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.