A fiefdom and a runaway train: Unflattering words for Nalcor at inquiry

Nalcor Energy was described in some unflattering ways during the Muskrat Falls judicial inquiry in St. John's Monday, and it resulted in a former senior government lawyer being accused of trying to "backtrack" on his criticism of the embattled Crown corporation.

A fiefdom, a runaway train and a classic example of the tail wagging the dog.

A Crown corporation whose upper ranks were filled with people from the private sector, and didn't appreciate having to turn over information to government.

All this came out as Todd Stanley, a former senior lawyer with the Department of Justice and Public Safety, testified before the inquiry, which is investigating why the project was sanctioned in 2012, and why it is so far over budget and behind schedule.

A sharp rebuke

Stanley used such descriptions of Nalcor during an interview with commission lawyer Barry Learmonth during a late-summer interview in advance of his appearance before the inquiry.

But during testimony, Stanley softened his criticism, which drew a sharp rebuke from Learmonth.

"I suggest you attempted in your cross-examination to backtrack from some of the evidence that you gave in the interview," a visibly irritated Learmonth stated.

"And I'm suggesting the reason you're doing that is not because the evidence wasn't true, but because you have come to regret some of the things that you said."

Stanley denied that, saying his choice of words were too "flowery" in some cases.

"I would have used less conversational language … to avoid misunderstanding," Stanley said.

Nalcor jealously guarded access to its information.- Todd Stanley

Stanley clarified that while it was sometimes difficult to obtain information from Nalcor, government did eventually receive the answers it was seeking.

"Nalcor jealously guarded access to its information," he said.

'Clash of misunderstandings'

Stanley also referred to "clashes of misunderstandings" between Nalcor's upper ranks, who he said "would not have been used to a shareholder asking for the level of information that was being required and requested by government." 

"Also there were concerns about access to information and where the information would go when it was supplied to government."

Stanley is a specialist in energy and resource law, and worked closely with the Department of Natural Resources as the "primary solicitor" on issues related to Muskrat Falls in the period before and after the project was sanctioned in late 2012.

During testimony, he described an atmosphere of "stress and tension" between some senior public servants and Nalcor, and of a Natural Resources department that was supposed to be keeping Nalcor in check but was "assumed to be a cheerleader" by senior officials at Nalcor.

"There was some frustration in the civil service," Stanley testified, adding that many public servants felt "disrespected."

He said senior public servants in the department would often find out about key decisions related to Muskrat Falls after the fact, and Nalcor would come to the department demanding answers to sometimes complex questions, and expecting answers in a short period of time.

Low-level resentment

This was happening, he said, at a time when the internal cultures of government and Nalcor were going in opposite directions.

Government was tightening the purse strings for departments and slashing positions, while Nalcor was "going nowhere but up," said Stanley.

"A low level resentment. We were all at that point spending taxpayers' dollars. And yet Nalcor salaries were even higher than the civil servants. So all of that combined to create sort of this friction."

He added: "It wasn't the tail wagging the dog at the end of the day, but there was definitely an issue where Nalcor was perceiving that government was there to help it get the project done. As opposed to doing the job that government officials would have thought, which was evaluating what Nalcor required."

Less oversight for Nalcor

In comparison to other government agencies and corporations, Stanley said it appeared there was much less oversight of Nalcor, and said this is not surprising "given the nature of what they were involved in."

In fact, he said interactions between government and Nalcor often took place on the eighth floor at Confederation Building, where the premier's office is located.

Traditionally, corporations and agencies report to a specific department, and under that formula, Natural Resources was supposedly providing oversight of Nalcor.

But Stanley described an atmosphere where the department was essentially sidestepped by Nalcor.

"There was no direct operational reporting between Nalcor and the department of Natural Resources on a detail level," Stanley said.

"The government departmental people at the time would been surprised simply by virtue of the fact that they didn't know that that topic was going to be discussed at the premier's office and may have had differing views or thought that the premier's office should have had more information," Stanley recalled.

Nalcor a 'runaway train'

Stanley went so far as to describe Nalcor as a "fiefdom" and referred to it as a "runaway train" that "we didn't have control over" during his August interview with Learmonth.

But he wasn't quite so harsh in his tone when he took the witness stand, but said he stood by his earlier comments.

"I have not come to regret some of the things I said in that interview at all. I may have regretted the terminology I used in making those statements in the interview," Stanley said.

I'm raising an issue about Mr. Stanley's credibility.- Barry Learmonth

But that didn't satisfy Learmonth, who said this about Stanley:

"I'm raising an issue about Mr. Stanley's credibility, his personal credibility, in his evidence today, in cross-examination, and the evidence he gave under oath at the interview."

In an unusual move, Commissioner Richard LeBlanc agreed to have the 90-page transcript from Stanley's August interview with Learmonth entered into evidence as an exhibit.