Wednesday, August 30, 2006
This is a letter from me to the editor published today in the Telegram.
I feel compelled to respond to the Saturday column by Bill Rowe on the issues surrounding Premier Williams and the Max Ruelokke decision penned by Justice Halley.
Mr. Rowe divides the issues into two separate matters. The first is the substance of the decision, where Justice Halley concludes that Max Ruelokke now holds the job of
However, he does take issue with the knuckle-rapping Premier Williams has received over his public criticisms of the Halley decision. Williams, to several media outlets over several days, repeatedly characterized the decision as “over the top” and remarked that Justice Halley must have “gotten up on the wrong side of the bed”.
The rapping has come from the president of the Canadian Bar Association, J. Parker
Rowe’s defense of the Premier boils down to a simple idea: an elected Premier has the right to publicly criticize a judge’s ruling on a matter of public interest.
Fair enough. But when does the premier plan to do that? How do any of his remarks so far constitute in any way fair criticism of the judge’s ruling?
In fact, the Premier’s remarks have had nothing to do with the substance of the judge’s reasoning or conclusions. Instead he has focused exclusively on undermining the credibility of the judge and belittling his ruling by calling into question the manner by which Halley came to his decision.
After all, the Premier seems to say, how can you take a ruling seriously that’s a product of mere Monday morning crabbiness? Would the ruling would have been different if Halley had downed a second cup of joe?
I agree that the Premier has a right to fair and responsible criticism. However, fair and responsible criticism does not include repeatedly going for the cheap shot in every media outlet available. Surely when his communications staff comes up with these kinds of lines-of-the-day, the Premier should have the judgment to reject them as inappropriate to his office.
Rowe went on to ridicule the idea that the Premier somehow owes greater duty to the Law Society than to the people at large. And rightly he should ridicule that contention. However, I have heard nobody besides Rowe make it.
Instead he should consider is that the Premier has a greater obligation than other people to support the integrity of the legal and judicial system of the province. As Premier, he sits atop a system of administration and governance which is founded on the rule of law and not on personal whim and caprice. When that foundation of law is undermined, all that is built upon it is undermined.
If the Premier wants to make fair and responsible criticism of a legal decision on an important issue of public policy, I say go for it. However, nothing he’s said so far fits into that category.
Too bad, because I believe he’d be capable of it if he really tried.
Posted by Simon Lono at 8:49 PM
Friday, August 18, 2006
About a year ago I replied to the Telegram's call for members of their Community Editorial Board. I submitted a few pieces and, to my surprise, I was accepted!
Since then they have published 6 of my pieces on their editorial page. The topics have ranged from municipal election reform to global warming to the Ruelokke-Williams-CNLOBP dispute.
I just wanted to thank the good people at the Telegram for the opportunity to participate in their community editorial board with a special thanks to Joe Walsh for his enormous patience. He would sometimes call me while I was in Iqaluit or Montreal or wherever I'd be stuck working at the time to remind me a piece was due. He always took me at my word when I told him that, by good or by God, I'd get it to him. I always did but sometimes it was a near thing.
One time I took shots at the anti-sealing industry that hit too close to home for their liking. As per their latest strategy of silencing their critics through the liberal application of libel chill, the anti-sealing legal dweebs formally complained to the Tely and forced a pro-forma apology out of them. They did the right thing, I thought, because it was never my intent to ever cause the publication any trouble. They issued the required correction because their lawyers told them to but I could hear the teeth gritting from here.
And the good people at the Tely never held that against me and for that I am grateful.
Yesterday was the last piece to be published. That one, and the other, are gradually being added to this site as I get around to it.
Thank you, Telegram, and keep up the good work!
Posted by Simon Lono at 6:36 PM
Thursday, August 10, 2006
Kathy Dunderdale, spokesperson for Premier Williams in the Department of Natural Resources, was quoted in the CBC radio news this morning on the issue of Max Ruelokke and the ongoing controversy of the CNLPOB Chairmanship. She was directed to say that:
"We're not going to comment on the Max Ruelokke decision at this time . . .We have received the judgment, the Department of Justice is reviewing that for us and until that review is complete, I won't be making any comment."For fans of judicial decisions, Judge Halley's stands apart in its decisiveness, clarity and straighforwardness; that will make the review fairly easy. No doubt the capable counsel at Justice will spend most of a cofeebreak coming to their conclusions.
Looking for a Hole
On July 12th, Premier Williams, in a scrum outside the House of Assembly on the topic of Justice Halley's remarks during closing arguments was also decisive, clear and straightforward: he would abide by the decision of the Supreme Court of Newfoundland.
So why the delay now?
If pressed, if one could get a government official to respond, I suspect that the answer provided would be all about government being prudent, doing drilldown, performing a due diligence piece and all the other buzzwords that get bandied about to provide cover for what is simply playing for time until government figures out which way to jump.
In other words, the Premier now regrets those hasty words in the scrum and is seeking a way out of his box. So what will he do now? This previous post covers some of the options available to him but which will he choose?
We can't be sure until that's announced but we can extrapolate what he should do based on his popular image and preferred self-descriptions: as the eminent lawyer, successful businessman and honourable politician.
As a lawyer he can read and interpret the decision and understand that Ruelloke is already the de facto chair. As an officer of the court, he is obliged to heed decisions of the court without undue or mischievous delay. If he plans to appeal, he should be announcing that without delay.
As a businessman he must be aware of the hazards of instability in the province's largest industry; the single biggest own-source of government revenue and the largest industrial component of the GDP. He understands that the longer this issue drags out, the more he shows the world that the regulatory regime of the province and economic policy of the province is based on personal capricious whim and not the rule of law.
As an honourable politician he is obligated to stand by his word and his word was that he would abide by the decision of the courts. At that point he placed no caveats, equivocations, conditions or exceptions to his declaration of intent to abide by whatever decision came out.
This is a watershed moment for this government and for the Premier in particular; unjustified delay under the camouflage of prudence damages credibility and calls into question any statement made in the future on any issue.
Get on with it.
Posted by Simon Lono at 8:49 AM
Wednesday, August 09, 2006
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Consider it a convenient service from the friendly people here at OffalNews - The Guts of Public Affairs, Economics and Politics.
Posted by Simon Lono at 9:06 PM
As Ed has mentioned, it's been 48 hours and still no response from government on the Ruelokke v. Government of Newfoundland and Labrador decision.
Maybe government thinks it can take its time in thoroughly reviewing the matter at its leisure. If so then government would be wrong. Time is ticking and other forces are moving forward.
In the judgment of Justice Halley, paragraph 59 says:
"It is now time for the Respondent to accept the Panel's decision and permit the Applicant to get on with the job of running the Offshore Petroleum Board."So what choices are open to government? I think they are pretty clear. Government can:
1) Immediately heed the judgment and let Mr. Ruelokke take the job he has already held de facto since December 5, 2005. This would put the matter to bed, government can redeem itself and could move forward with it's agenda.
2) File an appeal. This is most likely a fruitless exercise and just delays the inevitable. It also has the side-effect of making the government and the Premier look more spiteful and obstinate than they look already.
3) Buy off Ruelokke. To the government an attractive possiblilty except that he has thus shown absolutely no interest in stepping aside in any way shape or form. Thanks to the clarity of the Halley judgment, I can only imagine he'd be less inclined now.
4) Refuse to heed the decision. This puts government in the position of refusing to comply with both the federal and provincial legislation - the Atlantic Accord enabling acts - that outlines the division of powers and responsibilities in the management of this resource. This option has the side bonus of provoking an unprecendented fundamental constitutional crisis on the issue of government versus the powers of the judiciary and, as an officer of the court, puts the Premier in a personal conflict.
5) Try to bring the federal government onside and sidestep this entire mess somehow. Unfortunately, the federal government has hitherto shown no enthusiasm for the provincial position and, by contrast has been very supportive of the process generally and the candidacy of Max Ruelokke in particular. Even if the feds were inclined to agree with the province, it's a process that could take months or years, cost the feds much credibilityy in the industry and the larger business commmunity with no advantage to itself. And there would still be the issue of compensating Mr. Ruelokke.
6) Just delay delay delay as if the province had all the time in the world and hope it will all go away.
While government is dithering, Mr. Ruelokke has shown every disinclination to stand by and leave his fate in the hands of others. He is quoted as saying that he hopes to be on the job by Labour day. I have no doubt that he will take further action then if the government continues to do nothing.
That leaves Premier Williams just 3 weeks to make the next move.
In the meantime, the federal government will likely publish their own Order in Council confirming Mr. Ruelokke in the job.
Posted by Simon Lono at 1:19 PM
Tuesday, August 08, 2006
Almost a year ago Andy Wells leaked to the media that he was Premier Williams' choice for the Chairmanship of the Canada-Newfoundland and Labrador Offshore Petroleum Board.
The reaction was immediate. There was the obligatory and pro forma announcements of support from the friends, family and supporters of both Wells and Williams. Specific interest groups were horrified: a chill went through the local oil and oil-related community. Generally, though, the people of the province scratched it's collective head trying to figure out what was going on. We still are.
But some things have become clearer in the last 12 months. The first thing that comes to mind is that Wells now has the same chance of becoming Chair of the CNLOPB as my cat. The second is that Premier Williams will steamroll over anybody (Max Reulokke), hang up the legitimate activities of any organization (the CNLOPB) and stop any industry in its tracks (oil development) to get what he wants.
The real question is What does Premier Williams really want and why does he want it?
There was some speculation that Williams didn't really want Wells as Chair and wildly different reasons were proposed. Some thought he just wanted him out of the Mayor's chair to facilitate regional municipal amalgamation or to pave the way for his old buddy Jack Harris to waltz into city hall. Others thought that Wells was a bogeyman candidate in order to get another, more realistic and acceptable candidate in place.
I don't think we will ever know for sure why such a patently poor candidate was put forward by the Premier. Wells may question Halley's characterization of him as an unqualified candidate but let's call a spade a spade: Wells is a professional municipal politician with no experience in any business sector touching on the petroleum industry and has no technical expertise or training in any of the issues that the CNLOPB deals with every day.
There are some politicians who believe that their political experience provides some kind of universal qualification for every and any field of human endeavor. Wells is clearly one of those and Wells is clearly wrong about that - political experience does not provide anything like those qualifications. It can provide leadership experience in bringing together disparate groups and welding them into a consensus in order to achieve a higher goal. It would take an over-dose of hallucinogenics for a sane person to put Wells into that category of politician.
So why did Williams propose him? I think it can only fall into that class of things that seemed like a good idea at the time.
Williams' public reasons have been clear enough. Generally he wants the CNLOPB to stand up for the interests of people of the province and more specifically he wants the CNLOPB to initiate a fallow-fields process and so push the Hebron consortium into a deal of Williams' making.
Unfortunately for us who are trying to figure out what is really going on these public reasons are total nonsense. First the CNLOPB is a regulatory body that does not negotiate or establish industrial benefits for the province. Rather, it manages benefits that are previously negotiated and approved by the provincial government and industry consortium. In other words, it can only play with the hand that is dealt to it by others.
This puts the industrial benefits issue back into Williams' lap.
Second, and possibly more important, the CNLOPB cannot and will not initiate a fallow-fields process to push Exxon-Mobil et al off the Hebron project. The only way that could happen is to get the federal government to commit to supporting the province on the grounds of national self-sufficiency or national security of supply.
Not only do neither of these grounds apply to this case (Williams being merely unable to get what he wants), Prime Minister Harper has already made it abundantly clear that he views this dispute as a purely commercial one, to be resolved through negotiation. Notwithstanding the Premier's hopeful comments, no support will come from that source.
So again, the matter is thrown back into Williams' lap.
Does Williams really understand the environment and institutions he's dealing with? Can he be so fundamentally mistaken in such matters of basic roles, principles and responsibilities? I can't imagine how his experience as a lawyer and businessman, his exemplary education or the experience and knowledge of the senior officials who advise him could possibly lead him this far astray.
Far be it from me to question the motives driving the most popular provincial premier since Smallwood, but it seems clear that he will not be able to get through cheap and easy back doors what he has been so far been unable to achieve through the challenging and time-consuming front door. Governing a province is less about the grand gesture timed for the latest quarterly poll and more about the slow and incremental process of dealing with the dirty details like swallowing your pride and constructively bringing people together in negotiations to the benefit of all.
It's not always a zero-sum game, where winning necessitates others losing. Sometimes all sides can win.
Lets get on with it.
Posted by Simon Lono at 6:37 PM
Not since the Peckford/Trudeau oil wars in the 80s has the province been so severely rebuked by the courts on a matter of public policy close to the Premier's heart. At that time Peckford went all the way to the Supreme Court of Canada, insisting every step of the way that the province had jurisdiction over the offshore. And at every legal step of the way, the province was told that it had no such jurisdiction ever in the past, present or future.
Peckford's response was to call for a provincial day of mourning, complete with black armbands - and then he got on with the work of the province, culminating in the successful negotiation of the Atlantic Accord.
Those judgments, as definitive as they were for their time, were couched in language only a constitutional lawyer (and constitutional geeks like me) could love.
That puts the Halley judgment on the CNLOPB/Max Ruelokke case in a class by itself. In the end, Halley held that:
"Max Ruelokke has been the de facto Chair and CEO of the Board since the tribunal made its selection on December 5, 2005 and the Respondent is bound by the Panel's decision. The conduct of the Respondent was 'reprehensible', therefore it shall pay the Applicant his solicitor-client costs."Bad enough that the government's actions are described as reprehensible, but then Halley goes on to itemize eight distinct reasons why the province has acted in a manner he deems reprehensible. These were:
- The Respondent (government) had an opportunity to argue for the 'splitting' of the positions of Chair and CEO of the Board before the Panel was constituted but failed to do so.
- Upon receipt of the decision of the Panel the Respondent immediately took the position that it was not bound by the decision.
- The Respondent was aware that the issue of 'splitting' the positions of Chair and CEO of the Board was outside the mandate of the Panel, yet it seized on that non-binding advice as a reason for rejecting the Panel's selection of the Applicant.
- Prior to the commencement of this litigation, the Respondent refused to give the Applicant a rational explanation for its refusal to recognize him as the Chair and CEO of the Board.
- As a result of the conduct of the Respondent, the Applicant has been unemployed since March 24, 2006 and cannot obtain other employment in the petroleum industry because of the possibility of 'conflict of interest'.
- It may have been a mistake for the Respondent to promote an unqualified candidate for the position of Chair and CEO of the Board prior to the Panel's selection of the Applicant, but it was mischievous for the Respondent to continue to 'push' for his appointment after the Panel had made its decision.
- In this case, the Respondent's actions were meant 'to defer, delay and deflect' the selection decision of the Panel.
- On the whole, the Respondent has treated the Applicant with contempt and disrespect.
And just when you thought things were as bad as they could get, Halley cheerfully noted that:
"The federal government took the position that it wanted the Panel to choose 'the most capable candidate'. However, the Respondent chose to support one person and urged the Panel to select its candidate who was a long-term local politician. The Respondent's campaign to promote its candidate was 'doomed to failure' because he had neither the professional background nor the industry experience to be qualified to act as the Chair and CEO of the Board."For that unnamed unqualified candidate read Mayor Andrew Wells, the Premier's favorite for the job.
Now Williams has placed himself on the horns of a dilemma: he can either accept Ruelokke as Chair (thus tacitly accepting and admitting the harsh rebukes launched at him and his government by Justice Halley) or he can continue the fight with ultimately unsuccessful appeals to higher courts (thus delaying the issue even further and taking criticism in the process for being driven by ego rather than sound public policy).
So far thegovernment response has been an eerie silence, notwithstanding a cursory "we are studying the judgment" statement and reports of journalists being bounced back and forth between the office of the Premier and the Natural Resources minister.
So what choice of action does Williams have now? Here's my suggestion to him and this is how I would advise him if I worked up there:
"Mr. Premier, it's time to cut your losses. Your misplaced determination to install Andy Wells as Chair has caused you and this government severe legal and political embarrassment. The public perceives that this has become an issue of stubbornness on your part and wants you to move forward.Then I would run away as fast as I could to avoid personal harm in the explosion of temper that would inevitably follow.
As you previously promised, don't appeal this decision.
Instead immediately issue a press release appointing Mayor Wells to the vacant seat on the CNLOPB, and be sure to include all the usual accolades about how he will fight for the interests of all Newfoundlanders and Labradorians etc, etc, etc.
At the end include a paragraph accepting the judgement of Justice Halley and wishing Ruelokke well in his position as Chair and CEO of the CNLOPB.
Posted by Simon Lono at 5:36 PM
Sunday, August 06, 2006
Reproduced below is a piece from The Economist (if you don't already subscribe, what are you waiting for?) that's worthwhile reading. It's a brief profile of the head of ENI, a major oil company out of Italy and provides a very interesting perspective on the global oil industry and their relationship with nationalistic governments (of which Premier Williams would have to be counted as one for this discussion).
No doubt some will take this as a ray of hope for Williams' quest on forcing a Hebron deal on his terms.
Of course one significant difference is that this province doesn't actually own the resource. Under current federal-provincial arrangements, the province can stop deals, the province can allow deals but the province can't force deals. Nor can the province push a company off a license it alread holds. Recently the province has gone to the feds to get exactly those pwers.
Notwithstanding the "support" from the other Premiers announced at the recent Council of the Federation meeting, Prime Minster Harper has already made it clear that Williams should not be holding his breath.
Jul 20th 2006, From The Economist print edition
Paolo Scaroni, an Italian oilman, believes big oil companies ought to be more humble
BIG Western oil firms are like addicts in denial, says Paolo Scaroni—and he should know, because he is the boss of the sixth-biggest, the Italian oil group ENI. The oil giants are trying to do business as usual, he explains, as if nothing is wrong. Yet they are, in fact, having trouble laying their hands on their own basic product. State-owned or state-controlled national oil companies (NOCs) are sitting on as much as 90% of the world's oil and gas, and are restricting outsiders' access to it. Worse, the best NOCs are beginning to expand beyond their own frontiers and to compete with the oil majors for control over the remaining 10% of resources. The first step in overcoming this predicament, Mr Scaroni declares, is admitting that it is a problem.
Not all oil bosses do. Rex Tillerson, the head of Exxon Mobil, the biggest private oil firm, insists that his company is not short of opportunities. David O'Reilly, who runs Chevron, another oil major, points out that despite a recent spurt of nationalism in Russia and Latin America, more of the world is open to firms like his nowadays than 20 years ago. With the price of oil high and with big oil firms chalking up record profits as a result, the oil and gas business hardly looks like an industry in crisis.
Most oilmen see the long-running battle between nationalist governments and foreign oil firms over the division of oil's spoils as the natural state of the industry. When the price is low, and money scarce, foreigners are welcomed for their access to capital and their ability to eke more oil out of the ground. When the price is high, and money abundant, their skills seem less useful and their fees more extortionate. But Mr Scaroni thinks that the battle is now over, and that the oil-rich countries have won. These days, he says, NOCs are capable of developing big, readily accessible fields by themselves—with a little technological help from service companies such as Halliburton or Schlumberger where needed. Even in countries where foreign oil firms still have a part to play, since the oil is hard to get at or the NOC inept, they are seen as supplicants rather than saviours, vying for the honour of extracting local resources.
So the majors must come up with innovative ways to make themselves useful. ENI is doing just that in Congo-Brazzaville, where it has developed several offshore fields that contain a lot of oil and a little natural gas. Other firms working in the country used to extract the oil from their fields and simply burn off the gas, since there was not enough of it to justify building expensive export facilities. But ENI decided to use its gas to fuel a power plant so as to reduce Congo's frequent power cuts. Better yet, it took the country's leaders to Italy to see similar plants of its own, to prove that it knew what it was doing. Most of ENI's rivals, Mr Scaroni says, could not have done the same, since they do not run gas-fired power plants. More to the point, they are not sufficiently imaginative about endearing themselves to the governments on whose sufferance they operate.
ENI is also deep in negotiations with Gazprom, Russia's state-controlled natural-gas monopolist. For ENI to get hold of more gas to feed into its European distribution network, Mr Scaroni says, it will have to gratify Gazprom's desire to gain direct “downstream” access to customers in Italy. The deal has yet to be done—but it is clear that ENI will be offering more than the majors' normal enticements of money and expertise.
These tactics are not as new as Mr Scaroni suggests. The Italian government founded ENI after the second world war to break the oligopoly of the “Seven Sisters”—the majors of the day and the precursors of Exxon, Chevron, BP and Royal Dutch Shell. From its inception, it presented itself as a more reasonable, flexible partner than the overweening Anglo-Saxon oil firms. In its first big foreign venture, it offered Iran three-quarters of the revenue from any production there, rather than the standard half. ENI's boss at the time reportedly even floated the idea of marrying an Italian princess off to the shah to seal the deal.
Nor is ENI the only energy firm trying to ingratiate itself with oil-soaked governments and their NOCs. Wintershall, a German oil producer, and e.ON, a German utility, recently swapped shares in various downstream businesses for a stake in one of Gazprom's big gas fields. Both are also co-operating with Gazprom on a new undersea gas pipeline to western Europe, to the consternation of east European governments. Similarly, many observers contend that BP subscribed to the recent public offering of Rosneft, another Russian NOC, only because it hoped to win better treatment for its Russian ventures.
Oil and water
But Mr Scaroni takes this deference further than most. He is not at all offended, he says, by the notion that governments will increase taxes or tear up contracts to try to grab a bigger share of the proceeds of oil production when the price rises. The oil belongs to the countries concerned, he says, not to the oil firms that pump it, which must accept that they have no God-given right to the extra revenue. He does caution that governments should change existing arrangements by negotiation, not fiat. Indeed, he is in the middle of a row with the Venezuelan authorities about just that. But it is a far cry from oil bosses' usual rhetoric about the sanctity of contracts.
Then again, Mr Scaroni is a far cry from the usual oil boss. He has been in the business only a year. Instead of serving a long apprenticeship within his firm, as did his counterparts at Shell, Chevron, Exxon and BP, he moved to ENI from Enel, Italy's biggest utility, which he ran for three years after moving from Pilkington, a British glassmaker. He studied economics and management, rather than engineering. His relaxed, self-confident demeanour stands in marked contrast to the gruff, awkward bearing of many oilmen. A fitting messenger, then, for the idea that big Western oil firms need to change their ways.
Posted by Simon Lono at 1:09 PM