McGrath hits back

Defends himself against national association that says he’s ‘just plain wrong’ in Humber Valley Paving situation

James McLeod jmcleod@thetelegram.com
Published on May 27, 2014
Transportation Minister Nick McGrath. — Photo by James McLeod/The Telegram

Transportation Minister Nick McGrath spent yet another day batting back criticism over his handling of a controversial Labrador roadwork contract — this time from a national group representing insurance brokers and surety bond issuers.

he Liberals brought it up in the House of Assembly, with Liberal Leader Dwight Ball once again accusing the minister of cooking up a sweetheart deal for premier-designate Frank Coleman.

In a scathing news release, Surety Association Canada president Steven Ness said  McGrath’s explanation about the way he handled the contract with Humber Valley Paving doesn’t make sense.

“The minister’s comments about the surety bond process were completely irresponsible and just plain wrong,” Ness said in the release.

Humber Valley Paving was awarded a contract to pave a stretch of the Trans-Labrador Highway, but the work went off the rails after forest fires hit the region.

Coleman was one of the owners of Humber Valley Paving. He sold his stake in the company just days before jumping into politics.

Around the same time, Coleman’s son, Gene Coleman, called McGrath.

Following that conversation Humber Valley Paving was let out of the money-losing contract.

McGrath has said that by forcing the company to complete the work or calling the bonds, it would likely lead to a lengthy legal fight, and the roadwork wouldn’t get done on time or on budget.

But speaking to The Telegram he explained that as a form of insurance, surety bonds are in place for if a contractor abandons a project or defaults.

“It defies reason to suggest that you’re going to save money by not exercising (the bond),” Ness said. “It’s like if your house burns down, you’re not going to claim your fire insurance?”

McGrath said he believes that calling in those bonds would have led to a lengthy legal fight.

“Our experience with calling down bonds has not been a good experience,” he said. “I could go the legal route and say yes, I’m going to wait and take the chances; I still don’t have the work done.”

But Ness said it’s inaccurate to suggest that by calling a bond, the contract will be delayed or go over budget.

“Just to toss that comment out as he did was completely irresponsible,” he said. “That’s nothing to do with the surety bond process. The surety bonds are likely to minimize those delays because these are guys who have access to a lot of contractors who can get it done as expeditiously as possible.”

In the legislature, Ball led off question period by asking the government about what Ness was saying.

“I ask the premier: how can you claim that your government handled the situation properly when the national association says the minister’s comments were completely irresponsible and just plain wrong?” Ball asked

Premier Tom Marshall said that it’s not as simple as Ness makes it out to be. There were extenuating circumstances involving Labrador geography and other factors which made it better to just end the contract and re-tender the work.

Marshall has asked the auditor general to look at all of this and decide if there was any wrongdoing. He told reporters he wishes people would wait for that report to come out.

“The sad thing about what’s happening here is that information is being put out and it’s partially correct and it’s partially incorrect. Criticisms are taking place on this incorrect information,” he said. “Why don’t we wait for the correct facts to come out and then the people can decide?”