What flim-flam is and how it took centre stage at the Muskrat Falls inquiry
Gilbert Bennett provided some eye-opening testimony
"I'm acknowledging that's what was done."
It was with that one response that Gilbert Bennett — the vice-president of Nalcor Energy — confirmed what critics have long contended: that Nalcor lowballed cost estimates for the massive Muskrat Falls hydro project.
Basically, producing numbers that were, to be polite, flim-flam.
Not familiar with the word? Used as a noun in the 16th century, it means a ploy, a ruse, or a trick.
The fact that Nalcor senior executives seemingly played some sleight of hand with the numbers was revealed during Bennett's testimony at the Muskrat Falls inquiry last week. Bennett also told the inquiry the allowance for risk was reduced.
The result? Hundreds of millions of dollars disappeared from the estimated cost of the project.
So, why was it done?
According to Bennett, Nalcor needed the Nova Scotia energy company, Emera, as a partner in order to secure a crucial federal government loan guarantee.
Emera needed Nova Scotia's public utility regulator to agree that investing in a link to the Muskrat Falls project was that province's least-cost long-term option.
In order to make Muskrat Falls the least-cost long-term option Nalcor had to make hundreds of millions of dollars of project costs vanish.
Who knew what and when
Did Bennett tell anybody on Nalcor's board of directors about the revised numbers? No.
Did he tell anyone in government? No.
Was his boss, Nalcor CEO Ed Martin, consulted? Yes, said Bennett, Martin made the final decision.
Was Martin playing hocus-pocus — a noun common in the 17th century meaning trickery or deception — with hundreds of millions of dollars of project costs?
Responding to Bennett's account, Martin insisted there was no lowballing and said he is "confident that was the right estimate."
A win for Dunderdale?
Two things stand out in Bennett's testimony last week.
One, is that the happiest person at the inquiry must have been Erin Best, the lawyer for former Premier Kathy Dunderdale. Bennett just gave Dunderdale an excuse for her role in the Muskrat Falls fiasco.
That's because Dunderdale had repeatedly assured the public that her government's oversight of the project was adequate. It obviously wasn't, but now she can claim she was misled about the risks.
Second, Bennett laid the responsibility for the numbers in the lap of Martin, his boss. Bennett testified that, ultimately, Martin made the final decision about what to tell the Nova Scotia regulator, Nalcor's partner Emera, Nalcor's board of directors, and the Newfoundland and Labrador government.
Fortunately, the inquiry will get to hear from Martin (beyond the 30-minute interview he gave to reporters on Thursday).
Martin, while on the stand, will be asked how the estimate for the project's budget came to be — and why it turned out to be so wrong.
It will then fall to Justice Richard LeBlanc, the inquiry's commissioner, to determine if Martin was part of a hoax (an 18th-century derivation of hocus-pocus).
The real point of an inquiry
Questions unfortunately lingered long after the Mount Cashel orphange inquiry in 1989 because one key witness was never heard.
Remember, that inquiry was not about whether the Christian Brothers who ran the orphanage physically and sexually assaulted children. That fact was not in dispute.
What that inquiry was tasked with was trying to discover why the police investigation was covered up. Was the justice minister involved? In 1975, that position was held by Alex Hickman, and when he testified at the Hughes Inquiry he was a Newfoundland and Labrador Supreme Court judge.
Hickman told the inquiry that he had no knowledge of the investigation or the deal to let the offending Christian Brothers quietly slip out of town.
The person who made that deal, Hickman testified, was Vince McCarthy, the deputy justice minister — a man one level down on the department's organization chart.
Was that the truth? Many doubted it, but we'll never know because by the time the Hughes inquiry was launched in 1989, McCarthy had died. In the end the coverup was blamed on the dead man.
When it comes to cracking open the Muskrat Falls deal, LeBlanc has a better chance of finding the truth.
Ed Martin is scheduled to testify beginning on Dec. 10. Erin Best will be waiting.
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