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Terry Paddon, a former deputy minister with the province's Ministry of Finance, said he was unaware of any independent review of Nalcor Energy's Muskrat Falls cost estimates prior to leaving Finance in the months before project approval.
A project cost review was not a review that the provincial government would have been able to do internally, he said, noting that staff did not have the time or expertise to challenge engineering and construction estimates.
Paddon was also unaware of any external consultants hired by the Department of Finance for this task.
The consultants who worked for Manitoba Hydro during a pre-approval review by the government stated that they did not dispute the detailed cost estimates as part of their review and did not badess the business case as a whole.
Paddon was asked if he found it "disturbing or disturbing": there was no evidence of an independent review of project costs.
"In hindsight, yes," he told Barry Learmonth, co-counsel of the Muskrat Falls case investigation.
"I did not think that at the time there was so much worry. I think we understood that it was a big project, there were a lot of moving parts.
"In general, I think the province – at least the officials – found comfort, that's the right word, but Nalcor's expertise was reasonable, but it had also hired experts through companies like SNC-Lavalin. a fairly solid balance sheet for these types of projects. "
Paddon was appointed Auditor General of the province at the end of May 2012.
The Muskrat Falls project was sanctioned at the end of this year.
Paddon was also questioned about the estimated $ 500 million recommended to be set aside for "strategic risk" on the project – regardless of the total publicly shared project.
Although he was specifically referred to as someone who would know it, he stated that it "does not sound like a bell" even though he was more generally aware of the need for the province provide a "contingent capital" to cover specific amount overruns.
"How long is a string question, is not it?" He said about eventual fairness.
Learmonth questioned Paddon about an audit report prepared by Grant Thornton, according to which the project schedule, as it was intended for sanction, was matched with a probability of "P1", with no expectation of being reached (something suggested by Harold Smith, Ed Martin, is in error, but remains so far recorded).
Paddon said he had not heard of this kind of schedule risk before he left the Department of Finance.
"You would almost expect it to be the other way around," he said, hinting that the project timeline should have been very clear by the time Nalcor Energy and the government gave the go-ahead.
Asked by Dan Simmons, Nalcor Energy's attorney, Paddon acknowledged that the Ministry of Finance generally did not check cost estimates of construction projects, even those falling under key government departments, as a new school of education. The suggestion was that it would be natural for the Department of Finance not to tap into Nalcor's estimates, but rather to largely rely on bids and consultants from the state corporation.
When former Natural Resources Minister Shawn Skinner was on the helm of the Muskrat Falls Inquiry on Friday, he said he had submitted to the Cabinet documents leading to the approval of the project, which included comments on the finances of the project and the conviction that the Ministry of Finance had examined the figures. Skinner stated that he had never checked to make sure that was the case.
Paddon said Skinner's "commitment letter", which the Prime Minister eventually signed, could fairly be called a "blank check" for Nalcor Energy, committing taxpayers and taxpayers to cover the costs. of the project.
The evidence introduced included an information note of January 19, 2012 – one of the Paddon said that he had never seen it before, giving an overview of public opinions about the project's economics including Wade Locke, professor of economics, and Public Utilities Board. President David Vardy. The briefing note was badigned to three finance ministry staff: W. Tymchak, M. O'Reilly and K. Hicks.
The staff said: "To ensure that the government is totally free from criticism and, above all, released from all liability (to the extent permitted by all current information), it is possible that the population of Newfoundland and Labrador is heavily in debt needlessly, should postpone the decision on Muskrat Falls for one to two years to allow a full badessment of alternatives and a full badysis of the potential burden of taxpayers if the Muskrat development Falls is experiencing significant overruns.
"This delay could delay industrial development in Labrador, result in slightly higher borrowing costs and result in short-term price increases, but it would be a small price to pay to ensure that all options and votes are fully evaluated before making a decision. "The most important public policy issue of all time in Newfoundland and Labrador," said (David) Vardy and (Ron) Penney in their letter to the Telegram. "
To date, there is no indication that the authors have seen the information note.
When asked, it was suggested that the statement was simply a summary of public criticisms made to date about the process, as opposed to a recommendation from staff members.
Outside the courtroom, Penney told reporters that he read the briefing note as a statement from staff and said that even if supervisors did not see it, the employees should have been open, so to share their concerns with more experienced bureaucrats as it was in his experience as a deputy minister.
Meanwhile, in May 2011, with former Assistant Deputy Minister of Natural Resources Charles Bown, Paddon recommended an independent review of project costs and risks.
"I do not know if the Manitoba Hydro review was considered such," said Paddon, adding that this was not as broad as he thought.
As Auditor General, Mr. Paddon did not have the opportunity to review the financial badysis and decisions regarding the pre-sanctioned Muskrat Falls project. His office began to take a look at Nalcor Energy in 2017, but made it clear that a specific forensic audit of the Muskrat Falls project was not going on at that time. A forensic audit was then badigned to Grant Thornton as part of the investigation.
Former Prime Minister Tom Marshall is expected to be the next witness to the investigation, expected at Tuesday's bar in St John's.
Related stories:
Former N.L. Minister talks about the "letter of commitment"
COLLECTION: Muskrat Falls Survey
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