A quickie rejoinder to Ron Penney

So Ron Penney thinks Andy Wells - Ron's boss - is qualified to head the offshore regulatory board.

Then he says two things that are odd, if not contradictory. First he says that all the heads of the board to date haven't had a background in regulatory agencies - or for that matter oil and gas. Therefore, the chairman doesn't need to have an oil and gas background, or indeed any knowledge of the industry at all.

Second, Penney says there's a need to make a change in the board's leadership because the board hasn't been doing a good job, led as it has been, by guys who don't know the industry.

Ok.

Well, the stated qualifications - agreed to by Danny Williams from the outset - called for a change in direction for the board's leadership by specifying that the new chairman and chief executive officer would need extensive knowledge of the oil and gas industry, as well as technical knowledge given that the board is a technical regulatory body.

So the critieria used to judge Andy's candidacy already reflect Ron's supposed desire for change.

Here's the specific set of criteria since Ron clearly hadn't read them before he made his comments:

Candidates will have an in-depth knowledge of Newfoundland and Labrador'’s offshore oil and gas activities, along with a demonstrated ability to manage an organization with diverse technical and regulatory responsibilities, and to work effectively with senior industry and government officials. Qualified individuals will also have a good understanding of the structure and operation of the Canadian and international petroleum industry. Applicants will have extensive experience in the operational aspects of offshore petroleum activities, including full knowledge of related business, financial, safety and environmental matters, and of federal and provincial government legislation and operations. In addition, candidates will have experience in dealing with industry associations and a wide range of non-government organizations. This position requires exceptional communication skills.

On that basis, Wells is not qualified for the job.

Now, that's not just my opinion.

It's not just the opinion of Mr. Justice Halley.

Danny Williams said it when he signed off on the qualifications listed above long before he decided Andy Wells was the guy for the job.

Danny Williams said he when he endorsed these or similar criteria to be used by the binding arbitration panel.

Using Danny Williams' own criteria, the arbitration panel decided Andy Wells isn't qualified for the job: Max Ruelokke is.

For a guy who supposedly played a key role negotiating the Atlantic Accord (195) - the real Accord - Penney doesn't seem to know the document very well. Penney told the Telegram the board needs a shakeup because it hasn't done a good job of delivering benefits to the province.

As Ron knows - or ought to know - that is not the offshore board's job.

It never was. Not even when Ron was inking the deal in 1985.

The job of setting and delivering benefits to the province rests with people like Danny Williams, on whose behalf Ron was obviously speaking.

On that basis, and given the internal contradictions in his comments, Ron Penney is wrong both on the background to the offshore board and on Andy Wells.

After all, Ron's "rationale" was almost exactly the same one Danny's been offering, contradictions, serious factual errors and all.

Just like Danny.

Right down to the self-massage.

Mainland drivel

Only a reporter not from Newfoundland and Labrador could write the drivel found in a recent Macleans profile of Premier Danny Williams.

If Macleans has laid off the fact-checkers that helped to keep the magazine on the top of the reporting pile, they might want to reconsider and get them back on the job pronto.

Among the dubious - in some cases laughable - claims:

- that Danny Williams is likely the only Premier of the province to suffer a lower quality of life as Premier;

- that Williams' personal popularity has gone up since he lost a deal on Hebron in April;

- an unquestioning repetion of Williams' ludicrous claim that Hebron meant $10 billion to the federal government. It meant at least that much to Williams but nothing even close to that to the federal government;

- that Williams came out on top during his Larry King Live appearance with the Maccartney's over the seal hunt. Even some of his staunchest supporters have come to udnerstand the poor boy got snookered into the appearance and then got screwed at every turn by a show that was skewed to Heather and Paul; and

- that brinksmanship with Paul Martin "allowed Williams to drag Newfoundland from the edge of bankruptcy". High oil prices did that, not Danny Williams. Macleans' business reporters might want to take a look at Williams spend-happy government to get a more accurate take on this one.

It would almost make one believe that Williams negotiated on-going flatulent coverage from Macleans as part of his deal to sell Cable Atlantic to Ted Rogers. Rogers owns Macleans..

Oh well, since Williams has started to blacklist local reporters who ask him tough but fair questions, the poor guy will have to take the ego-stroking he apparently craves wherever he can get it.

"We're lovers and we're fighters," Williams says. "Newfoundlanders and Labradorians like to be loved."

L'etat c'est moi, indeed.

This week's Spindy

1. Front page article on some ministers' helicopter rental expenses. Not much detail, missing consideration of ministers' overall travel expenses, but still a cute little story.

My favourite is the 5K spent by one minister - Paul Shelly - to get to a career fair in Harbour Breton, the Town the Premier Forgot.

2. Column by Ryan Cleary in which he advises that the Premier has put the Indy on a blacklist. The crime: asking questions the thin-skinned petulant former hero of the Indy thought were "inappropriate" and a "personal attack".

The Premier's personal publicist - she who communicates only via Crackberry e-mail - either agrees with the bullshit decree or lacks the professional judgment and business stones to talk some sense into her client. (As an aside, between the comments from the Telly this week about government's directors of mis-"communication" and the vapid letter co-authored by several of my colleagues taking the Telly to task, I gotta admit I am with the Telly.)

Cleary's best line is the one where he notes - for Danny the Wonder Pony's benefit, no doubt - that the come-out-swinging at everyone all the time thing gets a bit old after a while.

Ryan is right. Problem is, Ryan, when you are a one trick pony, taking away your trick doesn't improve the show. He doesn't have time to learn a new trick as he orders his personal publicist to blacklist you, blackball you and other wise try to bollocks you up for daring to do your job.

Let's face it people: if Danny has turned on the Indy - and does it in such a chickensh*t way - odds are good, other media in town have been or will be getting similar treatment. That is they'll be blacklisted unless they conform to Danny's idea that their role is to be cheerleading for him.

Anyone remember when Danny explained that cheerleading was everyone's job in the province? He makes the decisions. We stand behind him and tell him how wonderful he is.

Ryan must have missed that memo.

3. Missing this week: a column from Radio Hydro Queen. The ramblings seem to have taken their toll on Ryan Cleary's time and patience. Instead, note the letter to the editor from former CBC producer Bill Kelly in which he lambaste's the former columnist for her lack of credibility.

Bill just recites a bunch of well-known stuff about the woman who built her name on radio call-in shows but seems to have abandoned them in a snit. Well, at least the VOCM ones. No talk-balk line at CBC is safe from her rantings these days. Would somebody at VOCM apologize to her? Puhleese.

Bill can expect a string of e-mails from said Hydro Queen, most of which will be incoherent strings of phrases. Don't bother deciphering them. Just delete them, Bill. It saves time.

4. Best piece of all: Ivan Morgan's piece on a former Canadian army sniper from Newfoundland. Doesn't need description. Just read the piece.

Canadians in Afghanistan, yet more

This video clip is additional footage to the 02 Aug 06 post on operations on or about 08 Jul 06 by 2 PPCLI.

This footage is considerably more rough and shows both the Canadian fighting alongside Afghan forces and footage from the next day showing Canadians inspecting the Taliban/insurgent position they were attacking.

Note the Afghan soldiers firing RPGs (rocket propelled grenades) and mention of an airburst, along with the sound of the incoming round and explosion.

Again, this footage shows the very close quarters in which fights take place.

This is not work or family-friendly due to language and violence.

Canadians in Afghanistan, still more video

Video of elements of 2 PPCLI ambushed by Taliban forces, Sangin, Helmand province, 15 Jul 06.

This not family or work friendly due to language and violence. Note at one point, a grenade being tossed less than 50 metres from Canadian positions.

This video and others posted demonstrate the close-in nature of the Canadian operations, with action occurring in very confined spaces. Grenades are commonly used.

At one point toward the end of this clip, notice a heavy thumping bang coming from the left of the Canadians' position as they advance. This appears to be the 25 mm canon on the LAV-III providing covering fire.

RPG is a Russian-made rocket propelled grenade; it was designed originally as an anti-armour weapon but has come to be used as a form of light artillery. in Chechnya, anti-Russian forces have been known to fire the rocket upward like a mortar. In Somalia, local fighters found them to be useful anti-helicopter weapons.

Frag refers to a fragmentation grenade. Soldiers will shout "frag in" or "grenade" to warn nearby comrades that a grenade has been thrown.

Canadians in Afghanistan, more video

Footage of a dawn assault by soldiers of Alpha Company, 2 Princess Patricia's Canadian Light Infantry, 13 Jul 06. Location given as Hydarabad, Helmand province.

Note this is rough footage and is neither family nor work-friendly owing to language and violence.

At one point in this video, soldiers are warned to take cover as an air-burst is coming. Listen for the whistling noise as the round (artillery?) approaches, followed by a small explosion and a puff of black smoke in the air. This shell has sprayed the area immediately underneath with small pieces of metal.

Of course, I think my boss is the greatest guy in the universe

City solicitor Ron Penney is in the Telegram today insisting, among other things that Andy Wells is more qualified than anyone to head the board regulating the province's offshore industry.

We'll deal with the serious shortcomings of Penney's analysis over the weekend.

In the meantime, at left is a photograph of the group that negotiated the Atlantic Accord (1985) along with the provincial and federal ministers involved. The crowd standing are a mix of federal and provincial officials. Seated, left to right, are: Bill Marshall (provincial energy minister), Brian Peckford, Brian Mulroney and Pat Carney (Marshall's federal counterpart).

Ron Penney is the second from the right, standing. Andy Wells other chief advisor on oil and gas matters - besides Penney - is the fellow in the beige suit standing with his hand on Brian Peckford's chair. That's Cabot Martin, for those who don't recognize him.

The best quote of the entire piece comes right at the end:

"This is an important public policy debate. It's important that people have the views of somebody who is knowledgeable about this issue."

The first sentence is absolutely correct. That's why the debate has been raging for a year now. It's also why we'll deal with the substance of Penney's views in a later (and sadly longer) post.

If Penney's assessment of his current boss' sterling qualifications had merit, Penney wouldn't need to swell himself with the gratuitous self-massage of the second sentence.

Federally-funded rugby centre doesn't fit program specs

A new $6.3 million recreation complex attached to a privately owned rugby club doesn't seem to fit the criteria for the federal-provincial program from which most of the funding will come.

Loyola Hearn, Newfoundland and Labrador's federal cabinet representative announced $4.0 million will be spent on the project by Ottawa and St. John's out of the Canada-Newfoundland and Labrador Municipal Rural Infrastructure Fund.

Established in 2005, the municipal infrastructure fund was intended to support development of infrastructure in rural parts of Canada, with an emphasis in Newfoundland and Labrador on so-called "green" projects.

Touted as a provincial recreation centre, the new complex will include additions to an existing privately-owned rugby club facility in the heart of the province's largest city and within easy commuting distance of several publicly owned or publicly-accessible sports facilities.

The national programs main website shows just how unusual it is to see funding for an urban sports complex under the rural fund, particularly one closely associated with a private sports venture.

The majority of projects already announced in other parts of Canada cover water and sewer installation and upgrading, fire service improvements, and road and bridge work. In March, the Governments of Canada and New Brunswick announced two ice skating complexes costing a total of $30 million for Fredericton, the province's capital city, based an application by the city council. That appears to be the only project of its type.

The provincial government isn't listed as one of the eligible applicants on the Newfoundland and Labrador program website. According to the information there, eligible applicants include:

Local governments including towns, regions, or local service districts; Inuit Community Councils; and non-governmental organizations whose application is supported by a resolution from a local government.

Read the actual agreement though and you see that the provincial government can apply and own the infrastructure, even though the provincial government sits on the joint management committee that approves applications.

Today's announcement contained no details of the management arrangement for the new complex even though it will include privately-owned space. Nor has it been revealed which organization applied for the federal and provincial funding.

Hearn doles out pork; soldiers still waiting - Updated

Loyola Hearn will announce today that the federal government will pump cash into a new "provincial" recreation centre being built on Crosbie Road in St. John's to replace a facility at the former Torbay air base.

[Update: According to the news release, the provincial and federal governments will contribute a total of $4.0 million from a jointly funded rural infrastructure agreement. Another $1.3 million will come from the City of St. John's and another $1.0 million will be raised by Sport Newfoundland and Labrador, a local rugby club and other fundraising. The provincial recreation centre project will apparently include a major addition to a privately-owned rugby club facility.]

The City of St. John's has already committed cash to the new building.

Meanwhile, Hearn ignores - as his predecessors have ignored - the need for a new headquarters and offices for the Regular Force presence in St. John's, cadets and four of the army and communications reserve units in the province sit in buildings slated for disposal.

Estimated cost of the project is $68 million to house Canadian Forces Station St. John's, cadet headquarters, The Royal Newfoundland Regiment, 56 Field Engineer Squadron, 36 Service Battalion and 728 Communications Squadron.

It's hard to understand why the federal government would pump cash into a building that is entirely the provincial government's responsibility to build yet a much larger and more important project that is entirely a federal responsibility sits stalled somewhere in the depths of the federal bureaucracy.

What's worse, the reserve units and CFS St. John's are responsible for considerable economic activity in the St. John's area, far more direct economic activity and benefit than the provincially-owned and operated facility will create.

Hearn might toss up the O'Connor defence plan to drop a new reserve unit in St. John's as a reason for the delay. That is just an excuse. None of O'Connor's pork-spending has been costed or approved and it may well take years before we see the first soldier of that unit in uniform, if we ever see him or her.

[Update II: As Back Talk host Denis Molloy noted, Hearn apparently assured everyone that the new DND headquarters is under active consideration. The problem is that it has been under "active" consideration for the better part of a decade through administrations both Liberal and Conservative. The hang-up in approval for such a necessary project remains inexplicable.]

In the meantime, the members of our Canadian Forces work away in buildings left over from the Second World War that are slated for disposal and that should have been demolished years.

Hearn should show a bit of interest in this project rather than gaining some publicity for himself pumping cash to support a provincial government the feds shouldn't be supporting and announcing millions for communities from a program put in place by the previous Liberal administration - and needlessly delayed by the provincial government.

Insights into the Premier's mindset

From the decision of an Ontario judge on a lawsuit filed by Henley Capital against Cable Atlantic, Inc. in a dispute over fees owed to Henley for advice and support provided Danny Williams and Dean MacDonald in selling Cable Atlantic to GT Group Telecom and Rogers in 2000:

"We are adamant that your client is not entitled to any additional compensation and will only pay same if ordered to do so by the Supreme Court of Canada.

Judge yourself accordingly!"

Danny Williams to solicitor for Henley Capital, January 5, 2001.

At that point, Cable Atlantic had paid Henley slightly more than $65,000 against an invoice for services rendered that eventually totaled almost $400,000.

Williams, who apparently had not seen the agreement between Henley and Cable Atlantic until after the sales were concluded, contended in the letter that the fees agreed upon were considerably less than Henley billed and that Cable Atlantic hadn't really needed Henley's assistance since the company principals - Williams, MacDonald and other senior officers - knew enough to conduct the sale themselves without Henley.

At several points in the decision, the judge notes that Williams and MacDonald considered Henley's work to have been a "hobble", local slang for a small, inconsequential job.

The pattern in this case is interesting on several points.

Firstly, Henley's work is diminished by Williams and MacDonald to the point of near insignificance despite evidence that Henley's work and his advice garnered significant financial benefit to Williams and MacDonald. The court was told and repeats the characterization that Henley's contract was considered a hobble.

Secondly, Williams is described in the decision as going "ballistic" when seeing Henley's invoice. Williams' temper is legendary.

It is almost incomprehensible that MacDonald did not show the Henley contract to Williams . Since the court has accepted this as fact, there is nothing to do but marvel at the notion that such a failure would occur. Perhaps Williams never paid the final settlement and the legal costs out of his own pocket, requiring instead that MacDonald foot the bill.

Thirdly, as in the quote above, Williams is prepared to take firm positions - perhaps in the heat of the moment - and then to sustain that position despite the costs.

In this instance, had Williams as majority shareholder decided to settle the account at the outset, the total outlay would have been around $400, 000 on a gross profit of close to $300 million in cash and stocks.

Even if Williams had settled this matter after trial - the decision was rendered on 31 May 2004 - the total costs would have been considerably less than the final tally.

Instead, Williams expended considerably more than that over a five year period in legal fees and associated costs including giving evidence in a Toronto courtroom. The case went through a first hearing and a subsequent appeal to the Ontario Court of Appeal that rendered judgment in a succinct four paragraph judgment in late June 2006.

There is holding to a position on principle; then there is holding to a position despite the financial and other rationales in favour of settlement.

This entire court case is odd since Williams' law firm based its insurance business on the simple premise that, in almost all instances, insurance companies are prepared to settle for a quantity of cash based on a rational cost/benefit assessment. In Williams' case, he apparently operates on the basis of never changing a position and never settling under any circumstances until there are simply no alternatives.

Fourthly, there is an interesting comment on Williams' memory of events or his account of events. At one point, henley gave evidence, supported by testimony from John Tory, then heading Rogers, that Tory had contacted Williams on a particular date to make another offer on cable Atlantic. Williams denied having spoken to anyone from Rogers on that date.

Fifth, MacDonald is described in the 2004 decision as having amended his testimony or altered his testimony as evidence was presented contradicting his statements during discovery.

Sixth, overall, it is interesting to note that at no point did Williams or MacDonald attend to negotiating a final version of the initial contract, addressing performance bonuses or, after the deals were concluded to achieve a resolution of the dispute other than through court.

The initial decision notes that MacDonald's response to an e-mail from Henley containing a draft services contract was "bantering", but apparently not substantive. Subsequently, and despite repeated efforts by Henley to talk cash with MacDonald on additional fees and charges, no discussions took place. Finally, when the dispute arose over the invoice, neither Williams nor MacDonald ever met with Henley face-to-face in an effort to resolve the dispute short of court.

This fits the seat-of-the-pants approach taken to the federal government in 2004/05. At that point, no firm proposals were presented to the federal government until November 2004.

It also suggests that similarly slap-dash negotiating style that would have contributed ultimately to the collapse of the Hebron talks. Poor communication could easily have led to both parties misunderstanding what had been agreed upon. Ultimately, Williams tendency to take firm decisions and not back off them - irrespective of the consequences - can easily be seen to parallel the experience with Hebron. Once he had decided on an equity position, he would easily sacrifice $10 billion for a mere $1.5 billion in the same way that in Henley v. Cable Atlantic he was prepared to pay out twice or three times the disputed invoice in total costs only to ultimately wind up losing the battle.

For Max Ruelokke, the implication here is that we may well see the matter headed to a higher court. We may also see the appeal period played out and an announcement made settling the matter as quietly as possible. The only thing certain is that Williams is unlikely to comply with the recent Supreme Court decision unless he absolutely has no alternative.

For Hebron, it's hard to know what henley might indicate other than giving a better understanding of how the supposedly masterful negotiator could fail, without a good reason. Once he locked his mind into a position, there simply is no shifting him, no matter how irrational the consequences are.

Lord doomed in NB?

Bernard Lord will ask the Lieutenant Governor to send New Brunswickers to the polls on September 18 as the boy-king of Canada's only bilingual province seeks a third term as premier.

Given that he only won last time by a single seat, let's say the fight will be close this time.

Good money would be on Lord heading for the Opposition benches.

What he said

Offal News on Kathy Dunderdale, Danny Williams and the delay on the Max Ruelokke file.

It's called negligent discharge

Accidental discharge in a case like this is like describing a suicide as "killed while cleaning his weapon".

It doesn't describe what happened. In order for the weapon to fire, there had to be a round in the chamber. That's risky enough considering that even if the safety was on, it can easily become dislodged in an vehicle accident.

That's when bad things happen.

Like in this case.

Let's get a board of inquiry going right away and make sure the weapon doesn't have a problem and the battalion standard operating procedures are the right ones.

Radio Free Terra Nova

One man's take on a local media outlet and its presentation of news from The Hill.

For sale: one tiny mental box

"If an interested buyer for the mill does come forward, government will do what it can to facilitate a negotiation with Abitibi," said [natural resources minister Kathy] Dunderdale.

"At this point, however, no one has expressed an interest given the state of the pulp and paper industry globally."

That's a section from a CBC news story on reaction to the application by Abitibi Consolidated to tear down the former papermaking mill at Stephenville.

Now a minister might be forgiven for such a statement if it wasn't for the fact that Dunderdale just finished up a tour in a department supposedly devoted to eceonomic development in the province and for the past year or so she has been part of a committee looking to diversify the Stephenville economy in the wake of the mill closure.

For all Dunderdale's love of vapid business-school cliches like "doing the due diligence piece", here's one that isn't meaningless: paradigm shift.

In plain English it means getting your head out of the same rut you've been stuck in. Or, as seems to be the case here, getting one's head out of one's posterior.

The reason the Abitibi mill closed in the first place was because of the very reasons the twenty or so companies government approached gave for not wanting the mill.

So why in the name of merciful heaven, would Dunderdale and her colleagues think they could find a papermaking company interested in taking over the Stephenville mill?

Let's not even mention the business un-friendly climate her boss has created with pointless row after needless racket with people who do nothing other than refuse to bow to his latest demand.

Dunderdale and her colleagues need to show they can see some future for the former Stephenville mill other than papermaking. (They really need to show they actually read and understand the briefing books their long-suffering officials keep handing them.)

Rather than giving permission to demolish the Abitibi mill, maybe Dunderdale can assess the impact of demolishing the exceedingly small mental box in which she and her colleagues apparently keep their collective imagination.

Until Dunderdale starts thinking outside the box, there's precious hope for anything new economically to happen in Stephenville - much less the province as a whole - any time soon .

Watching Tom Hedderson

The Department of Tourism, Culture, Recreation and Personal Promotion for the Minister is running a series of cheesy televisions spots on Rogers Cable in the St. John's area and likely on Rogers cable outlets across the province.

In the St. John's area, the spots are running in support of a summer replacement show for Out of the Fog that is similar in format and which has sucked up so much of the local Rogers budget that the usual broadcasts of the annual regatta were scrapped this year.

The spots don't appear to be part of the usual tourism promotion; heck, they wouldn't be part of any credible promotion designed to get people to travel around the province and see the sights.

You won't find reference to these spots in the tourism marketing strategy. The in-province approach lists these objectives:

- to increase resident in-province travel and expenditures by motivating residents to vacation in-province.

- to increase resident knowledge of activities and attractions that occur during all, spring, and winter seasons as well as the summer period.

- to increase frequency of travel by motivating residents to take additional and more frequent short trips during the shoulder seasons as well as their annual summer vacation. Increase focus on the shoulder seasons.

- to provide value-oriented advertising opportunities for tourism operators.

The spots feature cabinet minister Tom "The Watch" Hedderson purportedly kayaking and doing other stuff he clearly doesn't do in his real life.

As much as the marketing gurus are likely to come up with a bunch of excuses for wasting the money explanations for this particular advertising concept, I doubt very much ordinary people would accept the idea that seeing a politician most of them barely know looking incredibly stiff and uncomfortable would support these objectives.

The reality is that these spots just don't fit into the professional ad campaigns we've come to expect from our tourism marketing campaigns. No one should blame the agency of record (AOR). The new AOR has turned out some decent spots and worked to apply the marketing strategy. Their stuff can be found a Tourism Newfoundland and Labrador under the title "Beauty on Film" in the "Sights and Sounds" section.

The "Watch Tom Hedderson Float in a Kayak and Pray to God it Doesn't Flip Over" campaign isn't on film and it is far from beautiful.

Bad enough that the Williams administration has been wasting a great deal of its advertising dollars over the past couple years on this kind of bumpf, just like the Grimes and Tobin crowd before them. Surely everyone has heard - and then quickly started to ignore - certain ministers appearing on VOCM talking about summer driving season, as part of VOCM's usual summer advertising, moreso than doing anything substantive for the public and the government.

Bad enough that over the past 10 years all members of the House of Assembly and cabinet ministers have gone back to the hideous Peckford era practice of spending tax dollars to send messages of greeting to this and that group featuring little more than their smiling mugshot.

Basically, what we have running on Rogers is nothing more useful than some personal promotion for the minister at taxpayers expense. Since it's television, we have to ad in the production costs of the different spots and the ad time to see it is one of the most useless and at the same time most costly of these personal promotion for politicians.

The spots should stop immediately since they represent an entirely inappropriate way to spend public money.

Over the past few weeks, Newfoundlanders and Labradorians have been treated to one too many stories of politicians - Liberal and Conservative alike - who, over the past decade have spent public money to their own individual benefit. They've watched the stories spill out and the politicians fumble with excuses and inadequate responses. Now they can share Tom's "watch" fetish.

Tom and his colleagues should know that the public are watching closely.

They shouldn't assume the public is liking what they are seeing.

48 hours

And still no word from the provincial government in response to Monday's ruling on Ruelokke v. Government of Newfoundland and Labrador.

In the meantime, it seems the rest of us are just supposed to sit around listening to Roxanne on the iPod.

No interest, indeed

There is something oddly appropriate about the headline on a release from natural resources minister Kathy Dunderdale advising that the Stephenville Mill will be scrapped but assuring us that she and her colleagues are still working dilligently on a "strategy".

The headline: "No interest expressed in Stephenville mill".

The confirmation of government's position is in a quote from Joan Burke, education minister and the member of the legislature representing Stephenville: "Perhaps now that this matter is settled, we can all fully concentrate our efforts on diversifying and strengthening our economy..."

The only problem with Burke's position is that it is exactly the opposite of what she and the Premier told the people of Stephenville repeatedly over the past couple of years. From Williams election pledge that the mill would not close right down to the prospect of expropriating the property, Williams and his minister made great promises.

They talked of having a fall-back position, a so-called Plan B.

Turns out there was no Plan B, except perhaps as expressed in the quote from Burke, above.

With this news release, the Williams administration is accepting Abitibi's proposal to demolish the entire Stephenville mill structure and restore the site as near as possible to its original state before the mill was built in the 1970s.

What this means is that government is unwilling to purchase or otherwise acquire the building and have it available for alternative uses besides papermaking. Government has deemed it better to obliterate completely any sign of the mill than to look at any form of industrial development in place of the Abitibi mill.

So what are we to make of the talk over the past few years?

Not much, apparently.

In the release, we are not even given the courtesy of some hard, factual information. We are not told that a thorough engineering and financial assessment have shown it is actually better to let Abitibi clean up the site and let someone start from scratch.

We are not told very much of anything actually.

Nope.

All we get in the news release are hoary cliches about diversification and a commitment to doing something. Accountability, transparency, openness - genuine communication - all are missing.

The one thing we can be thankful for is that Stephenville is not being handled like Harbour Breton, at least at this point. There, people have been kept hanging for two years with glowing promises and commitments, none of which have come true. At least in Stephenville, people know the thing is over and those that have not already gotten on with their lives can do so now.

It is oddly appropriate, therefore, that the release title mentions a lack of interest. The headline refers to the lack of intereest of other parties in operating the plant as a papermaking mill.

Given the content of the release, though, it would seem the headline also refers to a certain lack of interest on the part of the current administration in any of a number of things. Not the least of these would be any role the mill site itself might play in the future "economic diversification" of the area supposedly being developed by the committee of ministers that leads a task force of officials - that lives in the house that Jack built? - as they set about "exploring a number of value-added options that have been identified for the region, with technical support being provided by staff of the Department of Natural Resources."

No interest, we are told.

No interest, indeed.

Pressure mounts to appoint Ruelokke

vocm.com's question of the Day feature yesterday focused on the provincial government's refusal to obey the law and acknowledge Max Ruelokke as chairman and chief executive officer of the province's offshore regulatory board.

The numbers were running heavily against government all day, including at one point hitting 76% in favour.

The Premier's Office e-mail tree mustn't be working very well these days. Their ability to fill up call-in lines is weakening and in this case, even a last minute deployment - after 9:00 PM - couldn't swing the votes in their favour.

The final vote remains 54% in favour of Ruelokke.

Danny got 28%.

It's not the only such vote Danny has lost and believe when you are told that Williams pays serious attention to these things. Why is incomprehensible, but he takes this sort of rigged voting very seriously. Gets kinda annoyed when he is beaten at his own game.

Churchill Falls background

It's hard to find a concise summary of the facts surrounding the Churchill Falls development.

One of the best ones is in the Supreme Court of Canada decision Re Upper Churchill Water Rights Reversion Act, [1984] 1 S.C.R. 297.

This is a famous case among the nationalists, pseudo-nationalists and a few other assorted types hanging off the end of the bar at the Ship.

There's a really brief summary of the whole affair on the Wikipedia site, but the SCC summary is also pretty short and it is factual. It stands as one of the sorry results of the windmill tilting Brian Peckford did on a number of issues only to lose badly in the courts.

The financial summary from the judgment is interesting especially in light of the number of times people like to run around claiming that Quebec owns Churchill Falls or Quebec has control of our natural resources and wants control of the Lower Churchill as well. These people conveniently forget that when it appeared CFLCo would fall into bankruptcy, Hydro Quebec entered into the ongoing recall/resale of power agreements beginning in 1998 designed solely to forestall CFLCo from becoming 100% owned by Hydro Quebec. The political fall-out from such a development would have been disasterous.

Hydro Quebec with its technical knowledge and financial support - most importantly in the form of performance guarantees - was crucial to the overall successful completion of the project.

In light of what is going on these days, it is always useful to get some background information that is reliable. In that same light, I am eagerly awaiting the revision of a paper recently completed by Memorial economics prof Dr. Jim Feehan on the negotiation of the 1969 contract.

The issue should be the subject of a book, but the paper - when the revised version is released - should be an important contribution to our understanding of a controversial, but often misrepresented episode. In any event, the information contained in the SCC decision is a tidy summary until someone writes the definitive book on the entire Churchill Falls affairs.

Extract:

In order to finance the project CFLCo was required under the provisions of the Power Contract to raise $700 million out of an estimated total cost in excess of $900 million. In addition to bank loans of between $100 and $150 million, CFLCo borrowed $100 million by the issue of General Mortgage Bonds, pursuant to a Deed of Trust of which General Trust of Canada was Trustee, known as the General Mortgage Trust Deed, which was executed on September 1, 1968. It was amended by a supplemental Trust Deed dated May 15, 1969. Pursuant to the Trust Deeds CFLCo assigned and charged all its assets and rights under the Statutory Lease and the Crown leases to the Trustee. The Lieutenant Governor in Council for the Province of Newfoundland consented to this assignment on August 1, 1968.

The bulk of the financing came from the sale of First Mortgage Bonds. CFLCo borrowed $540 million on the security of Series A bonds and a further $50 million on the security of Series B bonds. These funds came from lenders outside the Province of Newfoundland and largely from the United States. The Royal Trust was constituted Trustee for the bondholders under a First Mortgage Trust Deed entered into by Royal Trust and CFLCo on May 15, 1969. As security, CFLCo assigned all its assets and rights under the Statutory Lease and Crown leases and all its rights under the Power Contract. General Trust intervened in the Trust Deed as Trustee under the General Mortgage Trust Deed, granting priority to

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the First Mortgage Bonds, Newfoundland also intervened in the Trust Deed confirming its consent to the assignment by CFLCo of its assets to the Royal Trust, which consent had been given on May 12, 1969 by an agreement, known as the Financial Agreement, between the Royal Trust, CFLCo, and the Province of Newfoundland. This agreement was made pursuant to and given the force and effect of law by The Churchill Falls (Labrador) Corporation Limited (Financing) Act, 1969 (Nfld.), c. 76, (the Financing Act).

At the time of the hearing of this appeal [early 1984], according to the statement of facts which forms part of the record, there remained owing by CFLCo in respect of the above-described borrowings $98 million in General Mortgage Bonds, $458,620,000 U.S. in Series A First Mortgage Bonds, and $45,804,000 Cdn. in Series B Bonds. It is against this background that the Power Contract between CFLCo and Hydro-Quebec was signed on May 15, 1969. It is a lengthy and detailed document. Under the contract CFLCo agreed to supply and Hydro-Quebec agreed to purchase virtually all of the power produced at Churchill Falls for a term of forty years, which was renewable at the option of Hydro-Quebec for a further term of twenty-five years. The price to be paid for the electricity was to be based on the final capital cost of the project. Provision was made for CFLCo to retain a fixed amount of power for use within Labrador by its subsidiary Twin Falls Power Corporation. In addition CFLCo could recall on three years' minimum notice up to 300 megawatts (MW) to meet the needs of the Province of Newfoundland.

The importance of the relationship between CFLCo and Hydro-Quebec to the success of the Churchill Falls development is made evident by a reading of the Power Contract. Each party was to be responsible for the construction of transmission lines on its side of the Quebec-Labrador boundary. To ensure compatibility of the two systems, the

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contract provided that transmission lines and related facilities were to be built according to Hydro-Quebec's specifications. Hydro-Quebec was given a supervisory role over CFLCo with respect to maintenance of the development and also acquired the right to operate the plant in the event of CFLCo's failure to do so. For its part Hydro-Quebec agreed to make funds available for the completion of the project over and above the $700 million to be raised by CFLCo in exchange for mortgage security. If CFLCo lacked the funds necessary to meet debt service payments, Hydro-Quebec agreed to advance the necessary monies in exchange for debentures and shares of CFLCo. The Quebec utility also agreed to pay the difference between six per cent and any greater rate of interest payable by CFLCo on its obligations. Although Hydro-Quebec owns only 34.2 per cent of the issued shares of CFLCo (the remaining 65.8 per cent owned by Newfoundland and Labrador Hydro, a Newfoundland Crown corporation), a voting trust arrangement provides that no substantial changes in the financial or other obligations of CFLCo can be made without the consent of 75 per cent of the shareholders. [Emphasis added]