Cathy Bennett's Complex Muskrat Falls Case

 Cathy Bennett, poster child for the St. John's Board of Trade, owner of nine McDonald's franchises, fingers in many business pots, and former Chairman and Director of Nalcor Energy, has decided to try and secure the leadership of the provincial Liberals. On the face of it Bennett is a very unlikely Liberal. However, times are changing. Her provincial PC party is in a state of collapse and pragmatism demands a change of colours. The primary purpose of course in control of the provincial governments budget by the St. John's business crowd, but that isn't the focus of this post. The focus here is a curious statement made by Bennett when announcing her candidacy for the leadership of the Liberals.

According to Bennett, support for the Muskrat Falls project rests on "a complex interweaving of multiple business cases." Curious statement for the public to digest, and one which she gave no clarity to. However, for those of us doing in depth study on the Lower Churchill project it rang remarkably true. It was, in a way, a hint. We are all familiar with the arguments about selling power to Nova Scotia, the Labrador mines, the Island and so on. Each of these "business cases" requires the power be sold at a significant loss, which frankly doesn't make much sense from a financial point of view to most of us - these parts of the equation are frankly not that complex. However, there is one crucial, central, and strategic business case that nobody, and I mean nobody is or has spoken of.

To find out what that central business case is you have to go back to Danny Williams strategic plan entitled the "Energy Plan", and the energy warehouse. The stated primary purpose of the plan was to utilize all the province's energy sources to their maximum capacity - including the Upper Churchill. To that end he amended the Electrical Power Control Act to force water management agreements on companies proucing power on the same river. Considering the Upper Churchill was the only situation the amendments applied to the target was obvious as was the aim - take power from the Upper Churchill by forced recall. The premise is outlined in the words of Gilbert Bennett, Vice President of Nalcor in charge of Muskrat Falls:

"Gilbert Bennett: Section 2.1 of the Renewed Power Contract entitles Hydro Quebec to take the Continous Energy in each month, including during the winter...the average production at Churchill Falls is about 34 TWh. If we deduct the 2.36 TWh and 1.97 TWh for recall and Twinco respectively, we are left with approximately 29.7 TWh for HQ, or approximtely 2.5  TWh per month. Interestingly enough, this means the plant on average will deliver on average just
over 3470 MW for HQ + 525 for NLH/Twinco (or 3995MW out of 5428MW) over the course of the month, meaning tat while Hydro Quebec can have additional capacity, they can not have it all of the time, as they will exceed their energy allowance. This point ensures their will be lots of opportunities to withdraw stored enegy from CF, even in the winter.


Translation, Nalcor's big plan is to "withdraw", which is recall, roughly 1500 MW from the Upper Churchill and transfer it to the Island. Under such a scheme Nalcor would pay the same rate for that power as Hydro Quebec does - by 2016 .002 cents a KWH. In other words, the province gets the power of Gull Island, without building Gull Island, fot the same price Hydro Quebec gets its power for - a master stroke. The massive profits on the sale of that 1500 MW would subsidize all the losses of power sales, and contribute all that "revenue" we hear about. Then add in the two lines being built from the Upper Churchill, each capable of carrying 1000 MW, to Muskrat Falls and beyond. Then consider this comment from Nalcor's magazine called "Outlet", dated Winter 2010:
" The current 800 MW design (under sea cable) has the capacity to be increased by a further 1000 MW, without changes to the operating voltage or overhead transmission lines."

Bottom line, take the power. Most would say what a great plan. Except, its not constitutional, and therefore it is illegal. In a sense it is like stealing. This is the great plan of Williams and company - which most certainly includes Cathy Bennett.

As former Chairman of Nalcor, and director, Bennett would have been fully aware of all these plans. When she says it is "complex" she means she can't discuss it, because if she were to reveal that plan the Courts would consider it a deliberate plan rather than an unintended consequence. The province is relying on that constitutional defence. Unfortunately, any recall or taking of power beyond the 300 MW of recall allowed in thePower Contract is illegal - intended or not. So, yes, Cathy Bennett is right - it is complex. She should know. She helped get it through. She should have the courage to admit it. Now these issues are in front of the Supreme Court of Newfoundland and Labrador. Why? Because courage of conviction when it comes to protecting your own people from harm is the number one requirement of any leader of any political party. Complex indeed.

The Power Contract vs. the Water Management Agreement

What most Newfoundlanders and Labradorians do not understand is the Lower Churchill hydro development is built on one foundation - the Water Management Agreement imposed by the Public Utilities Board on CFLCO and therefore Hydro-Quebec. The other thing they are not readily aware of is that when this agreement is found unconstitutional there is no foundation to build the Lower Churchill dams.
The Supreme Court of Canada, in 1984, found the Reversion Act to be unconstitutional:

"Where, however, the pith and substance (true purpose) of the provincial enactment is the derogation from or elimination of extra-provincial rights then, even if it is cloaked in the proper constitutional form, it will be ultra vires (unconstitutional because it is outside the province's powers)."

When I stood in the Supreme Court of Newfoundland and Labrador last month, challenging the Water Management Agreement (WMA), I outlined the many critical ways this agreement broke the Power Contract of 1969. I did so not to protect Quebec, but to stop our own government from delivering us to them. The following points were gone through point by point to illustrate to Madame Justice the depth of the betrayal. On this, Memorial Day in Newfoundland, I believe it is important to make these points public so the people of the province understand the sacrifice before it they are lead into it.

1. Power Contract:
"Recapture means any withholding from the power and energy agreed to be sold hereunder which may be made by CFLCO in accordance with the provisions of, and within the limits stipulated by, Section 6.6..."

WMA:
No definition for recapture.

My take: Any power generated at the Upper Churchill, except the power allocated to Twin Co that now belongs to Nalcor, and the 300 MW allocated to the province, cannot be taken from the Upper Churchill facility. Key phrase here is: "made by CFLCO".

2. Power Contract:
"Applicable Law: This Power Contract shall at all times and in all respects be governed by, and interpreted in accordance with, the laws of the Province of Quebec."

WMA:
"Applicable Law: This Agreement shall be construed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province (NL) and the federal laws of Canada applicable therein, and each party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of the Province..."

My take: The Power Contract puts the rights of the contract in Quebec, and thereby all the powers of the contract. The WMA changes the location of those rights to NL, with the goal of changing constitutional jurisdiction. In other words, by way of legislation the government is attempting to alter the practical jurisdiction of Quebec over the operation of the Upper Churchill.

3. WMA
"Entire Agreement: This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, undertakings, negotiations and discussions, whether written or oral."

My take: It pretty clear, the WMA states it is now the predominant agreement, which automatically subordinates the Power Contract and forces CFLCO to recognize the requirements of the WMA over those of the Power Contract between CFLCO and Hydro-Quebec.

4. Power Contract
"The parties hereto acknowledge that it is desirable for Hydro-Quebec to have the benefit of operational flexibility of CFLCO's facilities... Accordingly... Hydro -Quebec may request CFLCO to operate the Plant (includes reservoir) so as to supply Hydro-Quebec's schedule of power requirements...Hydro-Quebec may require deliveries which have the effect of varying the amount of water to be carried in storage at any time..."
   
WMA
"The Independent Coordinator (appointed by the NL government), shall, based on the information provided by the Suppliers (Nalcor and CFLCO), and in the exercise of reasonable judgement, establish short and long term Production Schedules for all the Production Facilities on the Churchill River...The Independent Coordinator shall determine the total power to be produced...The Independent Coordinator shall determine and prepare the Production Schedules which shall specify the amount of power to be produced by each Supplier's Production Facilities in accordance with this Agreement."

My take: It's pretty clear. The WMA takes the right of control of production given to Hydro-Quebec and gives it to the "independent coordinator" who is an appointee of the NL government.

5. Power Contract
"Either party may at any time, for the purpose of safeguarding human life or protecting from major damage the storage, generating or transmission facilities of CFLCO or the Hydro-Quebec system, discontinue or reduce, but only to the extent necessary, the supply of power and energy hereunder."

Power Contract
"The Firm Capacity shall be available at all times when Hydro-Quebec has requested it. In addition whenever additional capacity can, in the opinion of CFLCO, be made available, such capacity shall also be available to Hydro-Quebec on request."

WMA
"CFLCO and Nalcor shall adhere to the Production Schedules set by the Independent Coordinator... Each Supplier shall continue to have the same rights to store water in its reservoirs as it did prior to this agreement, while at the same time recognizing the requirement to, allow Energy Banking (the taking of power from the Upper Churchill from CFLCO to Nalcor) by the other Supplier pursuant to the terms of this Agreement."

My take: Under the Power Contract Hydro-Quebec has the rights to all the power produced at the Upper Churchill, and only loses control in case of a disaster or protecting its electrical system. Because it has first rights, any power taken from it, including so called Banked Energy to Nalcor would have to be purchased from Hydro-Quebec, unless it waived its rights to that power and money - which is highly unlikely. This is simply an attempt by Nalcor to force Hydro-Quebec to use or lose the power potential of the Upper Churchill - which conflicts with the Power Contract.

6. WMA
"In no event shall the generating Capability, storage capacity, or transmission Capability available to a Supplier from all Production Facilities on the Churchill River be less than the amounts of then available generating Capability, storage capacity, or transmission Capability of the Production Facilities owned by that Supplier on the Churchill River."

Power Contract
again: "The parties acknowledge that it is desirable for Hydro-Quebec to have the benefit of operational flexibility in relation to the Hydro-Quebec system. Accordingly: Hydro-Quebec may request CFLCO to operate the Plant so as to supply Hydro-Quebec's schedule of power requirements, provided that no such request shall be less than the Minimum Capacity...Hydro Quebec may require deliveries which have the effect of varying the amount of water to be carried in storage at any time..."

My take: The WMA here requires the Upper Churchill to operate at full capacity which gives Nalcor the flow of water they need to run the Lower Churchill dams. Without this clause, Hydro-Quebec could just keep running the dam for its requirements, as the Power Contract grants them the right to, and the Lower Churchill dams would be forced to run at just 20% capacity - a financial disaster.

7. WMA
"Energy Benefits: Energy Benefits for each Supplier shall be determined by the Water Management Committee, in accordance with the Agreement, for each period established by the Water Management Committee, which period shall not exceed a year...Energy Benefits means the Energy accruing to a Supplier for a period as a result of this Agreement in excess of the Energy that would be accrued to such Supplier for such period in the absence of this Agreement..."

Power Contract
Again "The Firm Capacity shall be available at all times when Hydro-Quebec has requested it. In addition whenever additional capacity can, in the opinion of CFLCO, be made available, such capacity shall also be available to Hydro-Quebec."

My take: The WMA gives the Water Management Committee the right to give power produced at the Upper Churchill to Nalcor, without a power purchase agreement with Hydro-Quebec to compensate it, at its terms, which translates into a forced recall of Upper Churchill power to Nalcor. In other words, Nalcor gets to take power that it has no right to, and doesn't pay anything for it. Great plan, except it's already proven law by the Supreme Court of Canada that this is unconstitutional and therefore illegal.

8. Power Contract
" Force Majeure: contract not terminated. No event or force majeure or of default hereunder shall give rise to, or result in, the termination of this Power Contract..."

WMA
"Force Majeure means an event, condition or circumstance or combination of events, conditions or circumstances beyond the reasonable control and arising without the fault or negligence of the party making a claim to section 14.4 of this Agreement, including, without limitation:...(iv) action of any government, legislature, court or other governmental authority, compliance with applicable law, regulation or order if a governmental authority... An Effected Party shall be excused from the performance of its obligation hereunder or liability for Damages to the other party, if and to the extent it shall be delayed in or prevented from performing or carrying out any of the provisions of this Agreement, except the obligation to pay any amount when due..."

My take: In other words, while technically the agreement says the Power Contract can not be "adversely effected" it gives both CFLCO and Nalcor an out from respecting the contract by way of this WMA. It says a government action, regulation, act, etc can be a considered a Force Majeure, technically out of  the control of both CFLCO and Nalcor, yet both are owned primarily by the government. The effect of this clause is to give Nalcor and CFLCO legal cover from being sued by Hydro-Quebec for violating the Power Contract as they are simply following legislation. This clause makes obvious the government's intention to destroy Hydro-Quebec's rights under the Power Contract.

There are any number of additional issues with the WMA including such things as maintenance of the facility, and the like that also conflict with the Power Contract. What I have outlined above are some of the main points. What any Court must decide is whether or not the WMA "derogates" the terms of the Power Contract. If it does then its unconstitutional. Derogate is defined as: " To take away; detract. To deviate from a standard or expectation; to go astray." That is the standard the Supreme Court of Canada set down in the Reversion Act case of 1984. That decision was unanimous, and therefore that standard can not be altered by any court. The quote I placed in the second paragraph of this article rings loudly. Here is the second quote from that decision that you need to know:

"even if the flow of electricity to Quebec continued at the same rate and at the same price after coming into force of the Act, it would then be in the form of a privilege rather than an enforceable right. All this, in my opinion, points to one conclusion: the Reversion Act is a colourable attempt to interfere with the Power Contract and thus to derogate from the rights of Hydro-Quebec to receive an agreed amount of power at an agreed price."

A few of the local press, and some PC Party operatives have suggested what I am doing by challenging this agreement is assisting Hydro-Quebec. Some of my interested friends have noted that Hydro-Quebec hasn't said a word about it. Frankly, nobody has. Why? Well in Hydro-Quebec's case they are likely mad I've tripped up their ambush of Newfoundland and Labrador - waiting as they are for us to build it and then shutting us down in court..$10 billion later. In everyone else's case, well it's like a collective holding of the breath. So far at least $800 million has been spent by our government, and people cannot comprehend such a massive amount of money would be spent on something unconstitutional and therefore illegal. This also involves the governments of Canada and Nova Scotia.

Billions are at risk. The silence is deafening, but the facts remain.

Syria, Pandora's Box and a Game of Chicken

Most readers of this blog know it deals with primarily Newfoundland and Labrador

politics, the odd time national politics, and once in a while international topics. This post involves the latter.

Syria has been weighing heavily on my mind these days. In one way it is just another

implosion of a middle eastern political system - unrelated to the uprisings from the Arab Spring. In another way, it is the most dangerous manifestation of the Spring. Like Tunisia, and Libya it has a colonial past. Like Egypt it is focused more on religious rule than actual freedom.

It seems that western politicians and press consistently make the same, very strategic

mistake when they portray these uprisings as an awakening of a spirit of freedom in the
Arab peoples. In fact, when the Arab people rise up they are seeking a religious resolution not a political solution. There lives center around their religious ideals, not political
ideals. For them the revolution is a means to institute Islamic government, which is
central to their core values. The freedom achieved by the Spring gave them the
opportunity to replace secular governments and replace them with Islamic governments.
In fact, that is happening in every case. Furthermore, not one Islamic government has
been overthrown. So yes, they now have governments that reflect their beliefs, but their
beliefs are not necessarily aimed at peace.

The other commonality that keeps rearing its head is the Sunni - Shia blood-letting.

Whether it be the war in Iraq or the Arab Spring, and now Syria, this 1300 year old blood feud has been let out of Pandora's Box. Whether by design or coincidence this hatred has been used by NATO and the Russian bloc ( I include Iran in this one). While the old secular governments were notorius for their rights abuses, so are the Islamic ones. While the old secular dictatorships were controlled by one superpower or another, so are the new Islamic ones. Now, however, the evils unleashed from Pandora's Box are on Israel's door step. That is one primary reason why the Syrian war is dangerous. However, the biggest reason why the Syrian war is dangerous is the game of poke-in-the-chest that has been reignited between the United States and Russia.

Some media have attempted to portray Syria as a proxy war between the US and Iran, or

Iran and Israel, or even between Iran and Saudi Arabia. The truth is Russia controls the
Syrian government. It also controls the Iranian government. It does this with business, but just as importantly by arms sales. It also claims these countries as entities in its "sphere of influence", and therefore crucial to its national interest. The US claims the defence of Israel, and more "moderate" Arab countries as in its national interest. The difference really is geographic. While Syria, and Iran essentially border Russia, the US has no such argument. The old spheres of influence from the cold war days crumbled with the Berlin Wall, and the US has aimed to take advantage. What happens though when Russia decides it must make a stand, and refuses to retreat any further? The answer is Syria.

Frankly, NATO abused the United Nations resolution authorizing a no-fly zone in Libya - a very serious abuse. Instead of keeping Libyan planes and choppers out of the air it became the air force for the rebels. It took sides and determined the outcome. Now the Russians and Chinese no longer trust that option. The only option NATO has is to impose a unilateral no-fly zone. Russia answered that option with the transfer of state-of-the-art S300 anti-aircraft missile systems. It also heavily reinforced its only naval base in Syria. For every move the US makes (Patriot missiles systems in Turkey and Jordan, etc), the Russians counter. There is no backing away from this game of chicken.

Unfortunately for Israel, it is damned if it does and damned if it doesn't. It can't directly

intervene as that would provoke Russia, and cause moderate Arab governments to
become neutral or even hostile toward Israel. It doesn't want the Syrian rebels armed as
those arms would most certainly end up in the hands of Hezbollah and other Islamic
extremists. And, despite the anti-missile umbrella, Israel would almost certainly be
targeted with missiles from Hezbollah, Syria, and likely Iran. The one country that has no good options is Israel. Likely, and very ironically, the best case scenario for Israel is a victory by the Syrian government and a return to the status quo.

What is needed in all of this is a sense of place. The US needs to realize its place in the

world is not that of overlord. It needs to reject the single most dangerous doctrine it has
ever adopted - Bush's pre-emptive strike doctrine. It needs to adhere to the principles of
international law - even when it may not suit its interest. Obama's arming of the rebels
against another state is considered an act of war under international law, yet it is treated
as if it were nothing more than a policy decision. That is the kind of arrogance that causes instability and tragedy. Frankly, the Syrian government is fighting an armed insurgency according to international law. It is using force. That is legal under international law.

There have been civilian casualties and displaced people as a result. That has been the

case in every war since the beginning of time - ugly as that truth is. The Syrian
government is not fighting unarmed civilians. It is fighting an armed force that got its
arms from somebody, and is often not even Syrian citizens. If a similar situation were to
occur in Canada or the US, you can be sure there would be a similar response.

Were chemical weapons used? Who knows. Maybe they were. However, does it really

make sense that the Syrian government would use chemical weapons to kill between 100-150 people and thereby invite the US to intervene? In a war that's seen tens of thousands die? That simply doesn't make sense on any level.

What the Syrian situation needs is for both superpowers to pull back. Quit upping the

ante. Allow the Syrians to finish it between themselves. It's not a great way to look at it,
but it's a lot less dangerous than a game of chicken between the US and Russia.

Why Muskrat Falls MUST be Defeated

Why oppose Muskrat Falls? Having studied the project, the industry, and the demographic/economic position of the province there are many reasons. I won't get into any of them here except one. Muskrat Falls, indeed the entire Lower Churchill project, is based on an unconstitutional foundation - the Water Management Agreement imposed by the Public Utilities Board.



As I stood in the Supreme Court of Newfoundland and Labrador this past week a distant decision weighed on my mind - the Supreme Court of Canada decision of 1984 on the Water Reversion Act. So, I began my final argument with a quote from that decision that eerily mirrored the government's language of today:

"It was argued by the Attorney General of Newfoundland and Labrador that control over the power generated at Churchill Falls is essential for the effective management of its water resources and to meet the energy needs of the Province. However, it is not for this Court to consider the desirability of legislation from a social or economic perspective where a constitutional issue is raised."

Now have a read of the Water Management Agreement's opening words:

"it is declared to be the policy of the Province that, amongst other things, all sources and facilities for the production, transmission and distribution of Power and Energy in the Province should be managed and operated in a matter that would result in the most efficient production, transmission and distribution of Power and Energy and, where necessary, all Power, Energy, sources and facilities of the Province are to be assessed and allocated and re-allocated in the manner that is necessary to give effect to such a policy."

In other words, Nalcor is taking over the operational control of the Upper Churchill plant, and will "allocate and re-allocate" the power generated by it so its lower Churchill facilities will be able to function.



Essentially, the provincial government is attempting to achieve most of the objectives of the Reversion Act of 1984, just by different means. As we all know, the Water Management Agreement is meant to allow Nalcor to take power from the Upper Churchill when the Lower Churchill does not have enough water to operate, and then send that power back to the Upper Churchill plant at its convenience. Essentially, recalling power when it wants from the Upper Churchill.



The Power Contract defines recall as:

"...CFLCO may, on not less than three years prior written notice to Hydro-Quebec, elect to withhold from the power and energy agreed to be sold hereunder blocks at a specified load factor per month...not more than 90%, which blocks in the aggregate shall not exceed during the term hereof 300,000 kilowatts for a maximum withholding of 2.362 billion kilowatts per year."

In other words, only 300 MW of power can be withheld by CFLCO. The rest must be offered for sale to Hydro-Quebec. So, if Nalcor wanted to take power from the Upper Churchill it must reach an agreement with Hydro-Quebec to buy that power from them. Then consider the finding of the Supreme Court of Canada on who owns the power produced by the Upper Churchill:

"...the company signed a contract (the Power Contract) with Hydro-Quebec whereby it agreed to supply and Hydro-Quebec agreed to purchase virtually all of the hydro-electric power produced at Churchill Falls for a term of 65 years."

The Supreme Court of Canada found that "virtually all" the power "produced at Churchill falls” must be sold and supplied to Hydro-Quebec - Not from Muskrat Falls, or Gull Island. Nalcor and the government have attempted to change the ownership of power produced at the Upper Churchill, and place it in their control - in direct contravention of the Power Contract - which is unconstitutional.



In fact, the Supreme Court of Canada further stated, and this speaks directly to the Water Management Agreement:

"As soon as the Reversion Act came into force, Hydro-Quebec's right to receive power according to the terms of the Power Contract would be effectively destroyed. Even if the flow of electricity to Quebec continued at the same rate and for the same price after the coming into force of the Act, it would then be in the form of a privilege rather than an enforceable right. All of this, in my opinion, points to one conclusion: the Reversion Act is a colourable attempt to interfere with the Power Contract and thus to derogate from the rights of Hydro-Quebec to receive an agreed amount of power at an agreed price."

The government and Nalcor both argued throughout the hearing that the legislation says "no adverse effects" to previous power contracts are allowed - and that is what the Water Management Agreement says, but that's not the standard set by the Supreme Court of Canada. It said no "derogation" of rights. Derogation of rights means taking away of rights - whether it's adverse or not is subjective and irrelevant according to the Supreme Court.



So why did Williams and company use that phrase instead of the one insisted upon by the Supreme Court? It's quite simple. They tried to make it constitutional by including language that on the face of it seemed to safeguard Hydro-Quebec's rights and therefore be constitutional, but check out what the Supreme Court said on the Reversion Act:

"Where however the pith and substance of the provincial enactment is the derogation from or elimination of extra-provincial rights then, even if it is cloaked in the proper constitutional form, it will be ultra-vires. A colourable attempt to preserve the appearance of constitutionality in order to conceal an unconstitutional objective will not save the legislation."

So, why would Williams attempt to get around Hydro-Quebec this way? People close to him that I’ve interviewed suggest its his ego. That he was so obsessed with getting the best of Hydro-Quebec, and being recorded as the one who did it in the history books, that he became reckless. Perhaps that is true. I don’t know the man enough to be certain. However, I am certain that once the terms of the Water Management Agreement are forced on Hydro-Quebec, they will sue as they always have. When the government and Nalcor argued in Court that I was merely speculating as to what could happen, I brought it to the Court's attention that Quebec has never once left a challenge to their rights under the Power Contract go undefended. That there is a long history of Court bouts and that Quebec has not lost a single case. In fact, on the balance of probabilities, it is almost 100% certain Quebec will do the same in this case as it has in the past. The difference between this time and the Reversion Act attempt in the 1980's is back then the government had the sense to go to the Supreme Court of Canada first before it implemented the agreement or spent any money. That way it was just out the legal fees. This time they are attempting to build an entire dam complex, and transmission system, estimated to cost between $7-10 billion first. Of course that means adding that cost to our gross debt of $13.4 billion. But that isn't where it ends. Once the dam is built, Hydro-Quebec could easily refuse to ever come to an agreement with us, and the dam would operate at 20% capacity until at least 2041. The financial impact of that is permanent financial devastation to the people of the province.



The government's own legal opinion, in the publication "Legal Options", states:

"If a court followed this reasoning, CFLCO would be in breach of the Power Contract once it started diverting power to Newfoundland and Labrador from Hydro-Quebec. In these circumstances, Hydro-Quebec would pursue monetary damages from CFLCO. The amount of such damages cannot be accurately predicted, but would be significant...Any level of damages would be expected to drive CFLCO into insolvency and likely bankruptcy."

Bottom line, even though that legal assessment referred to the Section 92A strategy to get Upper Churchill power, it equally applies to the Water Management strategy.

This is why I have brought the fight to the province and Nalcor, to stop them from allowing Hydro-Quebec to destroy us before they get the chance. Yes, a lot of money has been spent, but nothing compared to what would be in store for us. I just couldn't stand by and watch Williams and company do this to us.

Muskrat Falls is Constitutionally challenged

It is just over a week to go before the Charter challenge resumes over the Muskrat Falls project in the Supreme Court of Newfoundland and Labrador. For the next several weeks I will be focusing soley on this challenge, so blogging will have to go on hold. However, a few thoughts on what has gone on with the federal and provincial governments in relation to this challenge should be passed along.

Back in December, 2012, during the initial hearing, I was somewhat amazed the provincial government had not submitted one piece of evidence, or argument, to back it's position that the 2007 amendments to the Electrical Power Control Act [EPCA] (brought in by then fearless leader Williams) and the subsequent water management agreement were constitutional. Not one word of the provincial government's argument addressed these two agreements. Think about that for a minute. Here a piece of their key Muskrat Falls legislation is being challenged and not one word. Not one piece of evidence was submitted to back their position. Not one.

We went into the Supreme Court in December expecting to fight a four day battle over this legislation. Although it isn't the whole case, it is 75% of it. There we are in the Supreme Court and the Justice tosses out that portion of the case, because in her estimation the service of the papers to the federal Attorney General was not complete enough. Service is required when a constitutional question is being raised and a law could be struck down. However, it was established from earlier court hearings that a declaratory decision regarding the constitutional status would not be permitted at this time, because that would be a final result and an injunction could not deliver final relief. Here is one question that weighed on me: If a constitutional decision can not be decided during an injunction hearing then why did the federal Attorney General need to be served at all? In any case, it was not allowed.

With a minimum of ten days notice required to serve the feds it appeared my case was dead in the water - pardon the pun. However, a subsequent challenge to the Judge's impartiality ate up the remainder of the court days and a postponement allowed me to serve the Attorney General - who subsequently decided not to intervene. During a conference call with the Judge and the government/Nalcor/Innu lawyers in May, 2013, it was decided by the Judge to allow the ECPA and water management agreement back in as the feds had been served with everything and declined to intervene. The provincial government's lawyer immediately requested time to submit documents regarding these peices of legislation and the Judge gave them until May 21, 2013 to do so.

That is where my question comes in. It is a troubling one, and one that has been weighing on my mind. Why did the provincial government not enter any argument or documents supporting their position on the EPCA and water management agreement when we went to court the first time - back in December - yet immediately rose to do so when the Judge reversed her decision?

To me it raises the question: Did the provincial government have inside information that the Judge was going to throw that part of my argument out? Sound far fetched? How do you explain the government's inclusion of argument suddenly then when it became clear that the legislation would be included? It seems to me the provincial government must have been liaising with the federal government, and come to the conclusion the feds had not been served properly, so there was no need to file an argument or evidence as it would be thrown out.

That begs the question: Is it right and ethical for the federal government to conspire with a provincial government to thwart a constitutional challenge by a citizen? I use the word thwart because at no time, despite numerous written and oral appeals to do so, did the federal Attorney General comment service was not adequate - or any comment at all. By doing so he caused that part of the argument to be thrown out in the earlier hearing. In fact, it was not until I wrote a personal letter to the Prime Minister, copying in the Attorney General and members of the press, that a response finally came back from the feds saying they would not intervene. I had to formally accuse them of undermining fundamentals of Canadian law, the right to present one's case, before a response came back - it took only two days.

So, it is quite apparent on the face of it that my own federal government, the defenders of the Charter of Rights and all aspects of the Constitution of Canada, were in fact assisting my provincial government in undermining a charter challenge. A charter challenge over the Muskrat Falls project. A project that the federal government signed a loan guarantee for. For people who like to believe there is no greater sanctity than the rights of a Canadian citizen this is troubling. For me this is troubling. Win, lose or draw this is troubling. It speaks to the rot in some ways that we have witnessed in Ottawa lately, but yet this is far more dangerous. Our rights are the one thing that rich and poor share alike. It is what defines us at home and abroad. It defines our values and core beliefs. Yet, apparently, it can be traded in over a hunk of concrete on a river. The charter challenge of Muskrat Falls resumes on June 4,5,6 and longer if necessary.   

Lies, Bribes, Harper and Dunderdale - the Evidence

On April 28, 2013, I wrote an article on whether or not the Innu people were bribed to vote for the New Dawn Agreement, which passage was necessary to allow the Muskrat Falls project to proceed. http://rocksolidpolitics.blogspot.ca/2013/04/were-innu-bribed-for-muskrat-falls-vote.html  Since that time the information contained in that post was forwarded to the Prime Minister's Office, the Attorney General of Canada, the head of the RCMP, the Quebec Corruption Commission, the World Bank Corruption Commission, the Swiss federal Police, and both leaders of the federal opposition parties. Yet nothing. It appears very likely that the Innu people were given a financial reward for voting in favour of the New Dawn Agreement, which violates federal laws on corruption and the federal elections act. The local RCMP in Goose Bay were informed of these payments a year ago. Those forwarding the information want a full blown RCMP investigation and forensic audit of both bands, the Innu Nation, and the Innu trusts. Yet nothing has happened.

I have decided to publish the actual minutes of both meetings where the $5000 payment was authorized, and where the children's trust fund was accessed to forward those payments as soon as possible with repayment of the fund coming later from a bank loan.



THE JULY 6, 2011 MINUTES

You probably noticed it was the Innu Nation, the group responsible for conducting the New Dawn Agreement referendum, that mere days after the agreement was approved by referendum wrote a letter to the trust for the $12.5 million payout at $5000 per man, woman, and child. You will also note the Bank of Montreal insisted on being renewed til 2017 as corporate trustee of the children's trust. The motion for the loan was made by Paul Rich, brother-in-law of disgraced former Innu Nation leader and MP Peter Penashue. It's most interesting to note that all the details of the loan had been arranged in advance of the conference call, and would imply the payout had been planned days in advance.


THE JULY 19, 2011 MINUTES

You will notice the urgency of getting that $5000 per person payout to the Innu people. So much urgency that less than 3 weeks after the New Dawn vote the Innu trustees voted to dip into the children's trust fund to get those funds out. It is unclear if such a withdrawal, even on a temporary basis, is even legal and in keeping with the terms of the trust.

You now see the evidence. You see who was involved. You know the time lines. Just a reminder, the New Dawn Agreement vote was held June 30, 2011. This must at a minimum be fully investigated by the RCMP, Elections Canada, Aboriginal Affairs, and a forensic audit conducted by the federal government. Future generations of Innu, and the rest of us in this province, are at least do that minimum of respect.

Wolves in the Keep

Like two castles the federal Conservatives and the provincial PC's of Newfoundland and Labrador dominated their kingdoms. Their walls were impenetrable. Their moats were deep. From this place of strength they exercised their power at will, and avoided all the nattering of pesky peasants outside their high walls. Their word was law. That was then. This is now.

Like a Shakespearean tragedy the rot within has broken the massive stone walls, and the all too human truth of absolute power corrupting absolutely is open for all to see. Both governments have been guilty of abusing their power in a way not seen before. They have ignored or forgotten the rule that power is to be used, and "if you abuse it you lose it". It's an old saying. It's an old yardstick if you will to restrain the dark side of human nature and ensure an order of proper balance in the exercise of power. When that balance is lost the great unseen hand has a way of restoring it, and often it is not a pretty sight.

Both parties have lost sight of the nature of power. The ability to govern, the moral high ground if you will, is rooted in the ancient notion of the "social contract". The social contract being an informal agreement between the very earliest humans that they would agree to surrender some of their rights to the group in order that they might survive. So in the beginning one or more cavemen would agree to hunt together, to share, to follow a leader, and to protect each other. From there it grew to villages, cities, provinces, countries, ultra national organizations, and eventually some say world government. The contract itself was in the beginning, and has never changed, an agreement between man and the state on how he agrees to be governed. In modern times it has become a written contract commonly referred to as a Constitution.

Remember, the social contract was between a man and the group he agreed to submit certain rights to - his government in the modern context. Herein lies the poison in the wine if you will: corporations were never a part of the social contract. People never agreed to submit any rights to corporations. Corporations, therefore, never had any right to exercise power in the affairs and lives of people. However, and we have seen it all over the world, corporations have decided to take that power by controlling the process that establishes who shall govern. In a sense, they have added themselves to the social contract. This very simple concept has led to where the world is today, and locally to where our nation and province are today.

On the provincial level we have been subjected to such acts as Bill 29 which violate the ancient right of disclosure - the right to be informed. We have witnessed our government  lay off almost a thousand people to save $30 million while giving $90 million to Kruger - in the same budget no less. We have witnessed former premier Danny Williams negotiate offshore royalty deals with oil corporations that included impacts and benefits agreements that personally benefited his offshore companies. We have seen the same ex premier grant massive contracts to SNC Lavalin and then sell his offshore companies to them. Of course he wasn't the only one. Joey Smallwood took a $100,000 loan from the bank of Montreal to buy shares in Brinco which he had hoped would make him rich when the Upper Churchill deal went through. And on it goes. The rights enshrined in the social contract, to be protected and secure for the benefit of all, greedily thrown to the curb.

On the federal level things are no different. The Conservatives have thrown all responsibilities of governing out in the march for control. Rather than debate each bill in Parliament, and defend each bill, they have created omnibus bills which essentially lump many bills into one. There is no scrutiny by the people's representatives allowed. And what are those bills? Most are corporate in nature. The bill to remove federal protection of almost all Canada's water is a big one. Bills to streamline, read water down, environmental laws that restrain corporations from exercising unimpeded activity. Essentially laws that were put in place to protect the land for the benefit of the people. So corporately controlled has their agenda become, so far have they strayed from the social contract, that they have alienated themselves from the people.

This week we did not witness Senator Duffy fall from grace. Or Senator Wallin. Or Nigel Wright. Etc. What we really witnessed was the exposure of corporate power and all its ugliness. Senator Duffy, appointed by Harper, was not conducting himself any differently than any other Senator in the game. They are named to the Senate to be professional back room types if you will. When Duffy was warned by Senator Tkachuck that he was about to be exposed for using the people's funds for improperly subsidizing his way of life, a deal was reached with Harper's Chief of Staff Nigel Wright to pay off the $90,000 before the report was released. The plan was to nullify the issue before it was publicly exposed, and thereby protect Duffy from serious damage. Duffy after all was a chief fund raiser and promoter for the Conservatives. The plan failed when the "loan" was exposed and Wright became fully exposed. The dangerous part of this equation was Wright.

To understand who Wright is you can check out this Globe and Mail story soa.li/8IFfm0Y   Essentially, Wright is a corporate guy, loaned from Onex corporation for two years (which were up six months ago) to run the Prime Minister's Office - in reality the Government of Canada. He is responsible for many of the actions of this government and it's decidedly corporate flavour. He is not a man of the people. He does not embody any of the principles and rights of the social contract. He is a man of the order, the corporate order that is. Like so many things, and like so many countries, he is there to establish their interests - whether they are those of the people or not. Since Wright became exposed, and the pressure from the people mounted, Senator Duffy was quickly thrown from the party. Then Senator Wallin quickly followed. Naked power, corporate power that is, was exposed. The ability to, in a premeditated stroke, cover up the transgressions of the privileged. The ones we agreed to give up certain rights to for their promise to look after and protect the rest of us. In one brief moment we saw it all. Now Harper is trying to save Wright. Just like he tried to save Penashue in the other recent, premeditated attempt to cover up corporate donations.

It is an ugly truth in all. The order of civilization is broken - terminally broken. Those with the great trust have failed their great responsibilities. It is evident throughout the world we live in today. From civil wars, to oil wars we see it everywhere around us. And while those wars were benefiting us we chose to go along with those social contract rights being violated. Now, with our world monetary system in near failure, with our personal and governmental debts reaching the maximum sustainable, we gaze into an uncertain future. We look toward the corporations for accountability. We look to the governments for solutions. In reality, they have become one and the same. Our earliest ancestors gathered together for protection from the wolves. Now the wolves are the ones we turn to for protection. Therein lies the not so good news.

Dedicated to my friend Jason.

Tipping Point - the End Game

It's been just over two years since Williams left office and Dunderdale was sworn in. It was the culmination of many political deals to pave the way for the Lower Churchill project. There was the deal with the Innu of Labrador. There was the deal with Harper. There was the deal with Nova Scotia Premier Dexter. There was the deal with Emera. There was the deal within the PC Party caucus. There was the deal with the corporate community of the province (less than ten families). There was even a deal with the Liberals. So many political and business deals were made over one project that one truly must tip the hat to the old chess master Williams - in that regard.

However, as the saying goes: "The plan doesn't survive first contact with the enemy". It's an old military saying, but it works. Like a well rehearsed play the show unfolded. Williams crafted the necessary legislation to force Hydro Quebec to share the Upper Churchill. He created Nalcor as the vehicle to achieve the project. The one thing he could not do was finance it alone. Since 2006 he pleaded with Harper for a loan guarantee. Harper put him off. Harper is aligned with Enbridge which has a strategic alliance with Hydro Quebec. Why would Harper help Williams and thereby Nalcor? Williams carried on. He eventually reached a deal with the Innu - the New Dawn Agreement. Peter Penashue, then at the Innu Nation, represented the Innu. Still, it took almost three years to take New Dawn from the drawing board to the place where it could be executed, and free the government to proceed with the Lower Churchill.

In those three years Williams set the stage by amending the Electrical Power Control Act, which would force Hydro Quebec to submit to the province on the operations and sales of the Upper Churchill. He also became increasingly desperate for a loan guarantee - culminating in the "ABC Campaign". In the interim he also sold his two offshore companies to SNC Lavalin for an undisclosed sum. SNC Lavalin was then given the Lower Churchill contract. By late 2010 Williams had all his ducks in a row. The agreement with Harper that in exchange for the loan guarantee he would leave politics. And so he did after carefully orchestrating a backroom deal with his cabinet to put Dunderdale in charge. She became the Premier run and controlled by her own Cabinet - rather than the other way around. He even contrived a falling out with Dunderdale, to reinforce his deal, claiming to be deprived of cell numbers for cabinet ministers that had not changed since he was premier. All very contrived, and all pulling on the ores in the same direction.

Then something happened. Actually several things happened. Firstly, and perhaps most importantly, the United States created a natural gas revolution. They built gas fired electrical plants in places like New York where Williams and company had dreamed of selling power. Hydro power was suddenly becoming obsolete. Also, the resistance started. In Newfoundland and Labrador the resistance was started by a handfull of political bloggers. They were/are Peter Whittle, Ed Hollet, Wally Maclean and myself. Dunderdale became so frustrated with the bloggers that she singled them out in her year end interview as "nay-sayers". The war within went viral. The bloggers were determined. They drove the discussion, the opposition, and some would say a political revolution resulted. Citizens, and bloggers, began consistently calling the daily radio shows with concerns about Muskrat Falls. Williams went public denouncing them and all who attacked his project for "no good reason". Dunderdale followed. So did the cabinet. It was a war of hearts and minds.

Yet, the project plodded along. Even before Muskrat falls was officially sanctioned in the House of Assembly, Nalcor was busy excavating the site - once the Innu had signed the three New Dawn Agreements. Harper came fourth with the promised loan guarantee, although it was in the form of a memorandum of understanding and had many stipulations. Williams promoted mining in Labrador, and his own little city on the Island - all of which would need the new power.  Even giants of industry like Brian Mulroney appeared on the scene. He publicly espoused the need for "environmentally friendly policies". He also joined the board of directors of Dean MacDonald's company - a close ally of Williams.

Then things started to go bad. The backroom deal to have Dean MacDonald take over the provincial Liberal Party, and then replace the battered Dunderdale in power, collapsed and he pulled out. The deal to include Penashue in the federal Cabinet fell apart as he was exposed, and forced to resign. Meanwhile Yvonne Jones kept to her deal and immediately pounced on the federal Liberal nomination to replace Penashue, leaving previous Nunatukavut MP Todd Russell justifiably furious.
Things started getting very interesting though when an email was sent to Hydro Quebec.

As you may or may not know, I have filed a lawsuit against the Government of Newfoundland and Labrador, Innu Nation, and Nalcor over the constitutionality of the New Dawn vote and the water management agreement/power control act amendments. On January 18, 2013 I sent an email to Hydro Quebec informing them of the nature of my lawsuit, and requesting they advise if they wish to intervene. Coincidentally, two hours later, the same person I was speaking with held a press conference. The story went essentially like this:

 "Quebec’s Crown-owned utility, which declined comment Thursday on the consultant’s report, changed its tune the following day.
'Normally we don’t comment on such third-party reports,' Ariane Connor, a Hydro-Quebec spokeswoman, said in an interview.
“But having had a chance to look it over quickly over the last 24 hours, we’re very surprised by the analysis and the conclusions of the report.'
Connor said the utility may want to be part of the regulatory hearing to “present our view” because it wasn’t consulted about the study."

What does that mean? It means Hydro Quebec's ambush was tripped. Hydro Quebec has always known that Williams' Electrical Power Control Act amendments forcing Hydro Quebec to share the Upper Churchill were unconstitutional. The law regarding this issue was decided in the 1984 Reversion Act review by the Supreme Court of Canada. However, like any good soldier, they were lying there waiting for Williams and company to deliver us to them. After all, without a valid water management agreement both of the Lower Churchill dams would only produce 20% firm power - as per Nalcor's evidence given at the Public Utility Board hearing. With Muskrat Falls built, and unable to operate, Newfoundland and Labrador would be at the mercy of Quebec. We would be unable to defend ourselves having completely maxed our borrowing on the construction of the dam, and the terms of the loan guarantee would require the surrender of these assets if the province were to default. All nice and cozy for Harper, Hydro Quebec and company. What they needed for this plan to succeed was silence.

That was the tipping point. After years of saying almost nothing, Hydro Quebec suddenly had a big interest in dumping their glut of power in Nova Scotia. They are scheduled to speak at the hearings in Nova Scotia now. Brian Mulroney's good friend Pierre Karl Péladeau just stepped down as President and CEO of Quebecor to become non-executive chairman of Hydro Quebec - not pulling a salary if that rings any bells. Jim Prentice, former Conservative cabinet minister, and vocal proponent of the Muskrat Falls deal, had this to say just days ago:

“It essentially means Canadian hydroelectricity, although we see it as renewable — the ultimate renewable energy — it doesn’t qualify as renewable energy in those states, because the renewable portfolio standard doesn’t recognize it. So basically you have a state-level interference with the market, and my point is if the North American market is going to work efficiently, we need the same standards on both sides of the Canada-U.S. border, and these renewable portfolio standards get in the way of our ability to sell Canadian hydro.”
This comes as the United States moves closer towards energy independence, he said.
“If you look at the numbers in terms of energy production in the United States and imports and exports (between) Canada and the U.S., it’s increasingly clear that the U.S. is moving towards energy independence.”
Combining the resources of Mexico, Canada and the U.S., Prentice predicts those nations will be energy independent by 2020. He said it becomes all the more important to keep the marketplace open and free from what he labels “sub-national impediments,” such as those state laws.

Asked about the implications for such standards with respect to Muskrat Falls, Prentice said they do not help.
“Well, it’s not helpful, and we need to make sure that across the United States, Canadian hydroelectricity is recognized as a renewable energy that is good for consumers.”

The deal is coming apart, and Williams and company are watching as the ground shifts beneath their feet. Hydro Quebec's massive debt grew $10 billion from just 5 years ago to a whopping $ 43.5 billion. That's over three times the gross debt of this province. It has mass surpluses of power it can not sell - - last I heard it was 5000 MW, almost the entire production of the Upper Churchill. Hydro Quebec now realizes it must abandon the idea of laying the trap for Williams and company, and instead move to secure the Nova Scotia market directly for it's own survival. This is what it is in the process of doing. The only remaining question is: At what point does the Newfoundland and Labrador government realize and accept the tipping point has been reached and the jig is up? Here is my suggestion: Be prepared to write off the money already spent and stop the bleeding here; send the Electrical Power Control Act amendments and the water management agreement to the Supreme Court of Canada for review to determine it's constitutionality; accept the political consequences; reimburse expenses. This is the end game. We are in it now.

Were the Innu bribed for the Muskrat Falls Vote?

The Innu communities of Labrador, Sheshatsui and Natuashish, are tight communities. Understanding what is taking place, or has taken place there is difficult at best. With a total population of 2245 people according to the 2011 census, everybody knows everybody and large families dominate the political and economic life in the communities. Therefore, getting accurate information of what is happening there is almost impossible for outsiders. This article is made possible by a number of Innu who have broken that code of silence and taken me into their confidence - for that I'm thankful to them as we should all be.

In the early 1980's Peter Penashue and two other people Incorporated a body politic now called the "Innu Nation". Essentially, the Innu Nation's purpose was to act as a quasi-government for the Innu people, because without a finalized land claim the two communities could only represent themselves and not the overall interests of the Innu in Labrador. The first real major financial victory for the Innu Nation came with the Voisey's Bay Agreement.

The Innu had tried to stop it until they had a land claim in place, but the courts ruled it could proceed and an impacts and benefits agreement was put in place. As part of that agreement the Innu would receive quarterly royalty payments from the provincial government of 5% of Vale's Voisey Bay sales and $59 million for the Teshipitakan Fund (T-Fund). The T-Fund was created soley as a fund for future generations (ie: the Innu children). As of February 4, 2011 the fund had grown to $66 million. Revenues from Voisey's Bay are split 3 ways: 50% to the T Fund (Innu Nation); 25% to the Sheshatsui Community Fund; and 25% to the Natuashish Community Fund.

The trustees of the fund, members from each Innu community and the Innu Nation, have been trying to gain access to the children's trust for some time. Minutes of their meetings show a determined effort by Paul Rich, brother-in-law of Peter Penashue, to take $25 million from the fund to build houses. The money was to be split evenly between the communities. He had no support but managed to have the trustees lawyers give an opinion. The only way to pull money from the trust was to prove a "man-made disaster" had occurred. He tried to have the housing issue put in that context. The issue was so divisive the trustees were read the Trust's mission statement, and they reviewed their trustee's Oath of Office. The trustees were cautioned by the manager to remove their "biases (personal and political)". They were reminded that the principal of the Trust could not be touched in any case.

On February 7, 2011, Paul Rich motioned the idea of getting a loan for the money and using the Trust as collateral. It was agreed that this course would be explored. It was also agreed the Bank of Montreal, the representative of the Trust, would look into the matter. On February 14, 2011 Paul Rich put forward a motion to lend the $25 million from the Trust. During discussions the concern of money being used for payouts to community members rather than housing was brought up. The motion was defeated 4-2 in a recorded vote.

During the May 10, 2011 meeting it was discussed and agreed to that public meetings would be held in each community in the middle of June - just weeks before the referendum on the New Dawn Agreement. On May 26, 2011 it was agreed the meetings would be held in the first week of June with expenses for planes, halls, and lunches to be funded. Then, during a Trust meeting on June 3, 2011, just days before the meeting were to take place, they were cancelled.

This is were it gets very interesting. On July 6, 2011, less than a week after the New Dawn vote, the trustees held a teleconference. The issue again was money, but this time it was different. The following motion, the only apparent topic on the agenda, was made:

" Paul Rich made the following motion: The Trust hereby agrees to apply for a loan for approximately $12,500,000 from the Bank of Montreal to provide a per capita payout of $5,000 to each member of the Innu Nation. It was seconded by Mary Jane Edmonds. BMO Trust Company, the corporate trustee, abstained from voting because of the conflict of interest with the application for a loan from the Bank of Montreal.  All other trustees voted in favour and the motion was carried."

So, less than a week after the Innu voted 88% in favour of the New Dawn Agreement, a $5,000 payment was authorized to every man, woman, and child - motioned by non other than Peter Penashue's brother-in-law. There are a few points to digest on this. Firstly, there was discussion during the meeting to have $5,000 payments for children placed in trust - that was summarily ignored in the motion. Secondly, and quite shockingly so, no reason was given for the payout in the minutes anywhere. Thirdly, the average annual income of the Innu people, according to last available census data, is approximately $12,000. Now consider the following facts:

Sheshatsui

population 1,314
ages:
0-4      200
5-9      130
10-14  150
15-19  115

total children 695 or 53% of the population

Natuashish

population 931
ages:
0-4      145
5-9      125
10-14  90
15-19  100

total children 460 or 49% of the population

Based on this census data, $6,775,000 of the $15,000,000 would go to children - or their parents on their behalf. To put that in perspective for some, the following are family sizes in:

Sheshatsui

2 people  100
3 people  95
4 people  60
5 people  80

Natuashish

2 people  65
3 people  60
4 people  50
5 people  55

Keeping in mind the average ANNUAL income in both communities is less than $12,000 per year, many families and individuals were about to hit the jackpot. For example, families with 5 people living in a household looked to receive $25,000.

On July 8, 2011, a formal meeting of the trustees was held. It was announced at that meeting that the Bank of Montreal had approved the loan for $12,500,000 for the $5,000 payout to each Innu. The bank, however, said it would take some time to process the loan. Paul Rich then motioned:

"Paul Rich made the following motion: To advance money from the Teshipitakan Fund to provide money for the per capita payout, and the money advanced from the Fund will be replaced once the loan money is available. The motion was seconded by Gregory Rich. BMO Trust Company, the corporate trustee, abstained from voting because of the conflict of interest with the application for a loan from the Bank of Montreal.  All other trustees present voted in favour and the motion was carried. The trustees were advised that tomorrow is the earliest the funds could be advanced. Janet will discuss with Lorraine Rich and Karen Penunsi about how much money to hold back. Only the amount that we are paying out will be sent to the band office."

In a somewhat incredible twist of events, a sum of $25,000,000 for housing was changed to a sum of $12,500,000 for individual $5,000 payments, days after the New Dawn was successfully approved by referendum, and motioned by Paul Rich - Peter Penashue's brother-in-law. The Peter behind the Muskrat Falls dam as it were. Interestingly, if you do the math, $5000 multiplied by 2245 people comes out to $11,225,000 leaving $775,000 left over. It appears that the early concerns of some trustees that this housing money would be used for personal payouts was warranted after all. It was noted in the minutes that once a major loan was drawn using the children's trust as collateral no other loan could be made in a similar fashion. So, after the New Dawn payout was made the housing crisis was to remain a housing crisis. The sudden reward for voting in favour of the New Dawn, or so it would appear, and the sudden rush to get the money into the hands of the Innu, robbed the future trustees of any ability to leverage that fund for any other purpose. As an aside, the trustees are currently trying to amend the terms of the trust so they can gain access directly to its funds.

The questions that now surround the New Dawn Agreement, which was necessary for the Muskrat Falls project to proceed, are many. Most seem to centre on what happened during the referendum to approve the New Dawn Agreement. It is illegal to offer a reward or bribe to people for voting in favour of a particular thing. It appears quite obvious this $5,000 per person payment was a big reward for some of the poorest people in Canada. There has been many stories of voting money and alcohol bribes to get the Innu to vote in favour of the New Dawn Agreement. In the end though, without sworn affidavits from the Innu themselves, these remain just stories. However, the $5000 per person payments just days after the vote, and sudden in its conception, leads to the inevitable conclusion that these funds were either a reward or a promise of reward fulfilled. That is my take on it. I have also been advised the RCMP were provided with all the documentation surrounding this issue a year ago, but have done nothing in the way of an investigation or forensic audit. If bribery or reward was used on some of the poorest people in the country to push forward the Muskrat Falls dam project, well, that is just unjustifiable in a country that we think we understand. Surely our provincial government knew these payments had taken place. It goes against our laws, our core beliefs, and everything we believe in as a people.

Pomerleau Construction donation to Danny Williams

Conflict of interest is not just a phrase - it's a crime. It's a crime for a reason. In 2007 the Canadian government amended the Criminal Code in order to implement the United Nations Convention Against Corruption http://laws-lois.justice.gc.ca/eng/AnnualStatutes/2007_13/page-1.html There are also provisions in the Criminal Code for just straight old conflict of interest http://www.nrc-cnrc.gc.ca/eng/about/ethics_integrity/conflict_interest_annex_c.html Finally there is the provincial conflict of interest legislation http://www.assembly.nl.ca/legislation/sr/statutes/c30-1.htm Please remember these.

February, 2007, Pomerleau Construction of Quebec was awarded the contract to build the 236 bed long-term care facility in Corner Brook. It came in with a low bid of $48 million. A competing Newfoundland firm, Olympic Construction, questioned how the contract was rewarded. Olympic's President said he believed the companies were given different specifications, and he suspected Pomerleau may have been able to alter its bid to become the lowest. Then Transportation and Works Minister John Hickey said the same tender package was used by all bidders, and there was nothing untoward about the project being awarded to Pomerleau. Then Corner Brook Mayor Charles Pender, and Board of Trade President Mark Baldwin agreed. The project started running into trouble almost immediately when Pomerleau brought in 4 carpenters from Quebec, and the local trades union protested.

Then in September, 2007 Danny Williams called an election for October 6, 2007. This is where the topic of this blog starts. Williams accepted a political donation to his campaign of $5,000.00 from Pomerleau Construction. Pomerleau did not donate to any other candidate in the election. Pomerleau did not donate to any candidate in the previous elections, or as an annual contributor to any person/party in Newfoundland and Labrador. Pomerleau never donated again in Newfoundland and Labrador politics except $750 to the PC Party in 2008. So what do you call a one-time substantial political donation made to a sitting premier whose government just gave you a $48 million contract? Most would instantly see it as a reward. I would say it falls in that category.

Does that make it illegal? Here's what those links above have to say about that:

CONFLICT OF INTEREST ACT (NL):

Accepting extra benefits

7. (1) A public office holder shall not, directly or indirectly, accept a fee, gift or personal benefit, except compensation authorized by law, that is connected, directly or indirectly, with the performance of his or her duties.

 

CRIMINAL CODE OF CANADA:

 

"121 (1) Every one commits an offence who:

 

a) directly or indirectly
(i) gives, offers or agrees to give or offer to an official or to any member of his family, or to any one for the benefit of an official, or
(ii) being an official, demands, accepts or offers or agrees to accept from any person for himself or another person, a loan, reward, advantage or benefit of any kind as consideration for cooperation, assistance, exercise of influence or an act or omission in connection with
(iii) the transaction of business with or any matter of business relating to the government, or

b) having dealings of any kind with the government, pays a commission or reward to or confers an advantage or benefit of any kind on an employee or official of the government with which he deals, or to any member of his family, or to any one for the benefit of the employee or official, with respect to those dealings, unless he has the consent in writing of the head of the branch of government with which he deals, the proof of which lies on him;

c) being an official or employee of the government, demands, accepts or offers or agrees to accept from a person who has dealings with the government a commission, reward, advantage or benefit of any kind directly or indirectly, by himself or through a member of his family or through any one for his benefit, unless he has the consent in writing of the head of the branch of government that employs him or of which he is an official, the proof of which lies on him;

CRIMINAL CODE OF CANADA (AMENDED)

 

119. (1) Every one is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years who

• (a) being the holder of a judicial office, or being a member of Parliament or of the legislature of a province, directly or indirectly, corruptly accepts, obtains, agrees to accept or attempts to obtain, for themselves or another person, any money, valuable consideration, office, place or employment in respect of anything done or omitted or to be done or omitted by them in their official capacity, or
• (b) directly or indirectly, corruptly gives or offers to a person mentioned in paragraph (a), or to anyone for the benefit of that person, any money, valuable consideration, office, place or employment in respect of anything done or omitted or to be done or omitted by that person in their official capacity.

The law seems very clear. It is illegal to accept money from a company that is doing business with your government. Yet Williams did, but he was not prosecuted. Pomerleau did as well, but they were not prosecuted.

 

Then on March 14, 2013, Richard Dion, formerly of Pomerleau Construction, admitted Pomerleau had been involved in illegal donations to political parties in Quebec. On the same day Yves Codette, VP of SNC Lavalin admitted organizing schemes to funnel thousands of dollars in donations to Quebec provincial parties. The full story is here: http://business.financialpost.com/2013/03/14/snc-lavalin-donated-more-than-1-million-to-quebec-political-parties-commission-told/

 

Genivar, a Quebec-based subsidiary of Pomerleau, admitted to the corruption commission that it too had been involved in illegal political donations to get municipal contracts: http://www.lexology.com/library/detail.aspx?g=354a8e51-079e-4995-b31a-c7950eb975b5 As did SNC Lavalin. The truely ironic twist is that Pomerleau is the construction arm of the SNC consortium put together to build the Montreal hospital where a $22 million dollar bribe was paid through an offshore company by SNC Lavalin: http://www.vigile.net/SNC-Lavalin-construira-le-nouveau and http://www.vigile.net/SNC-Lavalin-construira-le-nouveau

 

Pomerleau has since become very active in Newfoundland and Labrador. In 2009 Pomerleau was the lowest and successful bidder on the new Corner Brook City Hall - $19,798,278. At the time then councillor Neville Greeley was alone in opposing the bid: "The lack of public consultation that has gone into this and the process that has been followed to date; the fact that we are at just about $20 million, with cost overruns...we're pretty soon up to a $24 million city hall - for those reasons I speak against the motion." When the doors opened on the new city hall the final cost was $22 million. The province put in $15 million and the City paid the remaining $7 million.

 

Pomerleau was the lowest and successful bidder on: the Corner Brook Long Term Care Centre - original price $48.4 million, final price $68.5 million; Corner Brook Water Treatment Plant $36 million; Lab West Hospital $60 million; New Residence Building Grenfell Campus $17,750,000; Demolish and removal of St. Teresa's School $14,810,000; and St. John's Convention Centre expansion $55,000,000. Pomerleau is an approved bidder on the Lower Churchill Project, and is bidding. In addition, Pomerleau just acquired Nielson Inc. which is heavily experienced with hydro dams, including as a partner with H.J. O'Connell. In fact, H.J. O'Connell with Neilson Inc. and the Innu Nation were awarded the excavation work for Muskrat Falls. You will remember from my last post that many H.J. O'Connell executives donated to Peter Penashue's campaign in 2011. A practise which is under extreme scrutiny at the Quebec Corruption Commission hearings.

 

What seems to be clear from all of this is patterns. Patterns that exist in the Quebec construction industry and are certainly happening here, and now. The knowledge that our former Premier accepted what can only be seen as a reward, in the form of a political donation, for his re-election from Pomerleau is disturbing. Disturbing that in my opinion it clearly breaks the law. Disturbing in that as a wealthy man he didn't need it, yet accepted funds from a company that was clearly rewarding him personally. Did Pomerleau break the law? It appears that they did. Have they broken the law in other jurisdictions regarding donations? Yes, by their own admission they have. Do we have reason to consider that a great many of our current government funded projects may be subject to these type of activities or worse? Absolutely we do. To think differently would be to ignore the facts, and the evidence unearthed in the Quebec Corruption Commission, that point to exactly how these large corporations influence politicians for their own profit - at our expense. Do the RCMP need to investigate this? Yes it is their duty to, and we need them to.

 

To be clear, yesterday I requested comment on these facts from former premier Danny Williams through his lawyer, and Pomerleau Construction. I also requested the donation lists for the last three municipal elections from the City of St. John's and the City of Corner Brook. I have had no response from any of these enquiries.