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EDITORIAL: SNC-Lavalin’s warnings ignored

Normand Bechard, general project manager for SNC-Lavalin on the Lower Churchill development, is seen at the project office.
Normand Bechard, then general project manager for SNC-Lavalin on the Lower Churchill development at Muskrat Falls, is seen at the project office in this file photo. — Submitted photo

Fiduciary responsibility.

What a concept.

It’s the duty of a person working with someone’s else’s money to be responsible. It means you accurately represent the circumstances — warts and all — to your board of directors and to your shareholders.

It means, for example, that if you receive a report from your major project manager saying there could be $2.4 billion in additional costs on your hydroelectric project, you accept that report and deal with addressing whether the concerns have merit or not.

Especially if your company doesn’t have recent experience on a major hydroelectric project, and your project manager does.

Welcome to Muskrat Falls, where, as early as April 2013, things were clearly coming off the rails and project manager SNC-Lavalin was pointing out the issues in detail in a report.

Auditors with Grant Thornton, hired by the Muskrat Falls inquiry to do a forensic audit on the project, determined that Nalcor officials were afraid the report might find its way to the public.

“(Project manager Paul) Harrington made a decision not to ask for the report and recommended to (vice-president for the Lower Churchill project Gilbert) Bennett that SNC keep it as an internal document in draft form and not provide it to Nalcor,” the auditor’s report states.

Welcome to Muskrat Falls, where, as early as April 2013, things were clearly coming off the rails and project manager SNC-Lavalin was pointing out the issues in detail in a report.

Where did the report come from?

Well, SNC-Lavalin had prepared it on its own time and at its own expense.

As senior SNC-Lavalin official Normand Bechard told officials with the auditing firm, the work was undertaken because SNC-Lavalin was concerned that the potential failure of the project could damage SNC-Lavalin’s reputation. (This was April 2013 — and SNC-Lavalin was settling a bribery case with the World Bank that would include a 10-year suspension from World Bank related projects. The corporate reputation was pretty tarnished already.)

Notes from Bechard’s interview — not an official transcript — indicate Bechard felt he had a duty to analyze the risks involved.

The notes say that Bechard told Harrington, “First of all, you didn’t pay for that report, we did that on our own money and I did that because corporately, I got the obligation to warn my organization about anything that may affect them — this was my duty. … We had expertise and we did a report to warn them.”

There it is — fiduciary responsibility.

Bechard said he also offered the report to other Nalcor staffers handling the risk issue on the project and was told they didn’t want to see it either.

The auditors say by April 2013, the project had used up its entire $380-million contingency fund and would be $600 million overbudget by November 2013.

At the June 5, 2013 annual general meeting, Nalcor CEO Ed Martin said, “Right now we are on time and on schedule,” and, apparently, on budget.

There are two sides to every story.

The side we’re hearing now is alarming.

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