06 May 2014

HVP controversy deepens #nlpoli

[In a hole with a jack-hammer update  at bottom]

The controversy around Humber Valley Paving got worse for the provincial Conservatives on Monday as transportation minister Nick McGrath confirmed that he actually released $19 million in performance and goods bond’s supplied by the paving company despite the fact they failed to complete the tender as original awarded.

But that’s not all.

Put McGrath’s comments in the House on Monday together with media reports last week and you have a pretty clear picture of the pretty sweet deal McGrath cut with HVP.

Nobody’s fault

Humber Valley Paving had a three year contract to complete 80 kilometres of paving in Labrador. Value of the contract was $19 million.

As news media reported it – here’s one CBC story -  HVP company ran into problems and claimed it couldn’t finish the third year of the project and make a profit.. apparently tried to complete the whole project in two years but a number of factors  - including forest fires in the work area - intervened to frustrate the company’s plan. 

The result was that the company claimed it could not complete the original contract without losing money. They also left a bunch of local suppliers with unpaid bills.

A Telegram story on the weekend included two comments related to the role forest fires played in the contract.  According to the Telegram,

[transportation minister Nick] McGrath said the failure of Humber Valley Paving to complete the full terms of its contract, valued at about $20 million, was largely the result of forest fires in Labrador West.

They also quoted Premier Tom Marshall saying much the same thing about forest fires. 

Interestingly, though, no one appears to have invoked any force majeure clause in the contract – that would cover unforeseen events that were nobody’s fault – nor did anyone apparently consider a change to the tender to offset the costs incurred by the company as a result of the fire.

A Sweet Do-Over

Instead,  some time between March 13 and March 21,  the provincial government and the company worked out a deal to let HVP out of its three year contract without penalty and with the work unfinished.

McGrath didn’t call the performance and supplies bonds government originally demanded as a routine part of the contract, thereby allowing the company to keep the entire amount in two bonds totalling $19 million. 

On top of that, government agreed to bundle the unfinished portion of the original contract together additional road paving work in a new tender that HVP could bid on again. 

Then there was a mutual agreement between the contractor and the government, a small window of opportunity to be able to bundle that sixty kilometre piece of work with a much larger piece of work, an eighty kilometre piece of work in Eastern Labrador on the Trans-Labrador Highway. As well as a piece of work within Hamilton River Road in Happy Valley-Goose Bay and a small section on the eastern side of the Trans-Labrador Highway, about three kilometres that has chip seal that has to be redone. By bundling all of that work together, along with the sixty kilometres, we felt and still feel the best decision was to bundle it together to get the work guaranteed to be done on time, on budget, this season, Mr. Speaker.

The company couldn’t do 80 kilometres in three years and make a profit.  In fact, they only paved 20 kilometres in two years and got 60% of the original tender price.

So Nick McGrath’s solution was to give the company a shot at a new tender that combined the 60 kilometres of unfinished work, another 80 kilometres new work, plus three kilometres of chip seal replacement.

And – as McGrath said – all of that work would be done in a single year for the 40% unfinished from the 2012 contract.  After all that’s what it means when he says that this was the “best decision… to get the work guaranteed to be done on time,  on budget, this season….”

Sounds ludicrous, doesn’t it?

Well, that’s what you get when you put the whole thing together.

A Credibility Chasm

The obvious political problem with all of this is that it looks like the company got a huge favour from the provincial government owing to its political connections that others just can’t get.

Frank Coleman was a major shareholder in Humber Valley Paving until just before someone from HVP  started talking to McGrath and his officials about changing the contract.  McGrath has been insistent that he never, ever met with or discussed the contract with Frank Coleman.

In the House on Monday, McGrath started out talking about meetings with company representatives and immediately changed to say this:

I will say unequivocally that at no time have I ever had a conversation, as the Minister of Transportation and Works, at no time have I ever had a conversation with Frank Coleman concerning Happy Valley-Goose Bay.

That’s the kind of construction – I didn’t meet with him in my capacity as minister – that gives more information that it needed.  A simple flat statement  like “I have never met Frank Coleman and discussed this contract” says it all.

The extra detail sounds like a clear denial.  But it isn’t.  The part that sounds odd is the extra information, the qualifier between the commas:  “as the Minister of Transportation and Works.”  It suggests that McGrath might have met him and talked about the contract in some other capacity, like say minister responsible for Labrador,  concerned citizen,  or a guy with jet black hair and a faint Irish accent.

The whole thing suggests there is something more.  Like,  I did not meet him in my capacity as a cabinet minister,  Mr. Speaker,  but we both had a wonderful cup of coffee at a recent Start Trek convention and spoke about what we might do.  Frank was dressed as a Klingon from TOS, being the conservative guy he is, but his Klingon accent was flawless,  Mr. Speaker. 

Then there’s the unique nature of the deal. McGrath initially tried to claim that the sweet heart deal with HVP was common practice. He cited a supposedly similar situation involving another company.

That story disappeared in a cloud of paving smoke on Saturday. Penney Paving officials explained to the telegram that they ran into a problem with a tender for work that was let too late in the season to complete on time. The company wanted to extend the contract into the next season and agreed to take all the financial penalties associated with the work.  Big difference.

McGrath’s comments really served on Monday only to widen the  credibility gap he’s got on this issue.  When he acknowledge to reporters after Question Period that he’d met with Frank Coleman’s son Gene about this contract, the effort to distance Coleman personally from the sweet heart deal evaporated.

And McGrath’s credibility problem got that much worse.

So, too, did Frank’s political nightmare.

Peek-a-boo’s Nightmare

It’s not to hard to see that Coleman’s peek-a-boo game with the media the past couple of weeks as just part of a desperate attempt to distance Coleman from the whole HVP deal. After all, Coleman and the people inside the party who are part of his candidacy – including Premier Tom Marshall – likely knew about this and other issues in advance.  They’d naturally be trying to manage the political issues as best they could.  On top of that, you have Coleman’s line that he can’t talk about the issue because of the sale. 

Whether or not they’ve been trying to manage this or Coleman is just doing the ham-fisted job on his own, the complications HVP’s sweet heart deal offer for his slow stroll to the Premier’s Office are just too obvious for words.

The single biggest problem is that Coleman isn’t dealing with the issue personally and directly.  The longer it drags on, the more room there is for people to assume the worst. The more often that people like McGrath say  things that turn out to be untrue or only half-true,  the more suspicious people become that something untoward is going on.

The more Coleman avoids it – even though he is obviously closely tied to the company – the less people will believe what he says when he finally does do an interview. Coleman spoke with CBC’s Peter Cowan on Monday night but refused to disclose to whom he sold his interest in HVP.  Well, that’s just the same as not doing an interview at all.  It looks bad. It looks like he is hiding important information for no good reason.

That’s the way these things work.  People used to handling political crises always counsel maximum disclosure with minimum delay.  They know the value of simple, clear statements coming directly from the people involved.  Everything else looks bad and when you have huge discrepancies in the story, as McGrath revealed on Monday,  then you just know things are going in the wrong direction. 

The peek-a-boo approach has already damaged Coleman severely, anyway.  The way Coleman is handling the paving deal just makes things worse.  It’s so much worse, in fact, that if things keep going in the current direction, Coleman might not make it to the Premier;s Office at all.


In a hole with a jack-hammer Update:  When you are in a hole, the best thing to do is stop digging. With his latest peek-a-boo, all Frank Coleman has done is fire up at jack-hammer to dig the hole for himself that much deeper.

If Frank Coleman isn’t going to talk about the details of the HVP controversy, then that should be his policy.  It’s not a good policy but he should at least stick to it.

In the Tuesday Telegram, he refused to answer questions about the contract problems that occurred while he ran the company.

But he did bless the agreement as right for the province and the company (the official talking point) and defended the integrity of the company now apparently run by family members.  He talks about the “new management” of the company as if the things was owned entirely by strangers.

That double standard makes things worse.  The lack of frank disclosure about the problems that led to this sweet heart deal looks like Coleman is hiding something for his or the company’s benefit, not the public benefit. it’s consistent with his peak-a-boo campaign style to date and that’s been doing him harm at every juncture.

The story gets worse, though in that Coleman’s claims don;t match the facts.  He says he stepped away from the company in February.  Documents filed with the Registry of Companies indicate he resigned on March 10, three days before the sweet heart deals started, headed by his son Gene.  Gene Coleman is apparently not connected to the company any more, having resigned in late April, according to the Telegram.

The gap between what Coleman says and what other information says damages his credibility.