Natural Resources Minister Siobhan Coady says she found a request for a meeting with the Italian ambassador to Canada in March 2016 “highly unusual.”
It was not unusual to meet with a visiting diplomat. But Coady told the Muskrat Falls Inquiry the request for a meeting, in this case, was specifically to talk about Rome-based firm Astaldi, and Astaldi Canada’s contract on the Muskrat Falls project in Labrador.
“That is highly unusual. And I have had courtesy meetings with other ambassadors, certainly, that are visiting the province of Newfoundland and Labrador, happy to share with them our natural resource development and what opportunities there may be for their country,” she testified. “But for an ambassador to come to speak to a minister about a contract certainly is unusual, and it certainly caused me to reflect on the holder of that contract — Nalcor is — and why would the ambassador be coming to see me on that particular point, especially at what I’m going to call a sensitive time.”
The Liberal government was newly appointed at the end of 2015, and still trying to decide what to do with the Crown corporation’s hydroelectric project and troubled main contractor. Astaldi’s costs had run beyond what had been agreed, there was an ongoing commercial dispute and finishing the work was going to require hundreds of millions of dollars in added costs.
Coady agreed to meet with the ambassador, Gian Lorenzo Cornado, who was based in Ottawa. But she said there was discussion before the meeting between officials, and she made it clear she would not talk about any details of the commercial dispute between Astaldi and Nalcor, or potential arrangements.
“I had agreed to meet, really, as a courtesy meeting,” she told the inquiry, “so I want to point that out.”
The meeting was held on March 21 at the Natural Resources building on Elizabeth Avenue in St. John’s.
Coady said there were two other individuals with the ambassador, while she was joined by Nalcor Energy CEO Ed Martin, her chief of staff, Kelvin Parsons, and her executive assistant.
“My purpose in the meeting was, as I said, to be courteous and welcoming, but I certainly didn’t want to get into any details of anything. The ambassador did raise how important the Astaldi contract and Canada was to the government of Italy, how important it was we resolve the matter. He raised, again which I found interesting, the possibility of the Italian prime minister (Matteo Renzi) coming to Muskrat Falls and perhaps the prime minister of Canada (Justin Trudeau) would go. They’re friends, colleagues, something to that effect,” she said.
She said her conversation with the ambassador had a professional and courteous tone.
“But he was, I would say, impressing upon me the importance of Astaldi to the government of Italy and how it would be important to resolve the matter,” she said.
Consultants with EY had warned Premier Dwight Ball the parent company, Astaldi S.p.A., had worked hard to address financial issues internationally, reduce its exposure and improve its position. However, any significant losses from the Muskrat Falls project in its year-end report “could evaporate that financial relief.”
EY senior vice-president Paul Hickey advised the province to wait for Astaldi’s financial report before any further agreements, but, “if (Astaldi) financial stability appears to be an urgent issue, reconsider giving Nalcor immediate parameters for negotiation.”
Notes in evidence from Parsons support Coady’s testimony that there was some discussion with the ambassador of a possible visit by the Italian prime minister later in the year.
"PM Italy coming to Ottawa in Sept and maybe a MF visit possible," he wrote.
Coady said she took away a clear message from the meeting, but any concerns the Italians had were second to her own and those of the people of the province.
There were supplemental agreements with Astaldi, including – but not limited to – a “bridge agreement” that July and a “completion agreement” in December 2016, with the latter setting the total price for Astaldi’s work on a new, delayed schedule at $1.83 billion. The contract was originally $1.1 billion.
The company was thrown off the work site in 2018 and project costs remain under dispute.