24 June 2013

The Year of Living Dubiously #nlpoli

Conflict of interest is great thing to deal when there is a chance of stopping it or dealing with it, not six or seven years later.

Back in 2006, conflict of interest was all the rage.

Noting the problems with conflict of interest wasn’t.

Nalcor Born in Conflict of Interest

In April, talks between the provincial government and Nalcor broke down over the provincial government’s demand for shares in the project.

Nobody in the public knew how the provincial government planned to manage the provincial energy corporation they promised to create in their 2003 campaign platform.  In fact, they didn’t know how the corporation would work.  You see, the Conservatives gave notice of a bill to create the energy corporation on March 22, long before the talks broke down.  They didn’t make it public.  Toward the end of the session (May 18), long after the Hebron talks had broken off, the Conservatives introduced a simple set of amendments to the existing Hydro Corporation Act.  The amendments basically said the company could do anything cabinet wanted it to do.

The other little change exempted Hydro from the restriction under the Electrical Power Control Act that the company could only be involved in generating electricity. They didn’t change the Public Utilities Act, though.  As a result, the PUB still had to set electricity rates to cover off whatever financial situation the Hydro corporation found itself in.

SRBP made that point in a post in May, 2006.  The same post also raised concerned about the way the new company would be effectively removed from oversight by appropriate regulatory authorities as the case is in Norway. That’s basically the conflict of interest Russell Wangersky wrote about this past weekend.

And it’s on top of the conflict of interest inherent in having Nalcor boss Ed Martin negotiating development agreements on behalf of the provincial government. That same conflict of interest arose again in 2008 when Martin, on behalf of the provincial government, negotiated a deal to develop Hebron that allowed significant construction work to head out of the province.

Then there was the Patronage Scam

That wasn’t the only big conflict of interest that year. 

Don’t forget that in June 2006, we all found out that members of the House of Assembly had set up a wonderful scheme whereby they could spend public money in the own districts for any purpose they saw fit, most of it without receipts, and without an effective upper limit.

The government party dominated the House of Assembly internal management committee.  When the Tories took over in 2003, they kept the House scheme exactly as it was.  They made no changes.

Yet, even with that information in public, local media accepted without question the frame placed on the whole mess by the Premier’s Office.  That framed gave Danny Williams credit for fixing a problem even though he had done no such thing. As a subsequent report by the Auditor General showed, Williams was one of the heaviest users of the patronage system.

Like all the politicians in the House at the time,  Williams was in a fundamental conflict of interest from the start.  But none of that showed up in very many places outside SRBP.  The local media actually praised Williams for cleaning up the mess even though he and his colleagues had done nothing to change things until the Auditor General investigated.  Even in 2009, the Conservatives still hadn’t delivered on half their ethics and accountability promises from the 2003 general election.

Conflict of interest was so popular in 2006 that even then-Nalcor board chair Dean MacDonald couldn’t avoid getting in on the action.  Well, at least for a couple of days.

Norway, not Nigeria

Things didn’t have to wind up this way.  Nalcor could have been set up to follow the Norwegian model for governing state-owned energy corporations. That’s pretty much the gold standard for public oversight and accountability.  Back then, nobody was interested in discussing these sorts of pesky details and so now we find ourselves following the Nigerian model.  The state-owned energy company is exempt from proper oversight.  It can pretty much do whatever it wants, thanks to support from politicians who  - like Trevor Taylor and Paul Oram – believe things that aren’t just false, they are complete nonsense.

- srbp -

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