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.

When Regimes Fall - NL Style

The last few months have born witness to the death throws of the PC govenment of Newfoundland and Labrador. In local terms: " the bottom's out of her b'ys." It began with the sudden, and unexplained departure of one Daniel E. Williams - as he likes to be referred to in legal wranglings. That was followed by the unprecedented fixing of the subsequent leadership non-race. Then there was one sorry blunder after another. The polling numbers steadily fell. The blunders continued. And so on.

The last few months however have signalled a whole new phase, and a steady decline into the absurd. A place so low, so dark, so desperate that it reminds me of other places and other actors. Different circumstances, and different geographies, but bare with me.

When a regime begins to fall, anywhere in the world, what is the first sign of panic? The first sign of desperate people clinging desperately hard to power? They turn inwards. They refuse to acknowledge the opposition around them. They become insular and isolated. They ignore the art of compromise and embrace their tools of power. Power has become their only reason and purpose. They crack down firstly on those that forment the desent. They try to isolate them, marginalize them, demonize them, and when all this fails, as it inevitably does to those that attempt to halt just progress, they turn inward. It could be Syria, Egypt, Yugoslavia, South Africa, East Germany - you get the idea.

It doesn't normally happen in democracies - although it has. Take the civil rights movement in the US as an example - although they eventually accepted the just change. Another, closer to home example, could be Quebec's "Silent Revolution". The point is, most democracies are governed by constitutions that restrain their governments from acting against the just democraltic rights their countries are founded upon. So what happens when a government, in the developed, democratic world does just that? We have such a case now in Newfoundland and Labrador.

Our Public Utilities Board was castigated, marginalized, and demonized by the government (and its supporters) when it refused to endorse the Muskrat Falls option. It was sent to the dog house with the Premier actually commenting publicly that she had lost confidence in it. An act so contemptous, so arbitrary, so cowardly that those of influence and common citizens alike, in any other province would have revolted. Yet, hardly a word is muttered about the outrageous treatment given the Board. It did result in a small compromise by the government though - an agreement to hold a special debate on Muskrat Falls and a study of natural gas alternatives. However, the government is guaranteed to win a debate where they hold the vast majority of the seats, and they chose a company to do the natural gas study that was already on the record as saying it was not feasible. So a compromise, but in name only. A compromise that was so obviously designed to appease rather than to address that it lost its relevance almost immediately.


Then came the moment. The all encompassing moment. Bill 29. An Act to ammend the Access to Information Act. In an almost suicidal move the government decided to be exceptionally democratic about an exceptionally undemocratic move. It held a four day filibuster in the House of Assembly to pass a law that essentially turned access of information into a ministerial perogative. The new law gave individual ministers the right to veto what ever they chose to from their ministry. The public revolted. Not in the streets, although some did, but rather in their hearts and minds. It was as if for once they saw the government as it actually was and not how the government had been portraying itself for some time. The opinion polling numbers for the government began to plummet almost immediately.

The government's response? A new policy that bans individual MHAs from advocating for their constituents directly to the government departments concerned. The new policy mandates that all MHAs must put their inquiries to a Minister's Executive Assistant, and that no other channel may be used. Essentially, they rendered every MHA obsolete - especially politically. In effect, complete power and control of a constitutional responsibility was taken away, and a fundamental pillar of democracy, the citizen's vote to elect their own representative in the House of Assembly, was severely weakened.

The end result of Bill 29, and the new policy on MHAs power to represent, is to transfer absolute power to the individual ministers in Cabinet. A now complete inward turn. A desperate, undemocratic, and flagrant move by men and women to deprive their own citizens of the rights they should have become acustomed to by now. A move reminiscent of the Senatorial days of the decaying Roman Empire. A move gently similar to the now deceased, or in the process of becoming so, Arab dictatorships and their secret and self-rewarding deals. Over the top comparisons you say? Dramatic and off topic? Reflect on the times, reflect on the signs, and see the truth that the government of Newfoundland and Labrador has become.

Are We Being Used Here?

It is fairly obvious to the dedicated observer of Newfoundland and Labrador politics that all is not well behind the scenes with the Muskrat Falls project.

Since it's inception, the Muskrat Falls project has been an enigma. Born to bypass the "Quebec stranglehold" on this province's export of power, yet only able to transmit a measly 500 MW of power on the Maritime Link. Heralded for being a green power revolution in the province, yet causing the amount of thermal energy in the province to actually increase. Meant to supply the ever increasing consumption of electricity to the Island, but the demand has actually decreased to 1992 levels - and the population is aging faster than any other on the continent. Promised to provide cheap, stable rates for the next 100 years, but easily the most expensive power to be produced in North America.

My questions about Muskrat Falls began with the capacity of the sub sea cable to Nova Scotia - 500 MW. It became immediately obvious that such a small cable was not capable of exporting any serious power into other markets, particularly given that Emera was given about 170 MW of that capacity for no charge as partial compensation for financing the link. I am not alone on this thinking. The CEO of Emera, in conversation with the US Consulate, had this to say:

In a section subtitled, "Are we being used here?", the author wrote that Emera was worried about being manipulated by Williams.
"The unknown factor, as Spurr explained, is N-L Premier Danny Williams. Spurr explained that N-L had been the victim of bad resource deals in the past which have left Williams very cautious if not suspicious in his business negotiations," the cable says.
"Given that legacy, Spurr remarked that he and his senior colleagues are equally cautious in dealing with the premier, with knowledge it makes more financial sense for N-L to do a deal with Quebec than with them," the author wrote.
"In fact, Spurr indicated he wouldn't be surprised if William ended up doing just that, and leaving Spurr and colleagues to speculate that Williams might be using them to exert more pressure on Quebec to offer a better deal for N-L."

So here we are, nine months after the original dead line for the Emera/Nalcor term sheet to be signed, and no deal. The question is: why not? There is also no formal loan guarantee in place despite federal commitments to do so. There are no completed environmental assessments for either the Maritime Link or the Island link between Newfoundland and Labrador. There is no word what so ever on the status of the $375 million requested from the 3P Canada Fund to subsidize the cost of the Maritime Link. Nothing.

What we do have is shuttle meetings every now and then between the premiers of Nova Scotia and this province. We get assurances that everything is fine, not to panic, and the hope that the Emera/Nalcor deal with be inked by November, 2012 - "hopefully" in Dunderdale's words. So what is going on?

Well, going back to that conversation between the Emera CEO and the US Consulate - "Are we being used here?" Good question. In my opinion, the answer to that question is yes, but not for the reason the CEO believed. The key requirement for Muskrat Falls to proceed is a federal loan guarantee. Without it there is no Muskrat Falls dam. Former Premier Williams had pursued such a guarantee from Prime Minister Harper since 2006. Finally, during the last federal election, Harper agreed to it - conditionally. The primary, central piece to the guarantee is a deal between Emera and Nalcor. Unfortunately, that agreement makes no business sense, and can not possibly earn the provincial government anything but massive losses.

Danny Williams was and remains a businessman. It is hard to believe he would enter into an agreement to export power at such massive losses. He was also a tactician, and often belligerent opponent of the federal government. What ever it took to get his way - including taking down the Canadian flags on all provincial buildings. Given his business sense, and his mercurial relationship with the federal government, and given a loan guarantee is necessary to do the Muskrat Falls project, I am left with the belief that Mr Williams' strategy was to use the Maritime Link to get the loan guarantee and then kill the deal, but still retain the guarantee.

With Emera out of the equation, the Newfoundland and Labrador government would be able to cancel both the Maritime link and the Island Link (which Emera is also slated to be partner in). That would leave a Muskrat Falls dam to provide power solely in Labrador - where all those mines are being developed. Unfortunately, for the PC government, it appears that strategy is back firing.

The federal government is now insisting it will not give the guarantee without the project being officially sanctioned. In order for the project to be officially sanctioned the Emera/Nalcor deal must be signed. Either Dunderdale, or Nova Scotia Premier Dexter appears to be having cold feet. On the one hand Dexter, whose popularity right now at home is about 27%, must provide the cheapest alternative power to his province. Despite the fact Nova Scotia Power is a private company (Emera subsidiary) its rate increases have caused calls for it to be nationalized by many quarters in that province. He has to deliver the cheapest possible deal or face political oblivion and unrest. To underscore the point, it has been reported by Jim Morgan on the radio show, VOCM Backtalk, that Emera has been in negotiations with Hydro Quebec for the last three weeks. I had that report confirmed by an independent media source as well.

The fact is Hydro Quebec can dump all Nova Scotia's power needs for decades in one nice, cheap, multi decade contract - and it looks as though it's in the works. It may be that a political deal is no longer needed by Nova Scotia for power. That might suggest Nova Scotia's political minister Peter MacKay may no longer care to support the Muskrat Falls project. Without his support the Prime Minister may no longer have to supply a loan guarantee. After all, the loan guarantee was to Nalcor and Emera - not the respective provincial governments. That is an important difference. Suddenly, it looks as though Dunderdale is left in mid stream without a deal, and unable to use that deal to secure that necessary loan guarantee. What was her quote a month or so ago - "For me, at the moment, it’s a Minister MacKay problem.” That was on the face of it a rant against search and rescue, etc. However, attacking possibly the second most powerful person in the federal government seems to indicate the fracture is much deeper, and serious.

What we are left with is a game of chicken between the federal government and the province. On the one hand the feds are happy to sit back and watch Emera negotiate with Hydro Quebec. On the other hand Newfoundland and Labrador can't get a federal signature on that guarantee until Emera signs on with Nalcor. And somewhere in between, shuttling between the two provinces, Premier Dexter tries to avoid a political damned if you do, damned if you don't. Surely there are a few people right now asking themselves:

"Are we being used here?"

Backroom Ballet

So the numbers are out and the panic is in. Environics polling numbers place the NDP in first with 38% - the first time ever in Newfoundland and Labrador. The ruling PCs, who have enjoyed polls of 50-60-even 70% - are now behind the NDP at 35%. The Liberals, who were in free fall before the last election, and then stabilized in the high teens as the Official Opposition, are now registering a respectable 26%. Essentially, these are transitional times.

Yes, it can be argued that really the PCs have been in a constant decline since the leadership debacle that followed Danny Williams retirement. Issue after issue that has surfaced since that time has caused the government to trip over its own feet. You can go all the way back to the "near appointment" of Williams confidant, Elizabeth Mathews, and the government getting caught out in a lie. You can look at the endless, obvious propaganda put out regarding Muskrat Falls. There is of course the very public, absolutely suicidal Bill 29 filibuster. The one constant during this time, and remains to this day, is the sheer arrogance in how these issues have been handled. An arrogance born not of confidence, but of mission.

You could look at things in this way, and say it's just the natural result of an old government going into decline - that's the spin Dean MacDonald has put on it. That's how it is viewed by the public. Or, you could look at it as an ordered, backroom transition of power. To do so, of course, is to invite yourself to be called a "conspiracy theorist" by those that would prefer such things remain out of the lime light.

The basic thought in Newfoundland and Labrador politics is that governments are run by a "strong man". That all those MHAs that are elected with him/her are simply there to do as they are told. Of course that isn't true. It's a simplistic way to sell politics to the electorate - pure and simple. Never-the-less, that's how things have been sold. The trend of late has seen Liberal strong man Brian Tobin leave the Premier's chair. He was replaced by Roger Grimes - who was betrayed by Dean MacDonald. Grimes was then quickly replaced by businessman, turned sudden/reluctant politician Danny Williams. Williams left, and hand picked Dunderdale (his Grimes). Now, under Dunderdale's watch the Party is in a full death spiral. Coincidentally, sudden/reluctant Dean MacDonald has surfaced to take over the Liberal party in November of 2013 - slightly less than a year before the next election in October, 2014.

Where was Dean MacDonald during the last election? Why did he not run as a candidate, or step up for the leadership when the Party was left leaderless with the sudden resignation of Yvonne Jones? As a multi-millionaire, where have his fund raising capabilities been as the Party languished in $800,000 of debt? Quite frankly, he has been sitting it out. Waiting for Williams to finish so he can have his turn. In order for that to happen the once mightily strong PC party had to be brought down in popularity - a lot. This is exactly what has transpired.

The swing from PC support to Liberal support is clearly evident in the last poll. The NDP are doing well, but the Liberals are gaining more PC supporters than the NDP. While, at the moment that does not place the Liberals in even second place, a further decline in PC support will likely bolster the Liberals significantly.

The big question is how did Dunderdale manage to accommodate Danny and the boys? Was she a dupe/patsy that was used for her ego to be the fall guy for the Party? Likely yes. Has she been getting really "bad advice" to help the destruction of the Party along? Without question. Do the caucus members of the PCs have loyalty to her? Very Doubtful. Ms. Dunderdale has truly taken the poison chalice. She is getting bad advice, and being held in check by a Cabinet that is on board with putting the ship into the rocks. Their one and only primary mission, other than bringing the Party down, is to ram Muskrat Falls through at any price. It won't matter how badly they are viewed in public, or how severely the media brutalize them. The price won't matter. The terms won't matter. The plan is all that matters - right Danny?

Masters in Our own House

2012 marks uncharted territory for the province of Newfoundland and Labrador. Unlike years before, the province is facing the crushing realities of the world market place on its best laid plans for economic expansion. It is about to experience the boom/bust cycle that is all too familiar to oil driven economies - like Alberta. The 2007 Energy Plan, the "Masters in our own House" manifesto, was meant to usher in a new era of strategic development. Then Lt Governor Ed Roberts read the Speech from the Throne, as crafted by the Danny Williams government:

"Our people are proud nationalists who believe it is only by affirming our identity as Newfoundlanders and Labradorians that we will realize our goal of economic equality within the federation...Our people are ready to take charge of our future and, under [Premier Danny Williams's] leadership, our province will achieve self-reliance by becoming masters of our own house."
"We as Newfoundlanders and Labradorians aspire, not to perpetual subservience, but to self-sufficiency."
"Our people are not content to tolerate a future of relying on others economically. However, our people have now also learned that we will achieve self-reliance economically only by taking charge of our future as a people."

"Our province will achieve self-reliance". Therein lies the fatal flaw. Just as there is no such thing as a "self-made man" the idea that a people, any people, can be "self-reliant" is a concept hundreds of years outdated. In the age of globalization there are no "islands" protected from the deflationary waves. The western world finds its economies being rationalized to those in Asia, and not the other way around - as was originally envisioned.

Still, the nationalistic governments in Newfoundland and Labrador peddle the idea that somehow the power over the future lies in their hands. That the province is an entity unto itself, and the only thing holding it back is the negative attitudes that disagree. So it boldly, with blinders firmly attached, moves forward. It scored some victories with the oil companies for equity shares in offshore projects when oil was at an all time high. It scored a victory for $2 billion in offset payments from the feds when Martin had a minority government and was facing an election. However, when all things were equal it lost. It lost the Abitibi expropriation battle. It lost the recent NAFTA battle with the oil companies over research and development subsidies. It lost countless battles with Hydro Quebec. On and on it goes.

The problem is that despite all these lessons it does not appear to learn. Fast forward to today. The government is trying to force ExxonMobile to build all three $100 million modules in the province, or pay a large fine for not doing so. Exxon has stated the province can not build the third module on time, due to a lack of resources, and it must therefore build it outside the province or face costly delays in first oil. The Premier has threatened them with fines and "troubled waters" if they proceed. The Mayor of St. John's even boycotted a meeting with a top Exxon official in protest. Its the typical us vs them mentality that takes over when the government of Newfoundland and Labrador doesn't get its way. When it can't "take charge". Because controlling economic forces is not something any country can "take charge" of, let alone a province, in a global economy. It is not an achievable goal.

The province can spend its oil royalties as it sees fit. It can build the Muskrat Falls dam as long as it has enough money saved to leverage the rest in financing. It can do all that. But, it can't make iron ore mines any more attractive on the stock markets in a time of obvious, long term, international declines in consumption. It can't force private investors to invest and buy the mines shares on the stock market. It can not keep its young people from voting with their feet and leaving - a record 4000 or so did in the first quarter of 2012. It can not control the price of oil. It can not even accurately project its income each year from oil revenues. As of today, Brent crude futures are trading at $90 a barrel - 30% below budgeted revenues. The trend is downward as the world market place gets hammered by sovereign debt, consumer debt, and the resulting decline in demand. It will be a long term problem-decades long.

It begs the question: How is the provincial government reacting to the change? The answer is the same as usual. Fighting others to perpetuate the myth that we are "masters in our own house". No updated financial document to amend the budget to reflect the obvious massive deficit coming for this year. No plans to halt the Muskrat Falls development despite the mining companies in Labrador being frozen by the chill of world wide deflation. No plans other than the original - hell or high water - blinders firmly on. As we used to say in the army: No plan survives first contact with the enemy. To put the icing on the cake, the PC government passed Bill 29, which essentially guts access to information in the province, so that it can hide all those pesky little bits of reality that might make it known its not masters of its own House.

The New Official Secrets Act - Bill 29

The House of Assembly just wrapped up a historic filibuster on Bill 29, AN ACT TO AMEND THE ACCESS TO INFORMATION AND PROTECTION OF PRIVACY ACT http://tinyurl.com/75xa3sp . The four day, marathon session was covered nationally by every major press outlet, and of course locally in both the news and editorial pages province wide. The Centre for Law and Democracy, an internationally recognized organization on access to information, had this to say when asked for comment by the CBC:

"The new cabinet exception is, well, breathtaking in its scope... I think it’s one of the widest exceptions of that sort I’ve seen anywhere... The Newfoundland one, or the proposed cabinet exception, really takes it to another level... I don’t think I’ve ever seen one as broad as that. It really throws in the kitchen sink... What we see in other countries, and in Canada as well, is that governments often abuse those exceptions,and the way the thing is worded now, it’s really wide open to that kind of abuse.”

Very damning wording for any government to receive from an independent body, let alone on the issue of access to information - a basic right in a democratic society. Well, at least most of us view it that way, except, apparently, Justice Minister Collins who disagreed:

"Mr. Speaker, the right to information is an important one, one that we have to protect and guard," Justice Minister Felix Collins said during question period Tuesday. "But it is not absolute."

He then goes on to essentially tell it as it is with the changes to Section 18 of the new Act:

“The auditor general will have access only to those records that the clerk says he can have...
by expanding the list of cabinet records, it expands the list to which he does not have access.”

Worrisome as those words are, and they should concern any and every free thinking person, the really severe, and potentially dangerous words are found further down in the Act.

Section 24:

     24. (1) The head of a public body may refuse to disclose to an applicant information which could reasonably be expected to disclose

(a) trade secrets of a public body or the government of the province;

(b) financial, commercial, scientific or technical information that belongs to a public body or to the government of the province and that has, or is reasonably likely to have, monetary value;

(c) plans that relate to the management of personnel of or the administration of a public body and that have not yet been implemented or made public;

(d) information, the disclosure of which could reasonably be expected to result in the premature disclosure of a proposal or project or in significant loss or gain to a third party;

(e) scientific or technical information obtained through research by an employee of a public body, the disclosure of which could reasonably be expected to deprive the employee of priority of publication;

(f) positions, plans, procedures, criteria or instructions developed for the purpose of contractual or other negotiations by or on behalf of the government of the province or a public body, or considerations which relate to those negotiations;

(g) information, the disclosure of which could reasonably be expected to prejudice the financial or economic interest of the government of the province or a public body; or

(h) information, the disclosure of which could reasonably be expected to be injurious to the ability of the government of the province to manage the economy of the province.

Essentially, this section gives the "head of the public body" complete authority to refuse any information that could relate to any economic, scientific, or techincal information. That would include any information on Muskrat Falls, mining, etc.

Section 27:

   27. (1) The head of a public body shall refuse to disclose to an applicant information that would reveal

(a) trade secrets of a third party;

(b) commercial, financial, labour relations, scientific or technical information of a third party, that is supplied, implicitly or explicitly, in confidence and is treated consistently as confidential information by the third party; or

(c) commercial, financial, labour relations, scientific or technical information the disclosure of which could reasonably be expected to

(i) harm the competitive position of a third party or interfere with the negotiating position of the third party,

(ii) result in similar information no longer being supplied to the public body when it is in the public interest that similar information continue to be supplied,

(iii) result in significant financial loss or gain to any person or organization, or

(iv) reveal information supplied to, or the report of, an arbitrator, mediator, labour relations officer or other person or body appointed to resolve or inquire into a labour relations dispute.

(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 that information is non-identifying aggregate royalty information.

(3) Subsections (1) and (2) do not apply where

 

(a) the third party consents to the disclosure; or

 

(b) the information is in a record that is in the custody or control of the Provincial Archives of Newfoundland and Labrador or the archives of a public body and that has been in existence for 50 years or more.

This section backs up Section 24, and specifically uses the wording: "shall not disclose". There is no maybe, no 'it's up to the discretion of the head of the public body'. It very interestingly refers directly to the issues of royalties. This is interesting in that royalties collected from offshore oil are already well documented publicly. They are not a secret. Does it refer to mining royalties? Does it refer to a potential Royalty Trust Agreement for the financing of Muskrat Falls? This section would cover those. So it would appear the government's intentions are to keep these agreements secret - otherwise why single them out specifically in the Act, and leave no room for a head of a public body to do otherwise? The timing of this legislation, prior to the DG3 numbers on Muskrat Falls and its financing, contracts is suspect at best and does nothing to quell the very real suspicions of ordinary, thinking people. Most would consider common sense.

Section 43.1:

43.1 (1) The head of a public body may disregard one or more requests under subsection 8(1) or 35(1) where

(a) because of their repetitive or systematic nature, the requests would unreasonably interfere with the operations of the public body or amount to the abuse of the right to make those requests;

(b) one or more of the requests is frivolous or vexatious; or

(c) one or more of the requests is made in bad faith or is trivial.

This section is arguably the most dangerous to the basic democratic rights we all enjoy - or thought we did. Essentially, it gives the head of any public body the right to deny any request they feel like. It reminds me of the "Conduct unbecoming a member of the Canadian Armed Forces" provision in Canadian military law. It's a catch-all charge. One that if no other charge sticks this will. That is Section 43.1 - a catch-all clause. It gives a Minister the right to dismiss media requests for any information. Same goes for the Official Opposition. Same for the ordinary citizen. It is as undemocratic as you can possibly be without saying you are dictatorial - in words anyway. 

The Canadian Charter of Rights and Freedoms guarntees us:

Fundamental Freedoms

 

Fundamental freedoms

2. Everyone has the following fundamental freedoms:

(a) freedom of conscience and religion;

(b) freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication;

(c) freedom of peaceful assembly; and

(d) freedom of association.

The question begs answering: How can one have the freedom of belief and opinion without the knowledge to form it? How can the media be free, and communicate truthfully when it is denied the information to form that truth? How can citizens form the beliefs and opinions that allow them to reason and judge the performance of their government without open and honest access to information that is neither censored nor filtered? This is not a case of martial law. This is not a case of internal insurrection. This is not a case of state secrets at a time of war. No, this is a case of the government of Newfoundland and Labrador being at war with its own citizens. A secret war. A war that requires an "Official Secrets Act" - Bill 29. 

The Alderon/Williams Lawsuit Letter

As some of you may know, I was served with a letter from Alderon Iron Ore Corp two weeks ago today. The story begins with a phone call received on my business phone on May 9, 2012. It was a 416 number, and a woman asked: "What area of town is your business in?" I responded: "the east side." She then asked: " what is your address?" I asked: "Why do you want to know my business address?" She said: " I want to see your work." I said: "You can see our work on our business website." and hung up.

For curiousity, and because I knew a person from Toronto wouldn't be stopping by to see my work, I phoned the 416 number back. Low and behold if it wasn't the number of Cassels Brock law firm in Toronto. Several attempts to contact them for clarification for the need of my address failed to receive a response. The matter has now been sent to the Law Society of Upper Canada in the form of a compaint. You see, it's not legal for a law firm to misrepresent itself to gain information. But I digress. It just so happens that the senior partner of Cassels Brock was named to Alderon's board of directors, along with Danny Williams, on March 28, 2012. Danny Williams was granted 1,125,000 share options on the date he joined the board ( he has since acquired an additional 100,000 shares under 10981 Newfoundland). That compares to John Vettese/director (Cassels Brock) 300,000 share options; John Baker (Altius) 400,000 share options; Todd Burlingame 250,000 share options; Brian Dalton (Altius) 400,000 share options; Gary Norris 250,000 share options; and on it goes. Suffice it to say that of all the directors of Alderon, Danny Williams got the biggest number of share options of any director or officer in the company. Why that is the case? I do not know.

But there is a little background for you. Here is the document served on me by Alderon, although it appears to be almost completely about Danny Williams. Just a quick pointer: You will note that almost all comments on it that Alderon says are defamatory are quotes from the radio host, and not me. You will likely also notice the many references to discussing the Muskrat Falls project, which considering Alderon came out this week publicly campaigning for the project, seems a little rich. More on that later, but for now here is the letter (click on each letter to view):