Wednesday, May 7, 2014

OBFUSCATION NOT THE RIGHT APPROACH

Newfoundland and Labrador's new Premier, Frank Coleman, says the media and the opposition are making a big deal out of nothing. 

He says there was no conflict of interest with his son negotiating Humber Valley Pavings payment for non completion of a contract and the release of his former company from $19 Million in bonds related to incomplete projects.

The new Premier stepped down from the board of Humber Valley Paving three days before the company requested to be released from the terms of the Labrador contract. 

Coleman stepped down from the board of directors for both Humber Valley Paving and Humber Valley Aggregates and Asphalt, effective March 10th. He announced his intention to seek the leadership on March 13th.

Coleman confirmed for The Western Star on February 12th that he was giving the idea of seeking the leadership position some serious consideration. He did not officially enter the race until the very last day of the nomination process.

Every day we learn something new about the circumstances that led to the companies release from it's contractual obligations. For instance we now know that the company was released from two bonds for a total $19 Million - $10 million more than the amount previously stated by government.

We also learned that Humber Valley Paving had previously been given a year extension to do the work they were unable to complete last year.

How do you sell a company with nearly $20 million in outstanding liabilities? Perhaps the case for releasing the bonds was so strong that dealing with the liabilities was just a formality. Someone had to feel fairly confident that the liabilities would go away

We also know the Minister of Transportation Works, Nick McGrath. personally negotiated with Gene Coleman in the week leading up to his father's official entrance in the race to become McGrath's boss. 

Up to today , McGrath indicated that this type of discussion about renegotiating a signed contract was not an uncommon occurrence. 

Today, he admitted in the House of Assembly this was the first time he was directly engaged in a negotiation to release a performance bond or renegotiation of a contract.

After a scan of the registry of lobbyists, there is no indication that Premier Coleman's son registered with the government before embarking on discussions with the minister.  I really don't know if Gene Coleman would be considered an in-house lobbyist or not, but on the surface I would suggest that anyone lobbying to be released from $19 million in bonds should do so on the official record. 

I would like to give the minister and the government the benefit of the doubt. 
However, the changes in the total amount released, disclosure about the Minister's personal involvement and the timing of the discussions have muddied the waters. It is going to take an unbiased third party review to clear the air and pronounce that this deal was ethical and above board.

As I have said before, if the government feels that nothing has been done wrong than why not ask the A.G or a judge to investigate the process undertaken and the controversial decision made by the minister. The devil can be in the details.

The issue came to the public's attention when it was revealed that Coleman's former company, HVP,  owed thousands of dollars in unpaid bills to businesses in Labrador. That issue in itself undermined his integrity as a business leader.

It is a huge mess for Premier Coleman's reputation and integrity. No matter what the outcome of a review, the damage may already be done. 



The scandal is an even larger mess for the governing Progressive Conservative Party who are now stuck with a tainted leader at a crucial time of renewal. 

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