AG finds no wrongdoing in Martin severance
Auditor General Terry Paddon seemed guarded, answering questions about his long-awaited report into the Ed Martin severance affair.
Did anybody do anything wrong in the awarding of a $6.2-million severance package to the departing CEO of Nalcor Energy last spring? “Nope,” Paddon said.
But Paddon was careful to make it clear he was tasked only with answering a fairly narrow question.
“My mandate was to determine whether the severance was appropriate,” Paddon said. “I mean, Mr. Martin had a contract. The contract provided for a number of things, including payment in lieu of notice.”
The 34-page report published last Monday didn’t get into the thorny political questions surrounding the Martin severance situation, and whether Premier Dwight Ball lied to the public.
The closest Paddon came to any observation on that front was stating that Ball’s office appears to have not looked into what the implications of dismissing Martin would be. Paddon said it “probably would have made sense” to do some of that background research.
“When you think about the fact that Mr. Martin was probably one of the most high-profile public servants in the province, it’s fair to say that his departure was likely going to cause some public notice,” Paddon said. “It might have been a worthwhile process to have some assessment done on what the implications of him leaving would be.”
Ball was not available for an interview last Monday, but issued a statement to the media thanking Paddon for his work.
“The auditor general has determined that government did not direct Nalcor’s board of directors regarding the contract of Ed Martin,” Ball stated.
“The contractual obligations owed to the former CEO were negotiated and signed under the former administration. The auditor general has now concluded that the severance payments provided by Nalcor Energy were appropriate under that contract.”
The core of the auditor general’s report was that Martin’s departure from Nalcor Energy was “tantamount to constructive dismissal.”
In the early part of 2016, the new Liberal government had hired an independent consultant, and then in the April budget speech, the management team of Nalcor was the subject of some critical words from Finance Minister Cathy Bennett.
Moreover, Ball and Bennett both declined to publicly voice their confidence in Martin.
On Wednesday, April 20, Ball announced Martin was resigning, and Martin said he was leaving voluntarily to spend more time with his grandchildren. That turned out to be untrue. On the same day, the Nalcor board of directors resigned en masse, saying they no longer felt they had the confidence of the government.
It came out later, by way of several access to information requests, that Martin received severance totalling close to $6.3 million — and he wouldn’t have been entitled to almost all of that if he resigned voluntarily.
Paddon came to the conclusion that Martin’s departure was a constructive dismissal.
“The inability of the premier and the minister of Finance to publicly support Mr. Martin created a situation which compromised Mr. Martin in his role as CEO of Nalcor. This was incompatible with the continued employment of Mr. Martin,” Paddon wrote.
But in the key meeting between Martin and Ball where the decision was made, Paddon concluded that the two men had different takes on what actually happened.
“Mr. Martin considered that the decision for him to leave his employment was made by the premier, and the Premier considered that the decision for Mr. Martin to leave his employment was made by Mr. Martin,” Paddon wrote.
The severance scandal dominated the political conversation last spring, with questions about how involved Ball was, and whether he personally approved Martin’s severance.
Last week Paddon said there’s no evidence the premier knew at the time the magnitude of Martin’s severance package, even though his chief of staff and his natural resources minister had seen copies of Martin’s contract.
The closest thing to confirmation that Ball knew Martin received severance came from Martin’s interview with Paddon.
“In his interview, Mr. Martin stated that he asked whether the premier was saying he wanted him to leave now and that he would be paid out, to which, Mr. Martin indicated, the premier answered ‘yes,’” Paddon wrote in his report.
Auditor General Terry Paddon said former Nalcor CEO Ed Martin’s severance was appropriate