Former Nalcor Energy CEO’s severance was appropriate: auditor general

ST. JOHN’S, N.L. – A controversial $1.4 million severance package paid to the former head of the Crown corporation behind the troubled multi-billion-dollar Muskrat Falls hydro project was appropriate, Newfoundland and Labrador’s auditor general has found.

A 72-page report from auditor Terry Paddon said former president and CEO Ed Martin’s departure from Nalcor Energy after a change in government amounted to “constructive dismissal.”

Paddon said that meant Martin was entitled to the same severance payments and benefits he would have received under his employment agreement had he been dismissed without cause from Nalcor.

Martin was overseeing the delayed project and facing scrutiny as its pricetag ballooned by billions of dollars.

He abruptly resigned last April in a cloud of controversy that enveloped the house of assembly for more than a month. Martin said at the time that it was his decision.

But Paddon’s report said Martin did not want to leave his post.

“He indicated that it was important for him to stay on with Nalcor to get ‘us through the next while.’ He felt that he had built a very experienced team and that, in his view, this was best for the province,” Paddon said in the report released Monday.

The report said a meeting with Premier Dwight Ball last April in which Ball said he could not publicly support Martin and his team “confirmed and solidified the constructive dismissal of Mr. Martin.”

Paddon found Martin was entitled to severance payments equal to his salary and annual bonuses for two years. That, combined with his pension and other benefits, totalled more than $6 million, the report said.

In a news release Monday, Ball said the report confirmed that the contractual obligations owed to Martin were negotiated and signed under the former Progressive Conservative government and that his Liberal government did not direct the board on his severance payments.

Current Nalcor CEO Stan Marshall said in December that project costs had jumped to about $11.7 billion, up about $4 billion since the Tory government sanctioned the project four years ago.

Marshall took over as Nalcor CEO last April.

Ball challenged the Muskrat Falls project while opposition leader, including two related filibusters. He has said his government “inherited” what critics have called a bottomless money pit.

Muskrat Falls is the largest publicly funded venture in Newfoundland and Labrador’s history — a dam and powerhouse on the lower Churchill River near Happy Valley-Goose Bay in Labrador that was intended to free the province from volatile, oil-fired energy costs.

It will also bring power to Nova Scotia, through a joint deal with private utility Emera.