Feds won’t confirm details of Muskrat Falls watchdog report

James McLeod
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The federal government refused to confirm Natural Resources Minister Derrick Dalley’s claim that a key Muskrat Falls oversight report was only in an “interim” form when it was used to approve a $5-billion federal loan guarantee.

In direct response to what Dalley told The Telegram earlier this week, Natural Resources Canada spokeswoman Jacinthe Perras would not use the words “interim” or “draft.”

“In November, the independent engineer provided to the Government of Canada a report on the Muskrat Falls Generating Station, the Labrador Transmission Assets and the Labrador-Island Link (together, the Nalcor Projects),” Perras wrote in an emailed statement.

When the province and the federal government agreed in principle to a loan guarantee for the Muskrat Falls project, Ottawa placed a condition on the deal that an independent engineer should be appointed to study the project and report to the federal government.

The loan guarantee was approved in the fall of 2013, after the federal government was apparently satisfied with the report from the independent engineer.

In response to The Telegram’s questions, Perras wrote, “In providing the loan guarantee for the Nalcor Projects, the Government of Canada was satisfied with the independent engineer’s report. This report meets the standard expected of a lender in commercial transactions.”

Despite being asked point-blank by The Telegram, “Did the federal government really approve the $5-(billion) loan guarantee based on a draft report?” Perras’ response makes absolutely no reference to an “interim” or “draft” report in November, which is what Dalley said it was.

“My understanding is that it was an interim report,” Dalley told The Telegram on Monday of this week.

Dalley did not do an interview with The Telegaram Friday, but Natural Resources director of communications Diana Quinton provided a lengthy emailed response to several questions from The Telegram.

“In November 2013, Nalcor received a working draft of the independent engineer’s report. They provided comments regarding this draft to the Government of Canada,” Quinton wrote. “On Friday, Feb. 21, Nalcor received the interim report of the independent engineer called: Interim Independent Engineer’s Report Lower Churchill Project, dated November 29, 2013. This interim report had satisfied the requirements of the federal loan guarantee for the Government of Canada. This report has been forwarded by Nalcor to the Provincial Government.”

Quinton said an updated version of the report — dated Dec. 30, 2013 — was forwarded to Nalcor this week, and sent along to the provincial government.

Nobody has been able to explain why it took two or three months for the provincial government to get its hands on the reports from Ottawa.

NDP MP Jack Harris said it would be nice if the report was released publicly.

“The more the public knows about these things, the better,” he said.

“In this case, where we have a lot of people concerned about the project, particularly in the province of Newfoundland and Labrador, the engineer’s reports may be of some assistance.”

Harris doesn’t assign too much significance to whether it was an interim report or not that was used to authorize the loan guarantee back in November.

“The Government of Canada made its decision to go forward with the loan guarantee,” he said.

“Whatever it was called, clearly it was a report that was sufficiently final to provide that kind of advice.”

Dalley has told The Telegram he didn’t ask to see a copy of the report back in November; he’s also acknowledged that the independent engineer is the only independent oversight currently in place for the Muskrat Falls project.

Dalley indicated part of the reason he didn’t request a copy of the report is because it was still in an interim draft form, and he expected to see it when it was finalized.

The Telegram has requested a copy of the independent engineer’s report from Nalcor and from the federal government. Thus far, both have refused to publicly release it, and both have said, typically, a report of this kind would not be released due to commercially sensitive information.

But a former director on the Nalcor board is saying the independent engineer isn’t enough oversight for a project the size of Muskrat Falls.

Cathy Bennett spent four years as a director on the Nalcor board, as well as a time as chair of the board; she is also a Liberal politician who ran for the party leadership and is now pursuing a run in the district of Virginia Waters.

Bennett said she pushed the government to add expertise on the Nalcor board for megaproject management, but the government ignored her.

“You get better decisions because you’re asking the hard questions and there’s this kind of natural tension that happens, and my experience has been that provides for better decision making in the long term,” she said.

“If you have two major projects being undertaken that this company is participating in, you need to have some expertise around megaprojects on the board. You’d expect to have it in your executive management team; you should also expect to have it in your board.”

Bennett was skeptical that the independent engineer would be enough oversight.

“To say that a consultant is going to provide that same natural tension doesn’t make any sense to me. A consultant will provide feedback based on a piece that they see,” she said. “When you have to walk into a board meeting and explain why something didn’t go the way you planned, there’s a higher sense of accountability.”


Twitter: TelegramJames

Organizations: The Telegram, Natural Resources Canada, Muskrat Falls Generating Station Labrador Transmission Assets Nalcor board

Geographic location: Canada, Ottawa, Newfoundland and Labrador

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Recent comments

  • Tony Rockel
    March 03, 2014 - 08:20

    "John Smith" you are either one of the small band of connivers who stand to benefit from this monstrous scam or you have sold your soul to those that will reap the profits. In the latter case I'm wondering how many pieces of silver it took to buy you?

  • kelty
    March 01, 2014 - 20:07

    I wonder if one of the issues with these things is people like Cathy Bennett with no education sitting on the board of directors. Ronald McDonald would be a smarter choice than this clown.

    March 01, 2014 - 13:58

    To the crown agency spin-doctor who goes by the alias 'John Smith': McLeod is merely attempting to determine whether Minister Dalley told the truth when he gave a public explanation for not having received, seen or read a copy of this engineering report. Ferreting out the truth is not only a legitimate journalistic function, it is something the public has a right to expect from the media (growing rare that it might be). As for all the other propaganda in your personal attack on McLeod, the public understands its purpose is to deflect criticism away from your benefactor. There is abundant evidence that your Muskrat Falls project is a risky, uneconomic, and unwise use of scarce public resources, and that it will financially burden present and future generations of ratepayers and taxpayers in this province. But putting aside the merits of Muskrat for a moment, what really disturbs me - and I hope other Newfoundlanders and Labradorians - is the contemptible, abusive, deceitful manner in which this province's government and its free-wheeling crown agency NALCOR have gone about promoting, defending and shielding this project from open, informed public debate. Even the public face of government has waged a public campaign aimed at denigrating and destroying the reputations of those who would ask relevant questions regarding Muskrat, let alone criticize it. But beneath the veneer of what half passes for civility among cabinet ministers, back benchers and official spokespersons, there are the John Smiths of the world. How ironic that an ex-premier whose apologists are so quick to cite social media for her downfall, would have given license to this shabby, nasty underground cabal of faceless, gutless frauds whose sole purpose is to publicly eviscerate anyone who dares question the wisdom of their political masters. These are people invariably in the clutches of government in one fashion or another who skulk behind the anonymity of the twitter-sphere and digital media to attack the integrity of honest citizenry. These are the people who deploy their blackberries daily to blackball anyone they regard as naysayers, those who - from their distorted little perspective - are somehow disloyal to the province because they dare speak out. How ironic that it would be a progressive conservative government that has reeled us all the way back to the dark days of the Liberal branded dictatorship of Joe Smallwood - back to the days when individuals, groups and corporations would pay dearly for having expressed any other opinion than the one formally promulgated by government. How ironic and how sad. And as happy as I am to defend McLeod - though I doubt he needs any defence from me - I regret to say that a big part of the explanation for this resurgence of the secretive, duplicitous, deceitful style of government we have witnessed in recent years under the progressive conservative banner provincially (and under the conservative banner federally) is the abysmal performance of the media. But that's for a different day. For today, satisfy it to say McLeod deserves our gratitude for doing what we should be hoping many other journalists would take seriously - ferreting out the truth.

  • Prescient
    March 01, 2014 - 13:41

    @John Smith John, you talk about MF as if it is no big deal and it will inevitably be producing power shortly. The point of Cathy Bennett - and others - is that there is insufficient oversight of the project beyond the Nalcor management. Cathy notes that it is typical that companies which undertake mega-projects have individuals experienced in managing mega-projects on its board of directors. These directors provided experienced oversight of management. Who on Nalcor's board has that experience? There are many ways in this project may yet encounter major difficulties. Improving oversight will help to mitigate these risks and better protect rate payers.

  • Graham Bursey
    March 01, 2014 - 10:25

    Well John Smith aka SKENT ?.....What Mr Mcleod is trying to do is get at the TRUTH a word both the FEDERAL & PROVINCIAL go0vernments seem to have a problem understanding and it somehow seems to be an issue with you as well Mr Smith. No wonder Kennedy and Dunderdale QUIT this farce of a government and others crossed the floor with hopefully still more to come, at least the ones with the guts and honesty to do the right thing. Then again looking at who is left...I wont hold my breath waiting for anything like that to happen. Sometime Mr Smith the TRUTH is hard to deal with. I have three words for you sir....DEAL WITH IT. The best is yet to come.

  • John Smith
    March 01, 2014 - 07:51

    the crack news by's at the Tely are keeping us all safe from the mean ol' Muskrat falls project...LOL The bottom line here is that the project was a go before the loan guarantee, and before any connection to Emera and NS...We did not need the guarantee to make the project viable, we did not need Emera to make the project viable....these added to the deal, but were not necessary.Go to the PUB site, read the ten thousand pages of information, review the hundreds upon hundreds of exhibits that Nalcor submitted, read the MHI report, read the Navigant report. Why does the Telegram think that an interim report, by some engineer would be of such great benefit? Could they add anything to the colossal amount of study and reports that have been done by other outside entities?All saying that this project meets all standards and guidelines? Did the interim report satisfy the Federal Gov. that this was a sound project? Allowing them to agree to a Loan guarantee? Waht is Mr.Mcleod trying to accomplish? Is he trying to embarrass Derrick Dalley? Is that the end game? If it is then...how utterly childish. I could care less about the report, it allowed the feds to backstop the deal....do we need to know more? I know I don't. I have read the information on the PUB site, I have read the MHI and Navigant reports in full, I have seen that we have a need for more generation in this province, I have seen that Holyrood is a 45 year old smoke belching, cancer causing relic of another time, ...and I have seen that the Muskrat Falls project is 2.5 billion dollars cheaper than the nearest alternative....I mean really guys...the project is a go, it will be producing power in a very short time...perhaps it's time to find another windmill to tilt against?

    • Maurice E. Adams
      March 01, 2014 - 09:49

      Same misinformation --- different day John Smith. .... This ponzi government passed laws to force ratepayers to pay WHATEVER IT COSTS to pay for Muskrat ---- that is what the federal government demanded before they granted a loan guarantee.... PERIOD............ For $1 billion, government could pay for the installation of a heat pump in every home in the province and reduce our energy needs by between 25 to 35 percent. WE DO NOT NEED MUSKRAT FALLS ---corporate welfare at its finest (all on the backs of low and middle income residents).