Where Does Government End and Nalcor Begin?

In 1998, then-Secretary of State Madeline Albright captured perfectly the multi-generational culture of the US Foreign Policy establishment: “if we have to use force, it is because we are America. We are the indispensable nation. We stand tall. We see further into the future.” That last part in particular has aged poorly. When she uttered it, the US-led West was ramping up its campaign to open and secure markets (“spread democracy”) in every corner of the globe—peacefully if possible; by force if necessary. Two decades later, it is hard to argue that this approach has been especially successful for the United States of America.

In The Hell of Good Intentions, Stephen Walt, Professor of Foreign Affairs at the Harvard Kennedy School, describes the culture of this entrenched establishment as “fiercely self-protective.” Professional success depends on reputation, and you do not advance your career by challenging orthodoxy, which in this case includes America’s right to manage and dictate almost all of world politics.

Thankfully for Newfoundlanders and Labradorians, Nalcor is not in the business of bombs and world affairs. But as the Muskrat Falls Inquiry has repeatedly made clear, they are very much in the business of directing enormous power through an internal culture characterized by atomized self-interest and willful ignorance. Professor Walt points out that within the US Foreign Policy establishment, everyone worries that “if I start holding people accountable, I’ll be held accountable too!”

Sound familiar?

Nearly every witness who worked or works for Nalcor in Phase One had a story that went along the lines of: ‘I just assumed the information I was given was sound. I simply trusted my colleagues and superiors.’ To do otherwise would be to risk professional alienation or even termination. It’s tempting to wish for a shred of courage among the ranks in such a situation as has unfolded with Muskrat Falls, but we can guess the response from inside: “speak up? Get fired, you mean. Is courage gonna pay my bills?” It’s not as if many cushy jobs await the would-be whistleblower.

We can make a clear connection here to the private sector. Nalcor is of course at serious fault for its mismanagement of a multitude of contractors at Muskrat Falls and the resulting billions over budget, yet a dark truth I’ve encountered anecdotally several times now is this: if you’re a NL-based private contractor that wins a government contract, you’re milking that cash cow to the last drop for as long as you possibly can. In this economy, the logic goes, who knows when the next job is coming?

As for multinational juggernauts, we can hardly be surprised by the miserable saga of Astaldi. (Though perhaps miserable only for workers and the public, as those pampered executive jaunts to London, Paris and Rome actually sound quite nice.) Astaldi’s bid for the Muskrat Falls contract, reportedly “25, 30 per cent” cheaper than competitors’, was apparently founded in ignorance of the harsh conditions of Labrador. Nevermind the onus of what would seem to be basic research for a multi-billion dollar contract—if megaproject overruns are the norm anyway, as is repeatedly insisted, why not low-ball? What’s a few billion in overruns when your client is a government? They’ll tax it all back some day. (If not them, their children. Or grandchildren.)

What emerges is a picture of conformity: structurally enforced, made rigid in competition, and heightened acutely by scarcity—be it real or perceived. Few will likely disagree that in many industries, conformity to the status quo is a precondition to professional success. There are trailblazing and idiosyncratic exceptions, to be sure; but not at Nalcor. As we’ve seen thus far in the Inquiry, if everyone serves themselves with the same story, that story hardens into a kind of impervious collective shell under which all can evade accountability.

Still, someone is making actual decisions around here. Even if 90% of Nalcor and government staff are just doing their job and trusting the competence of those around and above them, a megaproject doesn’t build or finance itself. And yet, as seen in the testimony of former premier Dunderdale, even at the top there is no agency to be found. We find that she, too, was in the dark, doing what she was told, even as she was the face and voice and champion of the thing. But again: just doing her job!

Alright then, how about Derrick Dalley, Minister of Natural Resources between October 2013 and November 2015, another key player and formerly outspoken champion? An excerpt from his testimony: “when I look back at our involvement, we relied very heavily on the people around us, and the departments to feed us information.” The departments? Was he himself not the minister of the most relevant department? Perhaps a later comment he made referencing Nalcor will help clarify: “we relied heavily on their facts and their work, believing we were on the same side.”

Fine. So then let us turn back to Nalcor, setting aside for now the wondrously dubious question of who really runs whom here.

The recent Phase II release of a forensic audit by Grant Thorton revealed that,  internally, the writing was on the wall as early as 2013, when Nalcor had already awarded contracts that overshot sanctioning estimates by $600 million. And as CBC points out, “despite the early warning signs, Nalcor did not attempt to recalculate its contingency amounts, or modify its capital cost estimates prior to signing a federal loan guarantee in November 2013.”

When asked at the Inquiry why not, you’ll never guess how project manager Paul Harrington responded“not my call.” Any such changes, he predictably deferred, would be the responsibility of “senior management and government.”

On up we go to the very top of the ivory tower.

And look no further, because every word and sentiment so far put forth finds its perfect expression in the stoney, smug face of Mr. Ed Martin.

Can you hear him now at the luxury lodge with his buddies? ‘Six million is not what it used to be!’

And he means it. Martin’s impenetrable arrogance on the stand is the ultimate symbol, clue and key to a solipsistic Crown-corporate behemoth too drunk on power to even consider reckoning with the realities it has imposed on the population.

But what of the realities the ‘world-class experts’ themselves were in charge of  overseeing? Herein lies another crucial part of the story: what looks like sheer incompetence from the outside has played out on the inside as Nalcor simply exercising the many mechanisms of power it has been granted. As Steve Crocker put it at the Muskrat Symposium last fall, “Nalcor is now a monstrous problem child of state monopoly regulation in the service of wild market speculation—the worst of both worlds.”

Consider its fantastical privileges: to dictate that government rewrite legislation so as to monopolize the market and be free of regulatory oversight by the PUB; to gobble up the public purse, strap, zipper and all; and, not content with the billions spent in existing public funds, to commit many billions more, decades into the future, by bundling every electrical bill in the province into a securitized asset—an investment vehicle for the global bond market.

Imagine if a single entity got to fully customize its legal and economic restraints and operations, cherry picking the finest delicacies and worst excesses of both the State and private corporate monopoly. Imagine, further, that with this great power, great responsibility never really applied.

You don’t have to imagine this. It exists, and its name is Nalcor.

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