$1M legal bill for Ed Martin highlights expense breakdown for Muskrat Falls inquiry

A breakdownof expenses obtained by CBC News reveals that Nalcor Energy paid a heavy price in legal fees related to the Muskrat Falls inquiry, including nearly $1 million to the law firmthatrepresented former CEO Ed Martin.

Although Martin left Nalcor under a cloud more than four years ago with a multimillion-dollar separation package, and was singled out for blistering criticism in the inquiry's final report, Nalcor was required to pay his legal fees.

According to theCrown corporation, current and former officers and directors such as Martin are indemnified for their costs when they become involved in a legal proceeding related to their time with Nalcor.

As such, the $972,111.68 billed by veteran lawyer Harold Smith, and a team of three otherswith St. John's law firm Stewart McKelvey, which represented Martin, was paid by Nalcor, the publicly owned corporation that planned and oversees the Lower Churchill project.

"Nalcor had a legal obligation to cover Mr. Martin's legal expenses as they were incurred," a Nalcor official wrote in a statement to CBC.

The statement also explained that Nalcor has insurance to cover "some fees" paid to Martin's legal team, and other current and former Nalcor officials involved with the inquiry.

In all, Nalcorpaid just under $7.8 million related to the inquiry for what are called professional services, with the majority of that nearly $5.8 million, including HST paid to well-known business law firm McInnes Cooper.

McInnes Cooper, led by lawyer Dan Simmons, represented Nalcor throughout the nearly two-year inquiry process, and helped co-ordinate the submission of some four milliondocuments to the inquiry.

Separately, the provincial government was billed more than $13 million by commission counsel, the various law firms that represented individuals or groups with standing at the inquiry, and for a pair of forensic audits by Grant Thornton.

When the bills for the provincial government and Nalcor are combined, expendituresrelated to the inquiry reachnearly $24 million.

Fees capped for lawyers

Fourteen individuals, groups or organizations were given full or limited standing at the inquiry, with the commission paying their legal costs.

Law firms representing those clients could charge a maximum of $225 per hour, with a cap of 10 hours per day.

The firm O'Dea Earle, which represented former premier Danny Williams and several other former provincial politicians, billed the commission some $630,000, while lawyer Geoff Budden, who represented the Muskrat Falls Concerned Citizens Coalition, and was among the most visible lawyers at the inquiry, billed $460,000.

CBC spoke to one lawyer who said in some months, he was billing up to 230 hours to the inquiry.

"I never worked so hard in my life," said the lawyer.

But there was no such cap for the lawyers working for the inquiry, known as commission counsel, or for Nalcor.

Commission co-counsel Barry Learmonth's firm, for example, billed at a rate of $375 per hour for Learmonth's services, with a total cost to the inquiry of $2.2 million.

Harold Smith would not divulge how much he was charging to represent Ed Martin, saying that informationis private between him and his client.

Both Learmonth and Smith have been practising law for more than 40 years, and more experienced lawyers typically charge higher rates.

A misguided project

With the hydroelectric project billions over budget and years behind schedule, former premier Dwight Ball ordered the inquiry nearly three years ago.

Following months of testimony in St. John's and Happy Valley-Goose Bay, Justice Richard LeBlanc released his 1,200-pagereport,entitled "Muskrat Falls: A Misguided Project," in March, but the report was quickly overshadowed by the growing COVID-19 pandemic.

As the architect of the controversial project, Martin was the target of some scathing criticism from LeBlanc, who derided Martin and other top executives for taking "unprincipled steps" to ensure the project was approved.

LeBlanc said the culture at Nalcor was shaped by Martin, and this "resulted in a combination of unrealistic optimism, a willingness to misrepresent costs, schedule and risk, and an inability to change course when things were going wrong."

LeBlanc also blasted politicians and bureaucrats fora lack of "capacity or strong inclination to effectively oversee Nalcor."

• Former Nalcor CEO Ed Martin releases severance agreement, details exit pay

The report is now in the hands of the Royal Newfoundland Constabulary. A spokesperson said a team has been assembled to determine whether there is sufficient grounds to lay charges, and that investigation is ongoing.

The Department of Justice is also reviewing the report for possible civil litigation.

• Minister asks RNC to investigate Nalcor executives, public officials over Muskrat Falls

As for Muskrat Falls, the in-service cost for the project has now surpassed $13 billion, and full power is not expected to be reached until a year from now, which is four years behind the original schedule.

When it was approved seven years ago, the cost was forecast at $7.4 billion.

Nalcor is forecasting that power rates will nearly double to more than 23 cents per kilowatt-hour in two years in order to pay for Muskrat, though the provincial and federal governments continue to explore ways of keeping rates affordable in the Muskrat era.

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