Danny Williams, and the sale of... Atlantic XL - Part 2

When I started this look into the former Premier's business dealings and possible conflict of interest, with the sale of Spectrol Energy Services to SNC Lavalin, coming across a company named Atlantic XL was not in the plans. However, it soon came to light that this company was a matter of interest like Spectrol. In fact, Atlantic XL was made a subsidiary of Spectrol Energy Services. In other words, Danny Williams controlled it. Williams, SNC Lavalin, and a fellow named Collin Laird were contacted for comment, but after two weeks, nothing. Just wanted to get that bit of legalize out of the way.

To start the story you need to go to Scotland, Aberdeen to be exact, the corporate home of XL Group Ltd. XL Group was incorporated on April 14, 2000, and was previously known as Mountwest 288 Limited. XL Group has a number of subsidiaries: ORYX XL (joined XL Group in 2000); Aquidata XL (inc 1997); Excel Industrial Systems (inc 1992); Bennett Engineering Services (inc 2003); and until 2008 Atlantic XL. The sole shareholder of XL Group is one Collin Laird of Aberdeen, Scotland.

Scotland seems to, for some reason, hit near and dear to Williams, Brian Tobin, and even Dean MacDonald. Starting with Brian Tobin and Dean MacDonald back in 1998, MacDonald had this to say about a Scottish business trip:

"We identified the Information Technology Association of Canada's annual international deal-making conference, Softworld, as the perfect opportunity to have our coming out party (so to speak). After pitching to host the conference, the ITAC brass finally and reluctantly agreed to let us host Softworld in September of 1998.

I was the chair of the conference and to ensure a healthy dose of European delegates, we convinced Scotland to co-host the event with us. After months of negotiations it looked like we had our deal. I led a trade delegation to Aberdeen to sign the agreement -- everything was falling into place. At least I thought so.

A day and a half before the closing banquet at which the M.O.U. was to be signed, word was relayed to me that the Scots were upset because our Premier was not attending the signing. It was their understanding he would be there as they had confirmed the attendance of their government officials. Uh-oh...the wheels were coming off.

I tracked Brian down in Vancouver and explained the diplomatic slight. He was eight hours behind my time zone and just finishing up meetings. To make the next evening's event he would have to grab a plane in the next few hours, lose a nights sleep and basically travel non-stop for 24 hours.

To make a long story short, he made it. And as I greeted him at his hotel in Aberdeen he looked completely bagged. He looked at me and said "Deano, what are you doing wearing a kilt?" I said, "I'll explain later... here, quick, put this one on I've got for you!". "You don't think I'm going to put that on do you?" he exclaimed. I told him that I had chosen the tartan myself, it was the same one as Braveheart.

That evening, in his kilt, he delivered a vintage Tobin speech to the delight of all in attendance. The deal was done and the rest as they say is history."

What is interesting about that story is Softworld 98 was incorporated in this province in 2006, barely after the last one finished, and its chairman was Dean MacDonald. Williams' companies, like OIS Fisher and Atlantic XL, would have benefited from the international exposure. In 1999, Scottish Abbott Group sold out its interest in OIS Fisher to Williams. Shortly after that, 2001, Williams took a majority position in Atlantic XL. The company had 20 employees and earnings of $1 - 1.5 million.

Williams' two companies did very well in the offshore. Very well indeed. By 2007, Atlantic XL held lucrative contracts on the White Rose, Hibernia, Sea Rose FPSO, and Terra Nova projects. His other company, OIS Fisher/Spectrol, did just fine as well: White Rose; Terra Nova, Deep Panuke; and even a Mobile project in Nigeria. Newfoundland and Labrador Export Directory 2008 lists export markets as NS, AB, United States (TX), Brazil, China, and West Africa. It conveniently shared the same office as Spectrol Energy - 1 Duffy Place, St. John's.

The President of Spectrol, and director of Atlantic XL, was Bill Fanning. Fanning had a history in oil and gas, including his stint with the Hibernia Management and Development Company Ltd, before joining Williams' company. Fanning was also a director, as was Edward Williams, of Spectrol's US subsidiary Spectrol Group GP, LLC, and Spectrol Group Limited of Houston, TX. During Fanning’s time as President of Spectrol he was appointed to the Bull Arm Site Corp Board of Directors (Oct 2006); appointed as Chair of the Board of Management of Newfoundland and Labrador Centre for Health Information (2007); and appointed as a director to Nalcor's Board of Directors (2009). These appointments were made by the Williams' administration to key positions regarding the offshore development of the province's oil industry. Fanning now runs Kvaerner Newfoundland Ltd, an SNC Lavalin subsidiary. Today, Atlantic XL remains an SNC Lavalin subsidiary. Its two directors are Marc T. Cullen representing SNC and Colin Laird representing his XL Group of Scotland.

The problem for Williams, as will be discussed more in depth in the last part of this series, is he was in an obvious conflict of interest. While his companies may have been in a blind trust, although this author was unable to find a public filing of such a trust, his connections to his offshore companies were anything but arms length. In fact, he had family sitting on the Board of Directors of each company. Those Boards were small. Small enough that a family member could carry 50% of the Board's voting rights. Williams, as Premier, made decisions on offshore activity. His companies captured lucrative contracts on every offshore development in Newfoundland. His family members sat on those companies Boards. Williams, appointed his own President of Spectrol to government positions that could place him in a conflict of interest regarding Spectrol's, and Atlantic XL's operations. It would seem that Williams prepared his companies well for his time in government, and that arms length was not a primary concern of his.

Part3 will look at the actual sale of Spectrol, Atlantic XL, and Spectrol Group LLC to SNC Lavalin.

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.