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Former board chair challenged on cost estimates, communication

Former Nalcor Energy board chair Ken Marshall at the Muskrat Falls Inquiry in St. John’s on Monday.
Former Nalcor Energy board chair Ken Marshall at the Muskrat Falls Inquiry in St. John’s on Monday. - Joe Gibbons

Ken Marshall stands by former Nalcor Energy CEO Ed Martin

ST. JOHN'S, N.L. —

The Muskrat Falls Inquiry opened this week with a focus on the Nalcor Energy board of directors. Specifically, it was the board as it stood in the first few years of project construction – what it was aware of, what it approved of and ultimately what it communicated to the government.

Former board chair Ken Marshall was called to the stand. Marshall began on the board in 2004. He was named interim chair, then appointed chair at the end of 2014. He resigned in April 2016, along with the entire Nalcor Energy board of directors. The decision followed a change in government, and the constructive dismissal of then-president and CEO Ed Martin.

Marshall said Martin was reputable, respectful and forthright as a CEO.

“I think he was a very good CEO. I think he was a very competent CEO,” Marshall testified.

Ed Martin. - SaltWire File Photo
Ed Martin. - SaltWire File Photo

He pushed back against the suggestion Martin “withheld” information, saying the word carried an unwarranted, negative connotation.

Marshall acknowledged internal, project management team estimates were not reported directly to the board of directors. Instead, the board was given estimates tested and settled by Martin and vice-president Gilbert Bennett (even though they repeatedly came up short and the management team estimates proved to be more reliable).

“Hindsight is a perfect judge,” Marshall said.

He personally would like to have seen a project management team report putting the cost estimate for the project at $7 billion before financial close in 2013. That’s $800 million higher than the cost estimate put to the public less than a year earlier. He said $7 billion was a number that did come up in board discussions that year, but not on paper. He said there were cost ranges discussed in detail.

He told consumer advocate lawyer Chris Peddigrew the board of directors then relied on the CEO to funnel key information to the government. He said the board thought it made sense to have Martin update elected officials, given he was immersed in the details of the project daily.

“I guess there had to be a certain level of trust,” he said.

The board was given a heads up when Martin headed to a meeting with government members. He said the CEO would then contact the board afterward.

And a step before, when updates were first brought to the board of directors, Marshall said Martin would ask about comfort level. Martin and CFO Derrick Sturge, he said, would ask if the board wanted information in different formats, and if it felt it had the information it needed.

Marshall didn’t have notes to reflect what was said in particular board meetings. And there was little recorded in the meeting minutes, particularly in terms of dollar figures or project risks. He said he personally felt commercially sensitive information like that shouldn’t be in the written reports, fearing it might be released under the Access to Information and Protection of Privacy Act.

He was challenged on that idea by lawyer Andrew Fitzgerald, representing Charles Bown and Julia Mullaley. Fitzgerald walked through the special provisions for Nalcor under the Energy Corporation Act. He highlighted the broad definition of commercial sensitivity.

“Hindsight is a perfect judge." — Ken Marshall

Meanwhile, lawyer Peter O’Flaherty pressed Marshall on the internal assessment of costs as construction progressed. He asked about the assessment of significant delays with contractor Astaldi’s work by the second half of 2015. Marshall said the board was aware “hundreds of millions” of dollars worth of cost existed, but didn’t have a specific dollar amount prior to the 2015 provincial election.

Overall, he said, the board members took their role seriously, and challenged the project management team on details as the project work progressed.

“We certainly didn’t shirk our responsibilities,” he said.

Marshall previously testified in the first phase of the inquiry, in 2018, as part of a panel of former board members, including Tom Clift, Terry Styles and Gerry Shortall, speaking about the period before the project’s sanctioning in late 2012.

Another former board member, Cathy Bennett, who left the board in 2012 and went on to become the province’s finance minister, was also scheduled to testify on Monday. The time required for Marshall’s testimony meant Bennett was not called, and she was rescheduled for Tuesday, starting at 8 a.m. NST.

Twitter: @TeleFitz


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