Nalcor a 'downtrodden organization' that needs a few wins, says board chair

Nalcor chairman Brendan Paddick spent much of his time at the Muskrat Falls inquiry Tuesday calling for a change in the tone toward the embattled Crown corporation overseeing the troubled hydroelectric project.

"If anything comes out of this commission, hopefully it's just a chance to start over and everybody put the jersey on and want Nalcor to get back to what it used to be, which was a very respected part of the community," Paddick said.

He said Nalcor can become a corporation that is self-sufficient for future generations, funnelling billions in economic benefits to province, but everyone has to want it to work.

"If we want the best outcome, at some point we have to turn all of our attention to wanting and helping Nalcor to succeed," he said.

Paddick's message challenged

Paddick testified for nearly four hours at an inquiry that is investigating why Muskrat, a Nalcor-led project, is billions over budget and years behind schedule.

The inquiry has uncovered evidence that Nalcor executives, especially former CEO Ed Martin, withheld critical cost information from the board and the provincial government before and after sanctioning in late 2012. There have also been suggestions the cost estimate was deliberately lowballed in order to ensure the project was approved.

It was clear the inquiry wanted to be sure the current board was fully in the loop, and carrying out its mandate, and Paddick gave every indication that is the case.

But his request for people to get behind Nalcor and cheer for its success wasn't unanimously endorsed by others at the inquiry, including Justice Richard LeBlanc, who is leading the probe.

"I'm not so sure that based upon what I've heard … and the notoriety of this project … not so sure it's enough for Newfoundlanders and Labradorians to get behind Nalcor," said LeBlanc, who asked Paddick whether there's a strategy in the works to rebrand Nalcor as Muskrat enters the homestretch.

Paddick said that's been difficult because there's a strong focus on finishing the project, and there's great uncertainty about what Nalcor will even look like after Muskrat is completed, with some talk about dismantling the corporation altogether.

"I'm not suggesting we should forget what happened and get up tomorrow and say, 'Way to go, Nalcor,'" Paddick told LeBlanc.

"I'm saying if we continue to criticize at every level, regardless of whether it's related to a project that didn't go well or not, it's kind of a self-fulfilling prophecy."

How about an apology?

Paddick's message was also challenged by John Hogan, the lawyer representing the province's consumer advocate.

Hogan suggested a good step for the board might be a public apology for a project that will saddle the province with billions in debt and threatens to drive electricity rates into the stratosphere.

Paddick said an apology is not being considered, but added, "[It's] not because we don't think that's not necessarily appropriate or justified."

He did admit employees at Nalcor were perhaps set out on a mission for which "there was no good outcome."

It was the closest he came to criticizing the project, saying the board is focused on the future.

Board compensation a must, says chair

Paddick became wealthy during a long and notable career in the telecommunications industry, and moved away from the province nearly two decades ago. He was part of an entirely new board that was constituted in December 2016 at a time of chaos within Nalcor. 

The former board had resigned en masse the previous spring, and Ed Martin departed under a cloud of controversy at the same time as costs on the project were soaring.

Paddick felt it was his patriotic duty to step up, and said he believes the 10 others on the new board, including current CEO Stan Marshall, were similarly motivated.

Since that time, he's attended roughly 70 board meetings annually, and invested countless hours doing preparation work on a corporate board that does not offer remuneration.

But he's doubtful Nalcor will have the same success populating its board with experienced people if there is no financial compensation.

"I don't know what fair compensation would be, but I think I would be safe to say that zero is not fair," Paddick said.

"When I step down, whenever that is, I can't imagine you're getting a chair to come in here and put in that type of hours and effort for nothing," he said, calling the level of commitment required for zero financial reward "kind of unprecedented."

Board 'well-equipped,' says Paddick

Nalcor has annual revenues in excess of $1 billion, and specializes in everything from power generation and supply to oil and gas production and energy marketing. In the private sector, board members on such corporations could expect to be paid handsomely, but Nalcor is government-owned, and Paddick said there's little appetite to start paying board members linked to a corporation that brought us Muskrat Falls.

He said the board asked the province to consider paying directors a few years ago, but the request was denied because it was "just not the right time to be talking about increasing costs at Nalcor."

Meanwhile, Paddick said the current board has a broad range of expertise, and is well-equipped to lead the corporation. He described communications with the provincial government, Nalcor's lone shareholder, as "frequent and robust," and said the board has complete access to all the information produced by the corporation.

While he did not criticize the former board, Paddick said, "I think we've come a long way in the last couple of years."

Paddick also had high praise for Stan Marshall, describing the CEO's performance as "exemplary."

Paddick also expressed confidence in the current final forecast cost of $10.1 billion.

"We're confident as of today that we can still operate within that budget envelope."

When asked if the board feels confident it is receiving all the information it needs, Paddick answered with one word: "Absolutely."

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