People in the streets are alarmed by the $725 million deficit. They can't quite understand how it came to this with such a booming economy. They don't understand its consequences. They are uneasy.

At the same time, and in the same universe, hyperinflation is affecting two key economic centers - Labrador and the Avalon. Avalon being the capital area with the primary population concentration, and Labrador being the sparsely populated resource centre. In these two areas of the province massive government spending on the civil service, and capital projects has fueled housing inflation. Along with that housing inflation has come large increases in personal debt and property taxes. Like a fire being fed by a warm wind these local economies have been pushed beyond their rational boundaries. On the one hand the provincial government has increased the civil service by 25% in the last seven years, with large wage increases, and on the other hand Nalcor, the provincial crown corporation in charge of hydro electricity production, has been spending hundreds of millions on the development of the Lower Churchill dams in Labrador. All of which has been fueled by oil revenues - one of every three dollars coming into the treasury is from offshore oil.

So, with the impending cutbacks to spending coming to deal with the deficits, the province is in the midst of sanctioning the largest ever publicly funded mega project in its long history - Muskrat Falls. At a projected cost of $7.5 to $12 billion, which doubles the province's gross debt, Muskrat Falls is a grand mega project that does the 1970's proud. Tom Marshall, Finance Minister for the province, states the development will not add to the province's debt and will pay for itself. A true bit of fantasy if there ever was one. He refers to the net debt, which is gross debt minus the "value" of "assets". Not unlike your personal worth on paper. However, as we all know too well, that worth is only on paper, and we still must pay those bills each month for evermore. It affects our spending, our financial decisions, our ability to acquire more debt, and so on. Marshall's ridiculous ponderance that the project will pay for itself, that somehow it won't be ratepayers and taxpayers paying it, in many ways sums up the tragic logic of our provincial government.

Marshall is so confident that the project will pay for itself, at no real cost to ratepayers, that his government will not allow the Public Utilities Board (PUB) to have a second look at the project's viability. In fact, as I write this, the provincial government is tabling legislation in the House of Assembly to force through a bill that exempts the PUB from setting rates for Muskrat Falls power. It is a thing of wonder.

So as we head into 2013, the year the equalization wars are to enter the national discourse, Newfoundland and Labrador is in a state of pre-financial meltdown unseen for some time in Canada. All those necessities like new infrastructure, hospitals, etc must somehow be carved out of an empty and otherwise overly committed treasury. All provincial labour unions have their contracts up for negotiation - for almost nine months now actually. The unfunded pension liability of the province continues to expand with no disciplined approach, or any approach other than to try and force unions to change their pension plans downward, in sight. Oil revenues are being clawed back by the feds now the exemption period is over under the Atlantic Accord. And just to give things that strange twist that is the twilight zone, we have a $5 billion land development that essentially creates a new city around St. John's. DO NOT ADJUST YOUR SET. This twilight zone is for real.

Saving Private Peter -

Peter Penashue, federal Intergovernmental Affairs Minister, under fire. Not exactly the beaches of Normandy, but you get the idea - this guy needs saving. He's managed to leave a paper trail a mile long and a mile wide of everything from possible illegal corporate donations, possible illegaly subsidzed air travel, possible conflicts of interest in his dealings with the New Dawn Agreement, possible conflicts of interest in contracts awarded involving Muskrat Falls development, and God knows what else. This man is terminally damaged, and in reality there is no saving Private Peter. Why then would the Prime Minister attempt a last minute attempt at damage control to save him? Or was it really about saving him?

To find that answer we have to look at the big picture. Peter Penashue is not really a Harper man. No, he is more a Williams/Nalcor man. He negotiated the New Dawn Agreement primarily with Williams and Nalcor. The Prime Minister has nothing vested in him and no favours owed to him. In fact, Peter Penashue is hanging in the balance as an ally of Danny Williams. Not a good place to be these days.

The key to understanding Penashue's position is to realize he is corporately aligned with, we'll call it, Newfoundland Inc - the corporate folks that run this province's economy. His very real problem is that Harper is not.Harper has been supported as a politician for decades by people associated with another corporate world - primarily Enbridge. Why does that make a difference? Well Enbridge has a strategic alliance with Hydro Quebec and GDF Suez of France. They have interests that involve Gaz Metro that runs all natural gas distribution in Quebec. Hydro Quebec recently sold its share to the Casse, but its from one crown corp to another. It follows then that despite his poor political standing in Quebec, Harper is corporately aligned there. That is a primary reason why he granted Hydro Quebec an offshore agreement on the Gulf of St. Lawrence one day before he called the last federal election. That Accord allowed Quebec to freeze any development of the Old Harry oilfield, which downed this province's interests. It wasn't done to hurt us, it was done to stop Williams and company. Same goes for Williams attempt to name his longtime friend, Elizabeth Matthews, to the CNLOPB. Downed. Unfortunately, when you wrap yourself in a flag, and as a Premier use it to shield yourself, the province and its people become the casualties.

In any case, as Premier, Williams created Nalcor to take on Hydro Quebec, and to build the Lower Churchill. He wanted power first and foremost for the mines in Labrador, and secondly for export. He made it a centre piece of his reign to demonize Quebec, as to do otherwise be treachery. He brought the people along for the ride, his ride, with no apparent regard for their interest. In other words, as premier, he was prepared to sacrifice their future for his vision and interest. He was determined to have his cake and eat it to. He tried to force Quebec to accomodate all the power from a Gull Island site on their transmission system, and if they could not he expected them to pay for the necessary transmission expansion. When that did not work he attempted to force their hands by going to Quebec's regulator, and the US regulators. He was determined to have everyone else pay for his grand plan. As premier, he could not make an honourable business agreement with Quebec, so his Gull Island plan went down the tubes.

Williams then took the second best plan of Muskrat Falls. He negotiated hard with Penashue and company to bring the Innu onside. He threw the Crown's fudiciary responsibility to look after the interests of the Aboriginal people first right out the window. He focused the agreement primarily on the Lower Churchill to the point that other aspects of the deal would fail if the Impact and Benefits Agreement on the Lower Churchill was not passed by the Innu people. He put them in a position of weakness. He tied their rise from poverty, which should have been taken care of with a land claims agreement first, to their approval of his dam projects. Penashue went along for the ride with him.

That brings us to November 30th,2012, yesterday, and the sudden trip to Labrador to sign a "loan guarantee". Peter needed saving, and it fit right into the old master's plan. To add the maximum amount of humiliation, Harper did not inform Dunderdale until it was all leaked to the press. She was forced to admit she knew nothing of it. Then, to top things off, it wasn't a loan guarantee at all. It was, in fact, a term sheet. A term sheet that would take months and months to finalize into any kind of formal agreement. However, the biggest problem for Dunderdale, and Williams, is the tying of the guarantee to Emera joining the project. The coup de grace. Then Premier Williams' grand plan of a deliberate failure for the maritime link, while retaining a federal loan guarantee is gone. The Prime Minister has handed him his final defeat.

Most commentators, and the press, have been watching the Muskrat Falls deal as if it were a roller coaster. They have been dizzied by the turns. The drama. The reality is one man who thought he could be a big fish in a big bowl, and damn all those who got in his way, has now been placed in check mate by a far superior chess player. Do I agree with everything the Prime Minister does? No. I do however appreciate him keeping the golden rule: power, use it, but abuse it and lose it. It seems that lesson is finally coming to Newfoundland and Labrador, thank God, and the people of this province will be so much better off for it.

As The Cookie Crumbles

They say a week in politics can be a lifetime. If that's true, then Newfoundland and Labrador politics must be into its one hundreth reincarnation in the last while. After taking the summer to rest the politicians in the PC party, and organize a Muskrat Falls counter-attack, we are now at the place where reality meets fantasy.
As the PCs sat in the House of Assembly this week, full of pompous vigour, the drama played out. While Rome burns Dunderdale stares at the ceiling of the House, rolling her eyes incredulously at the "insufferable ignorance" of the Opposition as they level question after question at the government. Her members giggle amongst themselves like school girls, and catcall across the floor. Meanwhile, outside the House, small but passionate demonstrations express their frustration with the state of democracy in the province. The media cranks story after story about the secretive Bill 29, which restricts their ability to do their job as they want to. The Opposition screams into an apparent blackhole on the need for a real debate on Muskrat Falls including the ability to cross-examine invited witnesses. The government responds with a private members motion by the Premier which will allow a full two hours of debate on the largest single expenditure in the Province's history. The move also makes the motion fillibuster proof - coincidentally enough.
And so it goes. The goal of public decision making and discourse has evolved into the most efficient way to implement your agenda. Democracy, and respect for the institutions that are meant to safeguard it, has been discarded in a most cynical and dangerous way. It is as if everthing we have held dear, everything that we believe that defines us as civilized society, has been discarded as easily as the weekly trash.
The press, that great guardian of the public right to know, the checker of absolute power, has largely been indifferent to the great principles our society was founded on. Some members seem interested in fighting back against the obvious abuse of power. Others, ironically enough the local CBC led by local David Cochrane, have verily reinforced the government's tactics by reporting issues as if those opposed to the government's behaviour are somehow deviant and grading government action on the success of their tactics as opposed to the damage those tactics cause our democracy in the Province. It's a disturbing trend in media that I have yet to see in any other province or the national scene for that matter.
Then, in a replay of the last provincial election, last minute polls are planted in the public domain showing support for Muskrat Falls. One poll was conducted for the "Believe in the Power" group, locally known as Millionares for Muskrat.
They are released within a day of each other, they both have a sample of 400 people, they have a similar result, and they were both commissioned by business people supporting the project. A shameless and unsophisticated attempt to undermine the democratic process as the House of Assembly gathers to discuss Muskrat Falls, such as it is. Such is the incestous relationship between bases of power in the province, and such is the shameless abuse of power that is graded rather than condemned.
The one poll, which showed 59% support for Muskrat Falls, questioned whether people wanted a referendum and a PUB review of the project, and also if people felt they had enough information to make a decision. The results were revealing. 69% of people wanted Muskrat Falls sent back to the PUB for indepth scrutiny. 53% wanted a referendum. Over 50% didn't believe they had enough information. An interesting result. Essentially, it would appear a majority want Muskrat Falls developed, a majority want it further scrutinized, a majority want it submitted to a referendum, and a majority want more information so they can make an informed decision. It may seem like a scewed result on its face, but is it really? It may be the people are saying they aren't opposed in principle, but they don't trust the government's information so they want the PUB to give it complete, unimpeded scrutiny, and then submit the final result to a referendum so they can make that final decision - not the government.
As you may or may not know, I will be conducting a Charter challenge on the ratification of Muskrat Falls. It has received very little media coverage, and no really factual media coverage whatsoever from, guess who, the local CBC. Ordinarily, one would think a Charter challenge that could alter the government's plans on Muskrat Falls would be newsworthy. It's not that I need the coverage, but the principles involved most definately do. Yet as we see in this Province, the elites, some media or otherwise, tend to attack the messenger to kill the message. Its the kind of society that we all thought belonged in the distant past. A bastardization of democracy. A Franken-democracy. We won't stop in our fight to end it. They won't stop fighting to end our goal of bringing a real democracy to the people of the Province. That's how the cookie is crumbling in Newfoundland and Labrador.

Remembrance Day

November 11 is Remembrance Day. Its a day we honour all those who served. We pay special attention to those that sacrificed their mortal lives, and those that sacrificed their normal lives with wounds that never went away - be they physical or emotional. We honour you, and we honour your families. Most of all we owe you. We owe you everything. We owe you our freedom, our right to speak, our right to vote, our right to be free of oppression, and our society as you handed it to us. On Remembrance Day, we honour sacrifice. And that is the most important honour. But we also honour your intention of that sacrifice - to live and be free. Thank-you Dad.

DAD - Greg Cabana

SON - Josh Cabana

Moi

Newfoundland and Labrador Inc - Counter-Attack

For most of the last two years of the Muskrat Falls debate the business community has stayed relatively quiet, and on the sidelines. Then things started to change. First off was former Premier Danny Williams, and the company he serves Alderon Iron Ore Corp. coming out and stating Muskrat Falls power was necessary for Labrador mining. In fact, Williams said "alot" of Muskrat Falls power was going to that particular purpose. Then, despite a few tempests throughout the summer, Premeir Dunderdale disappeared for about three months. Speculation was ongoing. "Where is the Premier" many asked. Then last month at the St. John's Board of Trade lunch, Dean MacDonald kicked off the counter attack by stating: "I don't think we should be ashamed of ourselves in any way, shape or form, to be advocates for what we believe in".

That was the beginning of the businesss community's Muskrat Falls counter attack - in a sense. While the Premier was off chilling out, and recuperating from being brutalized during the spring legisative sitting, a company called MT&L opened an office in St. John's. In fact, the Nova Scotia headquartered company registered with the corporations branch on April 3, 2012, as an extraprovincial registrant. Enter Nancy O'Connor. She had been spending most of 2011 with M5 Marketing. Some of her work included:

i) listed as Nalcor media contact for the response to Nunatukavut complaints over lack of consultation on the Lower Churchill project;
ii) Listed as Nalcor media contact for panel hearings on the Lower Churchill development;
iii)Listed as media contact for OCI for the redfish application - 4 June 2011;
iv) Listed as media contact for OCI for the flatfish application - 17 March 2011;
v) Listed as media contact for Rona - 29 June 2011;
vi) Eastern Waste Management; and
vii) KPMG April, 2012.

Nancy was even given her own email address at Nalcor: connor@nalcorenergy.com.

Then there is Sarah Sullivan, who was responsible for the Lower Churchill public relations at Nalcor for four years. The niece of recently disgraced politician Loyola Sullivan, joined the firm in the summer of 2012. In a recent twitter exchange I had with her, a one tweet exchange, where I asked her about the contractual relationships MT&L had with the government and/or Nalcor, she had this to say:

Rock Solid Politics‏@BradCabana @sullivansarahj Does your firm ML&T have any contracts with the Newfoundland Government or Nalcor? #nlpoli

11:28 AM - 10 Oct 12 · Details
10 OctSarah Sullivan‏@sullivansarahj

@BradCabana No & yes (respectively). @MTandL fortunate to have clients we're proud of- nalcor, emera, mf coalition and many, many others

Follow up questions to MT&L, Nalcor, the Government of Newfoundland and Labrador went unanswered. Ms. Sullivan herself went completely silent, and refused to answer any further questions.

On October 3, 2012, the St. John's Board of Trade endorsed Muskrat Falls after a hate filled anti-Quebec speech by the Premier - her official come back to work day. One day later a pro-Muskrat Falls business group announced they had formed. Some of it's members admitted they could have direct benefit from the project, but were suppoting it because it would be good for the province.

The pro Muskrat Falls Group launched a website, registered to MT&L in Nova Scotia, and named a spokesperson, Nancy O'Connor of MT&L. Individuals belonging to the group are also running ads on VOCM running down the people against the project as "naysayers".

Interestingly, MT&L is just fresh from a controversy in Nova Scotia. They were hired without tender, on an emergency basis, by the Nova Scotia government to promote a national ship building contract for the province - the bill was over $300,000.00. Many people in Nova Scotia seem unhappy with the untendered "emergency" basis nature of the contract, and have even publicly stated it was used to get around the normal tendering process as public relations does not meet the requirements of an "emergency situation".
That being said, and the fiasco still unfolding there, I thought it was right to bring what's going on in the province to the public's attention.

That earned me the title of "dangerous zealot" from local radio host Paddy Daly. He even promised to ban me from the show. Said it was none of my business how private companies spent money. When I brought it to his attention that Nalcor is a public company, and MT&L has a contract with them, according to their staff, Daly told me they didn't have to answer to me or anyone else. Naturally I found that defensive attitude interesting.

On a related note, local PR Firm The Idea Factory announced it was also supporting the corporate pro Muskrat Falls campaign. I asked President Kevin Casey if his firm was being paid to do contract work for the pro Muskrat Falls group. His response was:
"The Idea Factory helping this independent coalition - 100% donation of services as needed. No contracts. No fees. No small print."
I followed up with a question asking if the Idea Factory intended to write off these donations, as a gift in kind, on their taxes. He would not respond. MT&L gave a similar respones to Ed Hollett, a local blogger, who asked if MT&L is being paid for its services or is volunteering them: "@edhollett A little of both. @MTandL is volunteering in kind services and also being compensated for hard costs".
If the PR firms are being subsidized by the taxpayers to work on the promotion of the Muskrat Falls project it raises a number of questions. Is it a corporate donation to an essentially political movement. Are larger contracts with entities like Nalcor and/or the provincial government, that have an obvious stake in Muskrat Falls, subsidizing this political activity. These are critical issues.

Then, earlier this week the Newfoundland and Labrador Environmental Industry Association (NEIA) issued a release supporting the Muskrat Falls development. VOCM reported it with a headline suggesting this was an environmental group. The Board of NEIA is made up of corporate actors, including three from Altius (mining company), one from Nalcor, one from Husky Oil, one from the Labrador Chamber of Commerce, and one from the Pennecon Group. That is about 90% of the Board. The reality is NEIA is a corporate/industry group - not an environmental group. The VOCM headline was very deceptive, and was subsequently changed once scrutiny was placed upon it by opponents of the project. It should be noted that VOCM owner, John Steele, is a founding member of the pro Muskrat Falls business group.

That brings us to the highlight of the week. Yesterday the PC government shuffled the Cabinet and created, of all things, an Office of Public Participation. The Telegram put it this way: "The premier also announced the establishment of a new Office of Public Engagement within Executive Council, which will include the Rural Secretariat, the Voluntary and Non-Profit Secretariat, the Youth Engagement office, the Strategic Partnership Initiative, and the Access to Information and Protection of Privacy Office.

Dunderdale said the new mandate of this office will ensure every department can launch effective, targeted and interactive public consultations,"including social media and rich information resources."

Significantly, the Office is controlled directly by the Executive Council - in other words the Cabinet. The restrictions placed by Bill 29 to the Access to Information Office means this new "Office" is wide open to manipulation by the government with no real checks or balances. Some corporate descriptions of Public Engagement functions of their senior staff include:

" ... the Deputy Director is in charge of the communications program and of the public engagement program (campaign, advocacy and education), with the objective of raising awareness about the mission"

"The PEAC Officer shall -
- design and implement in collaboration with partners, allies and Oxfam colleagues a public education, campaign and advocacy program focused on Oxfam Canada's priority theme of women's rights and gender equality;
- work with Communications team members to publicize the work of Oxfam Canada by initiating media engagement and supporting and training volunteers to actively engage local media in promoting Oxfam Canada campaigns and advocacy initiatives"

In other words, this Office, as the Opposition nicknamed it almost immediately, as an "Office of Propoganda". With little or no scrutiny to the awarding of private contracts to public relations firms, especially in the context of the current Muskrat Falls debate, the similarities to the Ship Building Scandal in Nova Scotia jump off the page.

Speaking of propoganda, former Premier Danny Williams is giving a speech on Monday at the St. John's Board of Trade. Apparently, Muskrat Falls will be high on his agenda as well.

Suffice it to say, the business crowd in St. John's have started their full court press. The provincial government seems ready to start theirs. Is Nalcor funding indirectly, or directly, public relations firms to work on trying to sway public opinion? How much are these contract worth? What are the terms? We don't know, because they aren't responding to questions. Are we seeing a Nova Scotia type situation unfolding? Is the contract this time with Nalcor as opposed to the provincial government in Nova Scotia last time? Will they be with the "Office of Public Engagement"? Is it because Nalcor doesn't have to release these, or almost any, documents? All hard questions. The obvious truth is that business and government in this province are far too close, and eventually that combination comes back to haunt. All of these questions aren't being answered by those responsible for the Newfoundland and Labrador Inc. counter-attack.

Expose Alderon Iron Ore Corp - the conclusion

2010 ended with Alderon being in its best cash shape ever. It had $24,376,060.00 in the bank, but a ballooning deficit that reached $32,347,749.00 by year's end. It incurred $4.6 million in administration expenses alone. Rougly $1.3 million went to the Exploration Group(Forbes West)alone. This covered rents, wages, and investor relations among many things. Alderon at this point had almost no staff of its own, and was billed for all these expenses. This, despite the fact that Alderon had only two "offices" at this time: one in Toronto that was in reality the office of Black Iron (Forbes and Manhattan company); and one in Vancouver that belonged to the Exploration Group (Forbes and Manhattan). In addition, large personal contracts for management were signed between Alderon and Forbes and Manhattan interests. The sole primary, physical asset the company had, other than the mine deposit, was a $180,000.00 trailer in Labrador.

2011 was a busy and transforming year for the company. Under the new Forbes and Manhattan direction the company moved ahead with exploration on the Kami site. The company was audited by Revenue Canada for its GST/HST return from April to June, 2011. In September, 2011, the "Forbes Fee" (Forbes and Manhattan)was increased to $40,000.00 per month, plus expenses, from the previous $10,000.00 per month. On a side note, the "Forbes Fee" also provided a lump sum payment of 36 months worth of fees should a change of control result in Mr. Stan Bharti leaving. Exploration Group (now Forbes West) had a contract to provide services and facilities to the company at cost plus 15%. 2011 also witnessed Alderon's stock graduate from the TSX to the TSE - at $2.67 per share.

2011 also marked the year when Alderon started to get a distinct political flavour. Gary Norris, recently retired Clerk of the Executive Council under Danny Williams, signed a personal services contract with Alderon to become Executive Vice-President of Government and Community affairs (after only 7 months from leaving the government). Shortly afterward, Todd Burlingame left Nalcor to become Alderon's Executive Vice-President of Environment and Aboriginal Affairs - a similar position he held at Nalcor.

On September 30, 2011 Alderon's name changed one more time - Alderon Iron Ore Corp. This time there was no reverse share split. Not to be outdone by his former staff, Danny Williams himself was hired onto Alderon with a consulting contract, as Strategic Advisor to the Chairman, on December 22, 2011. His long time communications director while Premier, and confidante Elizabeth Matthews was hired on the same day as a Communications Consultant.

Alderon also hired on 52380 Newfoundland and Labrador Inc to be a consultant for railway development to the mine. 52380 was incorporated September 7, 2005. It was ammended twice and lapsed, but brought back to life again. The company shows two directors - Greg Mercer, and his wife. Mercer served as Special Assistant to Brian Tobin, Fisheries Minister from 1994-1996. In September, 2000 he challenged Gerry Byrne, with the backing of provincial Liberals, for the federal Liberal nomination. He lost, and by November 2000, he was appointed Senior Policy Advisor at Industry Canada under then Minister responsible - Brian Tobin. Mercer is a federally registered lobbyist, and shows Tobin's/Forbes and Manhattan's Consolidated Thompson as his one registered client. He was hired three days after Danny Williams joined Alderon's Board of Directors.

While it was a busy year for Alderon, it was also the most expensive by far. They finished the year down to $7,759,933.00 in the bank and a massive $68,790,827.00 deficit(more than double the year before,and six times the year befor that). Key management personnel received $10,914,462.00 in renumeration. Other big tickets included: $3,567,604 in salaries and benefits; $15,182,005.00 in general and administrative expenses; $21,201,210 in exploration and evaluation expenses; $10,574,640.00 in share based compensation; $1,625,232.00 to Forbes West; and $2,926,997.00 in consulting, professional and legal fees. So much was spent that the company lost $37,506,618.00 on operations in 2011. A year that was very rewarding for insiders, but expensive for the shareholders.

January, 2012 started with a big financial shot in the arm for Alderon when Liberty Metals & Mining Holdings,LLC, a susidiary of Liberty Mutual(USA)took a major position in the company. Liberty pumped $39,999,999.00, less transaction costs of $2,626,000.00, into Alderon in exchange for 14,981,273 shares at $2.67 each - 15% of the company. It was significant as an investment for the credibility it lent Alderon, and of course the cash. Altius was diluted down to 34% opwnership.

On February 23, 2012, Alderon established a detailed Code of Ethics which was a significant departure from the practises of the old days within the company.
On March 28, 2012 Danny Williams joined the Board of Directors. It was an interesting choice as all other members of the Board represented significant shareholders.


On April 13, 2012, the news that Alderon had been praying for was announced. Hebei Iron & Steel Group (China) agreed to purchase 19.9% of Alderon and a 25% stake in a new partnership that was to be established to own the Kami project, for $194-million.
Hebei was to initially buy a near 20-per-cent stake in the Canadian company for $88.3 million at $3.42 a share, or a 0.6-per-cent discount to the day's closing price. Following that, Hebei would invest $105.7-million, giving it the right to a 25-per-cent interest in Kami. The deal also gave Hebei the right to buy 60 per cent of the iron ore produced annually from Kami. Hebei agreed to try and assist in obtaining debt financing for the Kami project from Chinese banks. GMP Securities was Alderon’s financial adviser on the deal and Bank of America Merrill Lynch acted as Hebei’s financial adviser. In a note of interest, the agreement states there were no "finders" except Cuda International Ltd. and GMP Securities L.P. The troubling part of this statement is almost no information exists on a "Cuda International Ltd". The announcement did say that the price per share was discounted 6% from the day's trading price. That may indicate a 6% pay out, or part thereof, to Cuda International Ltd.That represents about $11,440,000.00. There is certainly no record of payments it may have received due to its involvement in this transaction. The only firm of record close to that name the author could find was Cuda Capital Corp, now August metal - previously owned by Reza Mohammed. That's not to say it was the same firm, but the issue is clouded.

On August 9, 2012, Alderon added a significant piece to its infrastructure puzzle by entering into a Port Agreement with the Port of Sept-Ile. The agreement was for 8 miliion tonnes of ore to be shipped annually (although Alderon's plans call for double that ammount). The cost to expand the Port was pegged at $220,000,000.00, and Alderon was required to put in $20.46 million in two payments - $10.23 million on signing and $10.23 no later than July 1, 2013 (interestingly, the federal government added $55 million in as well). Alderon was also required to put up an irrevocable guarantee of the equivalent value. The deal was for 20 years with a 5 year option. Alderon would recieve a discounted rate for shipping until its initial pay-in had been discounted back to the company. Alderon apparently did not have the money for its share, so it turned to Liberty Metals. Liberty provided bridge financing for the first $10.23 million payment, securing it with a mortgage against the Kami project with an 8% interest tag, and promised to front the second half if it was required.

On August 13, 2012 Alderon joined CN Rail's feasability study to develop a rail line from Sept-Ile through to northern Quebec as part of the Quebec government's Plan Nord.

Alderon's stock hit a high of $3.83 on February 22,2012, but started to slide badly from that point on. By late August, 2012 it was at $2.45 per share, a $.97 (32%) drop from the price Hebei had agreed to pay per share. On August 31, 2012, pursuant to the terms of the subscription agreement (as amended) (the "Subscription Agreement"), Hebei acquired 25,858,889 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$62.3 million, representing 19.9% of the issued and outstanding Common Shares. Hebei was permitted to change its price per share offering in accordance with a section in the original agreement that gave it flexibility should the value of the Alderon change between the initial signing in April, and the final signing. Concurrent with the Hebei closing, Liberty Metals & Mining Holdings acquired 3,816,181 Common Shares at a price of C$2.41 per Common Share for gross proceeds to the Company of approximately C$9.2 million, allowing LMM to maintain its relative proportionate interest in Alderon. Also concurrent with the Hebei closing, Alderon repayed the $10.5 million bridge loan previously advanced by LMM. Altius also had a pre-emptive right to purchase shares to keep its percentage ownership of Alderon, but apparently did not. The dilution left them at about 25% ownership.

An interesting part of the Hebei Agreement is the formation of a seperate entity to own the Kami project. It appears the old Privco company (0860132 BC Ltd) Mark Morabito used to buy the interest in Kami from Altius may now be the shell company used as this seperate entity. The Agreement awardes 75% ownership to Alderon, and 25% to Hebei. The exact details of the take-off agreement are confidential, but it does remove Kami from Alderon's direct ownership. It also restricts the number of directors in the new company which would tend to benefit Hebei. It does free Alderon up to pursue other mining developments that it may try and capitalize without jeopardizing the financial health of the Kami interest. It may also reduce the over all value of Alderon in the near and long term. Ms. Zheng Liangjun and Mr. Tian Zejun were appointed to Alderon's Board of Directors and, as has been the practise, Stan Bharti of Forbes and Manhattan left the Board - although he kept his lucrative consulting contract. Alderon and Hebei were required to contribute to capital expenditures for the development of the Kami Project not covered by initial capital contributions and project debt financing, in accordance with their respective interests. That leaves it to Alderon to come up with 75% of the projected $1 billion to bring Kami into production. There is a note in the agreement that Hebei, a state owned corporation, would try and facilitate borrowing from two Chinese banks to fund Kami, but no requirement that the funding is mandatory.

In September 2012, Alderon submitted its Environmental Impact Study (EIS) for the Kami project. It outlines a number of challenges facing the development. One such challenge is electrical power. It calls for a new line to built from the Upper Churchill facility that it estimates will cost Nalcor $150,000,000.00 to build. Curiously, it also outlines the use of hydro power and oil-fired power at Kami. The EIS states aproximately one third of the power needed to run Kami at its original output of 8 million tonnes per year would be produced by oil fired generators. The reason given was it was cheaper to use the oil fired generators. This is fascinating when you consider the provincial government's primary purpose for Muskrat Falls was to generate green power and replace Holyrood. The author of that strategy, Danny Williams, now sitting on Alderon's board, is actively involved in promoting the use of oil fired generators, because they are cheaper than electricity. But, I digress.

Alderon's future as a company appears speculative at best. Its stock is now down to $1.73 on the TSX and $1.76 on the NASDAQ. Its cumlative worth has dropped about 60% in the last seven months. China, Alderon's main partner, is facing large over supply issues with iron ore and a slowing economy - domestically and internally. The ore to be produced at Kami cannot be sold in most markets except China due to its make up. So, Alderon and Kami remain almost completely reliant on the whims of China for their success as a company. As Alderon found out, when the original agreement was ammended to drop share purchase prices by Hebei, China has them in a position where they have very few options.

In the end, Alderon remains essentially a "promoter" type company - not unlike its earlier days. It was set up to take an asset, promote it, "de-risk" it, and then allow someone to take it over. That's the way Forbes and Manhattan rolls, and this one is not much different. Forbes group will not take this project to production themselves. We will likely see the same in the projects that Forbes and Manhattan, and Forbes West, are currently involved in within Newfoundland and Labrador: Cap Ex; Ridgemont Iron Ore Corp; Cross Hair Energy Corporation; and Castillian Resources (Hope Brook Gold Project, located in southwestern Newfoundland).

Expose Alderon Iron Ore Corp - Part 2

Alderon entered 2009 as essentially a shell company, and heavily under the influence of Forbes and Manhattan. Enter the Exploration Group, head quartered in Vancouver (run by Mark Marabito), and Altius Minerals of Newfoundland and Labrador. The Exploration Group was shown until recently as a Forbes and Manhattan company. In February, 2012 the Exploration Group made that association clearer by rebranding itself as Forbes West. Forbes and Manhattan's, and Exploration Group's earliest success in Newfoundland and Labrador was launching Brian Tobin's Thompson Consolidated iron ore mine in Labrador. Their other project with a long hisory in the province is Cross Hair Exploration - a uranium exploration company. They were behind the eight ball developing their uranium project compared to fellow promoters Altius.

Altius, incorporated in Alberta on March 5, 1997, traded on the Alberta Stock Exchange, and then the TSX(1999) and TSE(2007). Altius created Aurora Energy in 2003 with Australian, Fronteer Development Group to develop uranium prospects. Australia's Paladin Energy Ltd now owns Aurora with Altius holding shares and a 2% gross sales royalty. On June 23, 2008 Altius announced an agreement to jointly develop its Kami project in Labrador with Norvista Resources Corporation, a Brian Tobin interest. The joint effort failed to produce and Altius turned to Mark Morabito.

Morabito formed a shell company, 0860132 BC Ltd (Privco) and entered into an agreement with Altius known as the Privco - Altius Option Agreement. Essentially, it had the following elements:

1.) Privco gained the right to a 100% interest in the Kami project;
2.) Privco had to assign that option to a mutually agreed public company listed on the TSX or TSE;
3.) Meet seperate exploration funding targets of $1 million and $5 million within a year at the Kami site;
4.) Altius was to receive a 3% gross sales royalty; and
5.) Altius was to receive 50% of the shares in the public company.

The deal was announced on November 2, 2009. On Decenber 3, 2009 a private placement of 10,000,000 shares was issued by Alderon at $.15 per share. The offering was carried out by Delano Capital Corp, owned by Julian Bharti - Stan Bharti's son, and Axeman Capital Corp, which had a history of brokering offerings for Forbes and Manhattan companies. On December 8, 2009 the Annual Meeting of Alderon authorized a 2 for 1 reverse share split as required by the Privco sale agreement. On December 16, 2009, barely one month after the Altius Option was announced, Mark Morabito announced he had entered into an agreement to sell Privco to Alderon.

2009 was a transitional year for the company as it entered the Forbes and Manhattan fold as a shell company with a future purpose. Its annual financial statement for the year showed a cash balance of $4,920.00 and an accumulated deficit of $20,631,963.00. It was now in the hands of Emprise Capital for the apparent purpose of rescuing it to the point that it could be functional - even as just a shell company. Emprise was to receive 3,500,000 shares as compensation for debts owed to it by the company. The company had reached such a low point that on June 30, 2009 a cease trade order was issued by the BC Securities Commission for failure to provide audited financial statements. The order was revoked upon their submission on August 13, 2009. Alderon was ready for a change for the better. That started in 2010.

On January 15, 2010 Alderon issued another private placement of 10,000,000 shares - this time at $1.00 per share. Delano Capital was again a broker on this placement, as was Axeman Resources Capital and PI Financial Corp. http://tinyurl.com/9raoa5x
On January 19, 2010 Alderon completed another requirement of the Privco purchase and replaced its entire board with the Forbes and Manhattan team: Out - Jeff Durno, Robert Chisholm, Aron Buchman and Craig Goldenberger; and In were - Mark Morabito, Stan Bharti, Bruce Humphrey, Brad Boland and Patrick Gleeson. In addition, Altius as the controlling shareholder gained the right to name three members to the board, but chose to name two - John A Baker, and Brian Dalton. On February 19, 2010 Alderon listed on the American NASDAQ exchange.

On March 3, 2010 the Privco/Alderon deal was completed. Mark Morabito received 5,000,000 post consolidation shares in Alderon for acting as essentially the middleman between Alderon and Altius. Altius received 31,778,081 post consolidated shares, and a controlling interest in Alderon. Alderon also agreed to fund exploration on the Kami project of $1 million in the first year and $5 million in total in the first two years http://tinyurl.com/9kvrmhn . Altius had already completed aerial reconnaissance on the Kami project in 2006-2007, but there remained drilling, etc ahead.

On November 26, 2010 Alderon announced a private placement of 7,300,000 share units http://tinyurl.com/9sc4mrf . The price per unit was $2.20 and entitled the holder to a warrant of one common share and one half a common share exercisable at $2.80 for a period of 24 months from the closing of the offering. The original offering was valued at $16,060,000.00 with an additional over-allotment option of upto $4,015,000.00. The Alderon press release named Haywood Securities as the lead underwriter. However, Delano Capital Corp, owned by Stan Bharti's son, claims to have conducted the transaction: 9,125,000 units at $2.20 per unit for $20,075,000.00. The press release states there is a 6% commission, so one could assume the return for Delano Capital Corp would have to be around $1,204,500.00. The purchaser of these share units remains confidential.

In Part 3 of this series the Americans and the Chinese arrive at Alderon; Alderon gets political; and Muskrat Falls gains a new champion in Alderon.

Expose Alderon Iron Ore Corp - Part 1

Alderon Iron Ore Corp came to everyones attention in the province when former premier Danny Williams was named Special Advisor to the Chairman in 2012. A little known company that was suddenly the next Thompson Consolidated mine. It has been in the press advocating its need for Muskrat Falls power yet we know nothing about it. This series will attempt to answer some of those questions.

It all began with the incorporation of the name Comanche Resources Inc, under the Company Act (British Columbia), March 21, 1978. A little less than a year later, February 28,1979, its name was changed once more to Shawnee Oil Corporation. While it was difficult getting any information on these two names, both reappeared in the United States in later years - now defunct and registered as inactive foreign for - profit corporations. On June 11, 1981 the company changed its name yet again - this time to Enfield Resources Inc. Again, not much information was available, and again the same name reappeared in the United States. Enfield Resources Inc was formed in Delaware, May 20, 1986 and appeared in US bankruptcy court on March 10, 1989. Whether or not there is a reason behind this U.S link or it is simple coincidence is anyone's guess.

The story really starts to take life on June 30, 1989 when the company name is changed one more time - Pacific Summa Capital Corp. The records show one Dennis Kozak President and Director, with an office at Suite 411-850 Hastings Street, Vancouver, BC. It appears for the first time as a publicly traded company on the Vancouver Stock Exchange under the symbol PSU.

The Vancouver Stock Exchange (VSE) was essentially the wild, wild west of stock trading in North America. Wikipedia describes it well during the period:
" In 1991, it listed some 2300 stocks. Some local figures stated that the majority of these stocks were either total failures or frauds. A 1994 report by James Matkin (Vancouver Stock Exchange and Securities Regulation Commission) made reference to 'shams, swindles, and market manipulations' within the VSE. Regardless of the low opinion several held in it, it had roughly four billion dollars in annual trading in 1991."
To be clear, this in no way suggests the companies mentioned in this article were involved in such activities, but it gives you a sense of the backdrop to this story.


On June 28, 1991 Pacific Summa Capital Corp changed its name to Pacific Summa Environmental Corp, and issued a share swap of one old for one new share. It signalled a change in the company's focus as it tried to market two products which it had US patents for: Enviro Hazmate (fire extinguisher); and Zeomix (material for toxic clean up). The company entered into an exclusive distribution deal for Zeomix which was subsequently cancelled. On June 16, 1997 the BC Securities Commission filed a Cease Trade Order against the company due to outstanding annual fees. On September 16, 1997, the Securities Commission banned Kovack from trading in the companies stock, because he failed to file insider's disclosure documents. Other members of the board at that time included Gerald Jardine, John Toljanich, and David Van Dyke. On March 10, 1998, Kovak resigned as President of the company. The company itself was suspended from the VSE on July 16, 1998. The Cease Trade Order was revoked on July, 27, 1998. Gerald Jardine took over as President and the company delisted from the VSE on November 26, 1999. Significantly, Mark Brown took over as CEO. On November 27, 1999 the company joined the TSX venture exchange. Its high value was on the VSE at $3.35 a share, and its low value was $.01 a share on the TSX when it delisted on August 8, 2000.

The next day, Pacific Summa Evironmental Corp was renamed as Traux Ventures Corp. The company by this time was carrying a deficit of $10 million dollars from its previous years, had failed to launch any successful projects, and left many disappointed investors in its wake. To launch Traux the Board of Directors initiated a 30 to 1 reverse share split. That freed them to launch yet another share offering to recapitalize the company. On April 30, 2001 Reza Mohammed took over from Mark Brown.

Reza Mohammed ran a large number of exploration companies from his tiny office in Vancouver. The companies all had the same fax and phone number, and board members - particularily one Anita Algie. Mohammed was a realtor in the Vancouver area, and earned a degree in the mid eighties. Some of the companies he ran included: Tellford Management; Cuda Capital Corp; Titus Capital Corp; Gold Key Capital Corp; etc. The one director that stands out on most of his companies was Peter Born. Born not only sat on Mohammed's boards, but he also sits on the Advisory Board of Forbes and Manhattan - a relationship that will become crucial to Alderon. Mohammed also sat on the Board of Directors of Castillian Resources Corp. Castillian was, and remains, a Forbes and Manhattan interest. It's at this stage of the company's life that Forbes and Manhattan becomes an influentual factor in the company.

Also joining Traux at this time was Senator Edward Lawson. A veteran of the Teamsters Union, Lawson was appointed as an indepedendant Senator by Pierre Trudeau and became a Liberal Senator when Paul Martin won the Liberal leadership. Senator Lawson was very involved in mineral exploration companies. Lawson's lawsuit against Sun media over a story outlining his relationships with stock fraudsters David Ward and Ed Carter created national headlines. Interestingly, the US department of Justice filed suit against the Teamsters executive (Lawson included) alledging the executive, and 26 mobsters, had conspired to hijack the union from its members. The issue was settled when the executive agreed in writing to reform the Teamsters. Lawson took over the role of Chairman of Traux.

Traux followed the path of its earlier incarnations. It achieved little. It traded alot of stock. Its overall deficit remained about $10.5 million. Its highest stock value was $.58 per share on November 17, 2003, and its lowest was $.115 on June 3, 2004. It delisted from the TSX on August 31, 2004.

On September 1, 2004, the company's name changed again - this time to Aries Resource Corp. As had become the norm the Board authorized a reverse share split of 4 old for 1 new share. Members of the Board at this time included Reza Mohammed, Senator Lawson, John Kowalchuck, Anita Algie, and John Harper. Notably, all the original Pacific Summa directors were gone at this point. A significant entry into the company was a 2 million share purchase by Doctor's Investment Group, a Bahamian registered company, owned by Michael W Taylor. Aires made an application at this time to transition into the Business Corporations Act (BC), and on the same day shareholders passed a special resolution to change its authorized capital to an unlimited number of common shares without par value. The next four years proved to be generally fruitless for the company. Its accumlated deficit increased to over $11 million. Thomas Tough, a director of Desert Sun Mining Corp, a Forbes and Manhattan interest, joined the Board. At the annual general and special meeting of September 4, 2008, shareholders passed a motion for a 10 to 1 share reverse and a name change to Alderon Resources Corp.Nineteen days later the stock completely collapsed. Reza Mohammed resigned as president on August 12, 2008. The saviours of the company were to be Emprise Capital Corp who invested in the company, appointed its Jeff Durno as president, and Robert Chisholm as director. In the words of Emprise: " Complete restructure and reorganization (of Alderon)".

The first few decades of the company's life saw it swing from one interest to another. It sold large amounts of shares, did numerous reverse share splits that crucified investors who were unlucky enough to invest, and fed numerous officers with handsome management fees. It went from oil exploration, to mining exploration,to capital fundraising, to environmental promoters, and back to mineral exploration. One thing it did not do was achieve any purposeful, positive return to its shareholders. It ended this era with a sorry $.01 per share worth. In the wild, wild west days of the VSE it behaved as most did. In its transformation to the TSX it did no better. By 2001 it was becoming infiltrated with people closely aligned to Forbes and Manhattan. The stage is now set for the Forbes and Manhattan remake - that is Part II.

The New Dawn Agreement-Hidden in plain sight

On the 26th day of September, 2008, almost four years to the day, the New Dawn Agreement was signed between the government of Newfoundland and Labrador, Nalcor, and the Innu Nation. It was meant to satisfy the constitutional requirement of consultation with aboriginal people when their lands are affected by proposed developments. For good measure, this agreement included compensation for the Upper Churchill development, which they were not consulted on in the 1960s, and an Impacts and Benefit Agreement (IBA) to compensate for the proposed Lower Churchill Development. On the face of it, and certainly in the reporting of it, the New Dawn Agreement is a long bit of long overdue justice for the Innu people, but is that all it is?


I began studying the Agreement in an effort to find clues on the financing of Muskrat Falls. The question in my mind was:
Is there any place in the last 5 years that the government of this province would have to expose itself, throw some cards on the table as it were, with regard to its plans on financing Muskrat Falls. The New Dawn Agreement fell into that category. If the Agreement's purpose was to lay out compensation for the Lower Churchill Development, then surely it must also include factors restricting that compensation. Here is what I found:


" (v) After Debt Net Cashflow is to be determined as follows, with all elements of the calculation related to the generation comonent of the Project and determined using Canadian Generally Accepted Accounting Principles ("GAAP"):

(1) Gross revenues, less transmission costs for market access including any applicable open access
transmission tarrifs and related upgrades; minus
(2) all operational and maintenance expenses and related charges, excluding depreciation and
amoratization on capital assets; minus
(3) all debt service costs related to the Project with respect to financing in place at First Commercial
Power, both Project and equity related, including but not limited to principal repayments, interest
guarantee fees, issuance fees and all other financing fees tat may be charged from time to time; minus
(4) All debt service costs related to borrowings subsequent to that in place at First Commercial Power,
both Project and equity related, including but not limited to principle repayments, interest, guarantee
fees issuance fees, and other financing fees that may be charged from time to time; minus
(5) refinancing fees and related costs; miuns
(6) preferred dividends (related to financing) incurred during the year; minus
(7) income and other taxes paid and payable during the year; minus
(8) capital expenditures incurred during the year; minus
(9) an allowance for decommissioning costs.


The " (6) preferred dividends (related to financing)" caught my attention. Ed Martin, CEO of Nalcor, has stated publicly that, in regard to traditional financing for Muskrat Falls:
"No question about it, and as I mentioned before, we have the lead arranger in place and this is all bid stuff. So whoever comes forward with financing we're going to use the cheapest financing."


Fair enough. Sounds reasonable and prudent. Just one problem. Preferred dividends are paid out to investers based on the issuing of preferred shares by that corporation. In other words, its not bid stuff handled by a neutral third party arranger. Its a deliberate act by a corporation to give up some amount of ownership to other interests (almost always private) in exchange for raising money. Preferred dividends are normally fixed and entitle the holder of those shares first payment before common shareholders on dividends ( which is why preferred dividends are included in the New Dawn Agreement to be deducted before the Innu get their share) In the case of Nalcor that would constitute a form of privitization.

Which brings me to the other part of the New Dawn Agreement that directly ties into this strategy:

" (c) In the event the parent company of CFLCO sells any of its common shares the Innu Nation shall be entitled to receive three percent (3%) of the proceeds received from the sale of those shares...
(d) If CFLCO issues a new class of shares with the purpose of diluting the value of the the dividend on common shares referred to in section 2(b), above, the Innu Nation's share of dividends is to be calculated as if the new class of shares had not been issued."
This section deals with the effects of selling or issuing new shares in CFLCO for the purpose of outlining how that would effect the Innu's bottom line on the Upper Churchill portion of the deal. However, it still points to the fact Nalcor is envisioning a sale of shares that would dilute its control over CFLCO, which is a privitization.

I asked Nalcor for a comment on this story, and they sent me the following response:
" This provision allowed Nalcor or its subsidiaries flexibility to issue preferred shares should that way of financing prove feasible and appropriate... There are no specific plans to do so at present. This is not a privitization or a royalty trust."
When I followed up with a question asking who they would sell these shares to if it proved feasible and appropriate they would not answer.

It seems clear that Nalcor is contemplating a preferred share issuance in CFLCO to in part fund the Muskrat Falls project. Preferred shares can be utilized on their own, or as part of a Royalty Trust. Nalcor, as a crown corporation, has shown us a part of its hand. We haven't seen the whole hand as yet. We don't know what rules the government has placed on Nalcor and the lead arranger. Is there a required Newfoundland and Labrador component? Ed Martin has already said it must be the cheapest form of financing. Royalty Trusts and preferred shares are normally cheaper, especially in the long term, than traditional bank financing.

Will the government attempt to shield the details of financing Muskrat Falls with Bill 29? In regard to royalties it now states:
" Section 27 of the Act is repealed and the following substituted:
(2) The head of a public body shall refuse to disclose to an applicant information that was obtained on a tax return, gathered for the purpose of determining tax liability or collecting a tax, or royalty information submitted on royalty returns, except where the information is non-identifying aggregate royalty information."

In other words, Nalcor is a public body, and it is forbidden by law to disclose royalty information submitted on royalty returns. Thanks to the sudden and determined passing of Bill 29 by the provincial government.

We live in a time of secrecy in Newfoundland and Labrador. A secrecy designed to protect the interests of certain people and companies involved in the Muskrat Falls project. This little bit was hidden in plain sight.

The Problem With Dean MacDonald

One lunch with the St. John's Board of Trade can say so much. Dean MacDonald, for those that don't know, is the b'ys choice to take leadership of the Liberal Party of Newfoundland and Labrador. He's meant to take charge as the PCs decline, which is no coincidence. Set up early in life by Danny Williams, and a few well positioned business deals related there to, he moved on to be groomed in the business circles of Toronto. His company in Toronto, where he spends most of his time, has the establishment likes of Brian Mulroney sitting on his Board of Directors. He is meant to pick up the sword from the dying PCs, and slay the orange dragon (NDP) considered to be on the rise and threatening to send the province back to the days of have not with its irresponsible proposals for the province. That pretty much sets the stage.

So friday they had lunch. It was given publicity by the press for a good two weeks beforehand. Apparently, the very presence of such a man, and the "address" (as the Telegram put it) he was to give were that newsworthy. It was called an "address", because saviours do not give political speeches to promote themselves. That is below the run of the mill saviour. They are only interested in the people, and the fact they are being promoted as a political leader is an unfortunate burden they must bare as the only voice of reason and hope. He is being portrayed as the latest saviour for Newfoundland and Labrador. In order to need a saviour though there needs to be something to be saved from. MacDonald's central "crisis" theme thus far, in his own words, seems to be:
"As a citizen of the province, when a premier walks in the door on day 1, we all want them to succeed...Unfortunately, for the premier, it's been an unmitigated disaster. There isn't a file you can show me that she has handled well - she really hasn't."

The problem with MacDonald's choice of words is the premier of any province does not handle files - their cabinet ministers do. Of course that would muddy the waters that it was all Dunderdale's fault. You see, if it is all her fault, and the rest of the PCs aren't blamed, then they are more likely to join MacDonald at the right time - as per the schedule. Whether Dunderdale never saw her role as the fall guy from the very beginning with the PC leadership race is her problem, but one that good ol' Dean is meaning to capitalize on.

In his role as saviour he called from the mountains to the business community to rise up against the "unmitigated disaster" and speak out:
"We're knowledgeable stakeholders on this, and we should have a very, very loud voice on it, and provide leadership, because I think leadership on these matters would be helpful...It's not about partisanship. It's about good stewardship."
Translation: Its not about partisanship, but hey, I'm running for the Liberal Party leadership, so let's put her down so I can take over - don't worry you will be invited to the party.
He goes on to ridicule the handling of the budget deficit, Muskrat Falls, Bill 29, and the labour shortage in this province. All important issues you say?
The problem with MacDonald, and his arguments, is his hands have blood on them. He would have to explain how he is so opposed to deficits that he signed a lease deal on a newly purchased building with the PC government that saw the rent bill for that government agency go from $200,000 a year in their old location to over $900,000 in his new one. He could also explain why he sold to that same government agency the used furniture left in the building, untendered, for over $85,000. Then there is his support, for Muskrat Falls which has cost the taxpayers to lose $1 billion so far, and has significantly contributed to the deficit.

There is his issue with oil pricing forecasts. As the Telegram put it:
" MacDonald said no other jurisdiction in North America has budgeted based on oil being $124 a barrell like the province did, and that estimate initially masked massive overspending.' What really makes me mad is I think it's just a plug number to balance the budget, which means there's all sorts of overspending.' he said, saying that Alberta budgeted on a $95 barrel of oil."

MacDonald's arguement gives no play to the fact that the PC government somewhat inflated their oil numbers to portray a better than can be expected deficit, because $650 million was taken from the operating budget forthe purpose of financing Muskrat Falls - his pet project. In an apparently obvious political manipulation to try and make the government look inept he cited Alberta's budgeted oil projection of $95 a barrel, but choosing not to state that Alberta prices are based on West Texas crude pricing, while this province uses Brent crude pricing. West Texas is normally $15-20 a barrel cheaper than Brent, so the real difference in oil projections between the two provinces is about $10 a barrel. That still leaves the government's high, but nowhere near the falsely exagerated example given by MacDonald.

His criticism of Bill 29, and his condemnation of government reprisals for speaking out is almost to foolish for words. MacDonald supported Danny Williams for eight years. A government that held "purple files" on journalists that gave negative reviews on the goverment. A government that promised whistleblower legislation, but never delivered. A government that expropriated businesses. A premier that was known to crucify anyone that dissented - Manning, etc.

MacDonald did not once publicly criticize Danny Williams methods. Instead, he profitted during Williams reign. He decries financial mismanagement while advocating for the Muskrat Falls project, and the Gull Island project that they plan to follow with. He portrays himself as a new voice of reason and discipline, yet he comes from the very same group that has put the province in its current financial problems.

What we didn't hear him say was how the gross debt will potentially double with the construction of Muskrat Falls. We didn't hear him say how that would raise annual interest payments on servicing the debt, and how that would impact future deficits. We did hear him critique the business community for not speaking up, but we did not hear him speak of the province's accountants questioning of Tom Marshall last year on the impact of losing $500-600 million per year with the loss of federal offset payments, and the impact that would have.

Yes, the problem with Dean MacDonald is in what he says and what he does not. He is not new. He does not represent change. He is the same old same old.

Referendum - Refer It

I always enjoy a good debate with the knowledgable and gregarious host of the VOCM Backtalk radio show - Paddy Daly. Paddy admits to reading this blog on a fairly regular basis, and I certainly listen to his show daily. Today the big debate was a referendum on the proposed Muskrat Falls project.
His first question to me via twitter today: " Was the last general election a referendum on MF (Muskrat Falls)?"
My answer to that was, quite frankly, no. You may recall during the election that the only dollar figures available on the Muskrat Falls project were the DG2 (decision gate 2 ) numbers provided by Nalcor. Unfortunately, DG2 numbers were based on a project definition of 5-10%. In other words, the $6.2 billion projected at the time was one hell of a ballpark figure. The public were confused, and the opposition, official and unofficial, ridiculed the numbers to the point the government was on the permanent defensive. As a result, the public chose not to make Muskrat Falls a re-election criteria, and instead it focused on the economy and a sudden influx of new fire trucks to small, rural communities. The media also chose to dismiss Muskrat Falls as a serious election issue, and instead focused primarily on the fall of the provincial Liberal Party in the polls and the race for second place. Under those circumstances, there was no chance to have the provincial election act as a referendum on Muskrat Falls.

Of course, the fact that the PC Party gained a majority, albeit reduced, certainly gives it the legal right to act unilaterally and force the project through - as it did with Bill 29. The problem is, as they found out with the political fallout from Bill 29, these things eat your political capital faster than a starved man feasting on a steak. The all important high ground, or moral high ground as some refer to it, falls just as quickly. Without the high ground the government loses the ability to legislate and certainly dooms its re-election. Normally given such a scenario the many backbenchers, and some ambitious cabinet ministers, would apply enough internal pressure to halt such a proposal. However, this is Muskrat Falls. Logic is not a word that one could apply to this government's approach. For instance, there is Natural Resource Minister Kennedy's comments on buying power from Hydro Quebec as an alternative to Muskrat Falls:

"So we could be buying power from Quebec that is generated in Labrador. There is something immoral about that, but unfortunately, as the current power contract currently exists, it is not illegal."

Minister Kennedy has a perverse definition of "immoral" considering most people would consider not purchasing power at say five cents a KW from Hydro Quebec in favour of power that will cost 20-30 a KW from Muskrat Falls as immoral if there is a cheaper alternative. The source of that power is really quite irrelevant to most people. This is just one of many examples of the lack of logic that is rampant in this government's approach.

Paddy then has this to say:
" I would be surprised if the majority of NLers wanted a referendum on MF."
Tough one to argue. On the one hand Paddy has no proof to back up his assertion, and on the other hand I have no evidence they do. That being said, what logical person could be upset at the prospect of being able to exercise their democratic right, on a clear question, regarding a serious financial matter that will single handedly shape the financial future for generations?

If elections were enough to give a government the right to do as it pleased we would have never witnessed a referendum in this country. We have had separatist governments in Quebec elected with the known sole goal of splitting the country up. Was their election a referendum on separatism, and their victory an instant endorsement of that goal? No. They held a referendum, and lost. The government of PEI held a referendum on the fixed link. The BC government held a referendum on the HST. The New Dawn Agreement had to be appoved by a majority of the aboriginal community in the one and only referendum on Muskrat Falls to date.

So Paddy ol b'y, an election is an election, but a referendum is the way we must go on Muskrat Falls.

Hydro Quebec Welcomes New Business

So, as the Williams, Dunderdale, Kennedy story goes, Hydro Quebec is holding us in a stranglehold. Not only are they denying us access to their power distribution system, but they are holding hostage our ability to develop Labrador's resources. When they say resources, or, industrial development they mean mines.

May 15, 2012, Jerome Kennedy: " Mr. Speaker...there is no dealing with Quebec on the issue of hydro-electricity power in Labrador...We need power for the island, so we buy power back from Quebec, if we could...".
Kathy Dunderdale: "Is all of the development in Labrador going to be hostage to Hydro-Quebec in terms of energy for development? ...That's a big part of the debate that needs to take place over the next few months."

Food for thought. Is Hydro Quebec holding Labrador development hostage? Is it so bad that we must nearly double our gross debt to free ourselves by building Muskrat Falls? Is Hydro Quebec denying us power for that purpose? Have we approached them to supply us the 1000 plus mw possibly needed in Labrador for mining development? Are they willing to talk? Would it save us 5-6 billion dollars if we could make a deal? I had to try and find out. The Newfoundland and Labrador government has been notoriously closed mouthed about any deals that would weaken, perhaps fatally, their case for Muskrat Falls. So where to turn? So, in a shot in the dark, I decided to ask the bad old b'ys themselves - Hydro Quebec.
Here is my email to Hydro Quebec:

" Much of the discussion here on the proposed Muskrat Falls project has painted Hydro Quebec in a very negative light - as uncooperative, a menace, and a major factor in thwarting development in Labrador. It occurs to me that Hydro Quebec has not been given a chance to address these charges. Therefore, I would like to write a story on the validity of these claims. Specifically, the following questions:
1. Does Hydro Quebec have the excess capacity to sell electric power to this province via the Upper Churchill facility and transmission system?
2. If yes, would Hydro Quebec be prepared to enter into a power purchase agreement with this province's utility to supply between 800 - 1200 mw of power at a fair rate?
3. Has the Newfoundland and Labrador government, or its utility Nalcor, approached Hydro Quebec as to the feasibility of such a PPA?
4. If yes, was there a formal request and if so was it turned down?
5. Any other comments you may have to put forward Hydro Quebec's position on these matters."

I was surprised and bewildered at the one sentence response I received :

"Dear Mr Cabana, Hydro Quebec is always willing to explore new business opportunities."

In other words, 800-1200 mw of power to this province from the Upper Churchill is open to exploration. In other words, they are not blocking industrial development in Labrador, and, to the contrary, appear to be willing to sell us all we could need. The Premier and her government have been selling us a line that is quite simply false. They've put it out to the media. They've said it in the House of Assembly. Purchasing cheap power from Quebec, even if it was ours to begin with, is not an option, and Quebec is blocking industrial development of Labrador. Now we know, that is simply not true. It is a serious misleading of the people of Newfoundland and Labrador. Now you have it, right from the source: " Hydro Quebec is always willing to explore new business opportunities.".....NOTE: To Danny Williams, this reply was requested and answered in one day - the first day of a separatist victory in Quebec.

Quebec's election - same ol same ol

Here we go Quebec. Its election time and the big question is: "are the separatists going to win?" Certainly the national press are tripping over themselves trying to disect the outcome, and its possible consequences. The last poll before the election is showing the PQ in the lead by 5% in a virtual three -way race. The same poll shows over 60% are against separation. Only 28% are backing that option. The second place runners are portaying themselves as nationalist business types that don't want to leave Canada yet, because the Quebec economy is not quite ready for that. Not a ringing endorsement, but second best in the snake pit. Question is though: " what message are Quebecers sending to the rest of the country."

The answer is typical politics Quebec style. Quebecers are poised to put in place a government that wants to get in the face of the federal government. Yet, they are not poised to give it a working majority. It will be held in check domestically by its weak election victory, but able to bark at the rest of the country at will. That suits a major purpose just on the horizon for all of Canada.

2013 marks the year of equalization negotiations. It will be one of the most divisive times in our history as a country, and threatens to rip the proverbial flesh from the bones. Provinces and territories standing against each other, and against the federal government, in a battle of wills over dollars. Equalization dollars. For Quebec last year that was around $8 billion - a huge part of their budget that helps pay for the european style social programs they enjoy. Those two issues are the heart of Quebec's election, and have been since the sixties. Socialism paid by the rest of Canada.

Fast forward to this election, and understand that Quebecers are not voting for a government to negotiate separation, but rather equalization. They are voting in the threat to achieve the goal. They are reigning in the threat with a weak government, but holding the card of a subsequent election up their sleeve. Each and every denial to them will be portrayed as a new and more grevious affront to Quebec's "legitimate aspirations". They understand that provinces like Alberta, Saskatchewan, and even Newfoundland and Labrador will be seeking to hold onto their oil revenues while attacking Quebec's hydro revenues. They have a quasi partner in Ontario and some of the maritime provinces that are becoming more and more reliant on equalization.

The people in Quebec have turned small "s" socialist, as evidenced by their endorsement of the NDP federally. The PQ, while not strictly socialist, is the closest thing in provincial politics there. The second place party is more business oriented, which is a political philosophy that Quebecers do not entirely trust. The Liberals were a good mixture of both in theory, but not so much in practise.

Post election Quebec will be turbulent in itself. Corruption will become the interim major issue with provincial Liberals being roasted on the proverbial stick. Big business, organized crime, and probably federally orientated forces will be exposed. Deals like the privitization of oil and gas prospects from Hydro Quebec to small, Liberally connected energy firms will likely come into focus. Territorial challenges from Newfoundland and Labrador in the Gulf, and possibly Labrador, will be ignited. Deals and plans for the Plan Nord will certainly come under scrutiny. These times will unfold as a time of "truth". The separatists will portray the truth as the ideal of "Quebec society" being violated by federalists and corrupted, disloyal businesses. They will argue for a return to a managed economy with loyal crown corporations like Hydro Quebec centering that move. They will look to rescind deals that they deem do not serve Quebec's interest.

So, we enter a new time of conflict this coming week. Will the country respond as it always has? Will Quebec be given the Plan B scenario as Chretien gave it to them? Will gateways and northern plans be scuttled? Time will tell. All we can say for sure now is Quebec has chosen its champion.

To Quebec with Love

The one strength Quebec has is its ability to move as a collective whole. Despite its public act of the reluctant bride, Quebec follows federal politics probably closer than any other group of people. It moves as one when its interests are affected. It has the ability of foresight, and the wisdom to use it. It creates conditions that favour it, and radically opposes those that do not. In the end it can be pragmatic as long as its strategic interests are served.

The Muskrat Falls federal loan guarantee is one such case. For starters it does not see Newfoundland and Labrador as any threat to its virtual hydro monopoly. Its key to understand that. No threat at all. Even if the complete Lower Churchill were built, and Quebec completely surrendered the Upper Churchill, Newfoundland and Labrador would be outgunned five to one for production of hydro power. Then there is the years they've spent concluding strategic alliances outside the country. Case in point, Vermont. Quebec owns the two dominant power distributors in Vermont, and just signed a long term agreement to supply both of them with all their power needs. In other words, they own it. So much so that Kathy Dunderdale wouldn't even attend the annual eastern premiers and governors meeting there this year.

But how does a Muskrat Falls loan guarantee possibly benefit Quebec? Here is how it works. Just before the last federal election, when the guarantee became a political promise publicly, the legislature got together in Quebec and denounced the awarding of it. They didn't oppose it on moral or ethical grounds. Not on jurisdictional grounds. No they opposed it on the grounds that they never received such a subsidy on any of their hydro projects. They made their statement for the record and then the issue virtually disappeared. There was almost no discussion of it during the subsequent federal campaign. There has been no discussion of it from Quebec since.

The fact is they smell the opportunity. The opportunity to cash in. They have formally notified the federal government that they oppose "special" treatment of Newfoundland and Labrador in regard to loan guarantees for hydro projects as it gives us an "unfair advantage". Now all they have to do is sit back and watch the feds give the guarantee to us in writing. Once that happens they will be knocking on the door for a guarantee for all their hydro projects, and knowing Quebec, they will likely want retroactive compensation for their previous hydro projects as well. The ironic part of all this, of course, is it leaves Newfoundland and Labrador in a much weaker position vs Quebec, and it bolsters the financial position of Hydro Quebec. In other words, its one step forward for Newfoundland and Labrador and ten steps back. This is how Quebec plays the game. It's as predictable as the hours of the day.

Unfortunately, its also the way the government of Newfoundland and Labrador play the game, which leaves us as the permanent doormat for everyone and their dog to use. Make no mistake, it is self-inflicted. Whether it be the days of sending cod to foreign markets before its time and ruining the market for it, the rush to build three mills which in the end starved all of them, the rush to sign on and build the Upper Churchill only to effectively surrender it, or the current rush to build Muskrat Falls to power an iron ore explosion in Labrador that must and will flood the market thus rendering them unprofitable, the government here has always approached economic issues with blinders on. The result has been a constant state of reaction to poor decisions based on greed. Unlike Quebec, our government is not strategic. It does not understand how to play the game in confederation. It tries to project Newfoundland style protest politics onto the national stage with almost zero effect, and then it wonders "why we have no influence". It is not a matter of the rest of the country not understanding this province. It is not a matter of having no influence or being ignored. It is not a matter of why the rest of the country won't fit into this province's vision.

It is a matter of Newfoundland and Labrador understanding that it is a part of the political family of Canada, understanding how that political family works, and pursuing its ambitions within the family. The rest of the family does not care if provincial nationalists feel alienated by history or their place. What they want to see is Newfoundland and Labrador exercising the political and strategic tools afforded every province within the country. Imagine the loss of political capital in the rest of the country that Danny Williams created by hauling down Canadian flags. Again a short term move, for a short term financial goal, that in the long run hurt the province strategically.

Is it a case of cutting off the nose to spite the face? Is it a case of a history of poverty and struggle that resulted in a political and economic culture of short term gain for long term pain? Is it a case of leftover divisions from the confederation referendum days, and long held resentments that poison the waters? Or, is it all of these things? My money is on the latter. In the end though, it will be the people of this province that pay the price for this lack of wisdom, and not their politicians, which is unfortunately the way it has always been.

Lies of Omission, and Half-Truths

"Clever liars give details, but the cleverest don't." Anonomys.

Lying can take many forms. The best, all encompassing definition I could find was from Wikipedia http://en.wikipedia.org/wiki/Lie.
When it comes to Muskrat Falls, and the circumstances surrounding it, the best descriptions are:

"Lying by omission:

Also known as a continuing misrepresentation, a lie by omission occurs when an important fact is left out in order to foster a misconception. Lying by omission includes failures to correct pre-existing misconceptions.

Half-truths:
A half-truth is a deceptive statement that includes some element of truth. The statement may be partially true, the statement may be totally true but only part of the whole truth, or it may utlize some deceptive element, such as improper punctuation, or double meaning, especially if the intent is to deceive, evade, blame, or misrepresent the truth."

I, therefore have to respectfully disagree with former Premier Roger Grimes when he said this week: " Sometimes Danny Williams would not know the truth if it smacked him in the face." The fact is that Danny Williams, Kathy Dunderdale, Jerome Kennedy, etc know the truth - they just choose to lie.

Danny Williams attack on Roger Grimes this week was outrageous, and cannot be left unchallenged. Williams accused Grimes of "rapping his arms around Quebec" and that Quebec was blocking this province's development of Labrador. Williams, and his then Minister of Natural Resources Kathy Dunderdale, spent five years in secret negotiations with Hydro Quebec to develop the entire Lower Churchill. The negotiations apparently failed because Williams would not compromise. Bottom line is that Quebec was willing to work with this province, but not at any cost. Williams knew Quebec was acting in good faith. Why else would he spend five years negtiating with them?

Williams also attacked Grimes for suggesting working with a potential seperatist government in Quebec City woukd be a futile and foolish effort. He conveniently neglected to qualify that statement with the fact that both Grimes and Tobin negotiated deals with seperatist governments - although both eventually came to nothing. The Upper Churchill agreement was negotiated with a strongly nationalist government. In fact, nationalist governments in Quebec are a fact of politics in Quebec. Williams should recognize this as he led one in this province.

Williams assertion that Grime's deal was a sellout to Quebec is just utterly and obviously false. In fact, the deal to develop the entire Lower Chuchill, and not just Muskrat Falls would have left the province in a much stronger financial position, and allowed it to retire debt with oil profits rather than ignore debt and in fact grow it substantially to achieve a third of the power. The only potential draw back to the deal was that we would receive only 600 mw of recall power, and it would be streched over a twenty year period. You may ask what difference that would make? Well, given that the mines in Labrador are under development, and may want over 1000 mw of power, that scenario may not have suited them. Recall if you will Dunderdale's tirade against Quebec in the House of Assembly during tbe spring when she decried leaving industrial development in Labrador in the hands of Quebec.
Also this week I raised the question why we need to build two 900 mw hvac lines to the Upper Churchill from Muskrat Falls. Vocm Nightline radio show host Pete Soucy raised the question again on his show. He actually wanted to know if it was true and if so what the lines were needed for. He received a snotty reply from PC MHA Kent that he should stop quoting me. Pete pushed it further, but the MHA would not answer. The next morning the MHA tweeted that yes there would be two lines to help maintain power in Labrador. Put aside the foolish reason put forward for a moment, and note that while he did confirm the two lines he did not identify that they were capable of carrying 900 mw each. That is 200% plus the amount of power Muskrat Falls could possibly produce. Then this week, Jerome Kennedy indicated that the power promised to Emera could come from any source and does not need to come from Muskrat Falls. You see, part truths, but other possibly damning facts left out. In other words, lies by omission, half-truths.

Unfortunately, lies by omission, and half-truths have become the norm in Newfounland and Labrador politics. There has been zero accountability and therefore zero fear to keep them going. Whether its Danny Williams and his assertion that Muskrat Falls will make this province a leader in environmental stewardship, while conveniently leaving out the fact that thermal power generation is actually going to be 2% higher than the isolated island option, or Dunderdale's demonizing of Quebec for holding back Labrador development, or even Steven Kent's sladerous assualt on Cabot Martin, the trend is the same: Clever liars give details, but the cleverest do not.