Out of the loop
It’s unsettling, at the very least. The Muskrat Falls inquiry is trundling along, with last week seeing testimony from Derrick Sturge, Nalcor’s vice-president and chief financial officer. Now, here’s the baseline of what a chief financial officer is supposed to do, according to acccountingjobstoday.com: “As a key member of the executive management team, the chief financial officer will report to the president and assume a strategic role in the overall management of the company. The CFO will have primary day-to-day responsibility for planning, implementing, managing and controlling all financial-related activities of the company. This will include direct responsibility for accounting, finance, forecasting, strategic planning, job costing, legal, property management, deal analysis and negotiations, investor relationships and partnership compliance and private and institutional financing.”
It’s a job that covers a lot — and requires incumbents to have comprehensive and intimate knowledge about the inner workings of the company that employs them.
But Sturge has testified that he wasn’t in the loop on a number of things involving the Muskrat Falls project, which instead was treated differently, following different reporting lines and closely-held information.
Sturge testified that the project had its own supply chain, its own risk management, its own accounting lead, and even did its own IT hirings.
Thursday was the second day that Sturge admitted feeling out of the loop — even when it came down to getting new and accurate capital expenditure numbers for the project, even as Sturge was preparing to meet with Canadian government officials to finalize details of a federal loan guarantee.
“The whole team was frustrated at that point,” Sturge testified.
Sturge expressed that frustration in handwritten notes from the period, which were entered into evidence, saying of CEO Ed Martin, “He clearly does not want me to know where the estimate currently sits.”
That frustration was clear. In an email chain headlined “Gong show,” Sturge and Aubrey Warren, Nalcor’s manager of investment evaluation, discussed an upcoming announcement, with Warren writing he was “absolutely gobsmacked” thinking that a final agreement on a federal loan guarantee had been reached, adding sarcastically, “(Oh) well no need to keep us in the loop ... probably better not to have anyone who could point out the flaws in what is being ‘agreed to.’”
It seems like a strange situation for a company’s key finance official to be in. As Sturge testified about the Lower Churchill Project, Nalcor’s largest investment, “I can’t speak to the quality of the LCP risk process. I can’t.”
Why? Because he said wasn’t even part of the discussion of what risks Nalcor and the province were prepared to take on the project.
Again — he was and is the top finance official at Nalcor.