Out of the loop

The Labradorian - - Editorial -

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.

Un­set­tling in­deed.

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