Liberal MHA denies conflict of interest

Cathy Bennett became partner at Nalcor contractor soon after leaving board

James McLeod jmcleod@thetelegram.com
Published on May 16, 2014
Cathy Bennett speaks to the media after being eliminated from the Liberal leadership race after the second ballot count. — Photo by Rhonda Hayward/The Telegram

Four months after she left her position as chairwoman of the Nalcor Energy board in 2012, Cathy Bennett became a partner in a New Brunswick company that has done more than $10 million worth of business with Nalcor.

Bennett — who is now a Liberal MHA — was already talking to Sunny Corner Enterprises about buying part of the company in early 2012, while she was still serving as chairwoman of the Nalcor board.

But Bennett said she did nothing wrong. She said she recused herself from any board meetings in which Sunny Corner or related business came up.

Moreover, during her time as chairwoman of the Nalcor board, Bennett said, she pressed the government for tough conflict of interest rules, but was shut down by the Premier's Office.

“I was advocating for similar rules that you would see at a publicly traded company, but I wasn’t getting any support from government,” she said. “I was told it wasn’t a priority for them.”

Sunny Corner is an industrial construction and fabrication company based in New Brunswick that employs more than 400 people. Before 2011, the company had no business dealings with Nalcor.

Its first contracts with Nalcor happened in November 2011, when Bennett was on the Nalcor board of directors.

Since then, Sunny Corner has done more than $10.5 million in business with Nalcor.

Gordie Lavoie, president of the company, said the Nalcor business makes up a small portion of Sunny Corner’s overall work, and the company wasn't introduced to Nalcor through Bennett.

“We’ve had a relationship with Nalcor prior to even getting to know Cathy Bennett,” Lavoie said. “There were some people within Nalcor that had contacted us due to some prior experience with our organization, and asked if we were interested because they knew we had done a lot of work in the power generation sector.”

Shortly after Sunny Corner started bidding on Nalcor work — in early 2012 — Bennett started her discussions about buying a minority share in the company.

Lavoie said the timing is just happenstance.

“It just happened to be coincidental,” he said. “Obviously, she’s a high-profile person within Newfoundland and she’s involved in a number of different endeavours, and the Nalcor thing just happened to be one. That wasn’t the driving interest as to why we were interested in Cathy.”

Bennett said that, during her initial discussions, she wasn't aware Sunny Corner had any dealings with Nalcor, and when she found out, she spoke to Nalcor CEO Ed Martin about recusing herself from any discussions that might place her in a conflict of interest.

The Telegram requested an interview with Martin, but was not able to reach him by deadline.

Bennett said in those discussions with Martin, she was astounded by the lack of conflict of interest rules.

“The policies that you need to have in place and the disclosures that you need to have in place weren't there,” she said. “It was left to the discretion of the CEO and the chair at the time, and it was left to the discretion of the director if they chose to disclose that they were in conflict,”

Bennett said she met with then-premier Kathy Dunderdale's chief of staff, but was shut down.

“You don't leave it up to individuals to disclose their conflicts. You leave it up to processes and systems that are robust and reviewed and audited,” she said. “I was flabbergasted that the premier's office didn't think there was a need to bring in conflict of interest guidelines and disclosure for Nalcor.”

Bennett said the unwillingness to reform the Nalcor corporate structure was one of the reasons she resigned from the board in the spring of 2012. A few months later, in September 2012, she became a partner in Sunny Corner.

The partnership didn't last long. Ten months later, in June 2013, she sold her portion of Sunny Corner as she prepared to enter politics and run for the Liberal leadership.

While she was involved with Sunny Corner, Bennett said, she tried to make sure her time on the Nalcor board didn't affect dealings between the two companies.

“I didn’t even participate, initially as a shareholder, with any meetings with Nalcor officials, because I wanted to remove myself from that discussion,” she said. “My fiduciary responsibility was still intact to keep the confidence of the (Nalcor) board.”

All of this comes at a time when the Liberals are relentlessly attacking the Tory government for perceived conflict of interest involving premier-designate Frank Coleman, whose family was involved in a paving company which was let out of a money-losing contract by Transportation Minister Nick McGrath.

When it comes to the governance at Nalcor, Premier Tom Marshall said he wasn't aware of the conversations that Bennett had with officials in Dunderdale's office, but that in recent conversations with Martin, they're moving towards reforming the governance structure at Nalcor.

Earlier this year, Marshall announced increased bureaucratic oversight of Nalcor by officials within the civil service.

Speaking to The Telegram Thursday, Marshall said alongside that reform, he talked with Martin about reforming the governance structure within Nalcor.

“Mr. Martin said the company has been working on this for some time and it is ready to proceed, and I instructed him to proceed,” Marshall said.

Marshall said he discussed it with Martin as recently as Wednesday.

He said he believes Nalcor should have the highest standards for corporate governance, whether that means directors have to fill out disclosure forms, or there has to be a cooling-off period before getting involved in related businesses.

“We certainly have it for cabinet ministers. When you leave government you cannot have any dealings with government for a year,” Marshall said. “It's my understand that doesn't apply to senior civil service, which I always found surprising.”

 

jmcleod@thetelegram.comTwitter: TelegramJames