PCs criticize McKenna ties to NB Power deal
Last Updated: Monday, November 9, 2009 | 9:55 AM AT
CBC News
Former N.B. premier Frank McKenna offered advice to Premier Shawn Graham during the negotiations to sell NB Power to Hydro-Québec. (Gerald Herbert/Associated Press) The Opposition Progressive Conservatives are raising questions about the number of advisers linked to former premier Frank McKenna who are working on the proposed NB Power sale.
New Brunswick has entered into a proposed deal that would sell the majority of NB Power's assets to Hydro-Québec for $4.8 billion and provide an estimated $5 billion in rate savings.
The deal has been greeted by a wave of unease, but the New Brunswick government has hired two public-relations consultants with ties to the former Liberal premier to help sell the agreement with Hydro-Québec.
The lead PR consultant on the deal is Steven MacKinnon of Hill and Knowlton's Ottawa office. He once worked as Frank McKenna's executive assistant before serving as the executive director of the Liberal Party of Canada.
Hill and Knowlton has subcontracted some of the work to Colour, a New Brunswick firm run by David Hawkins, another consultant with ties to McKenna.
Tory MLA Jeannot Volpé said he is wondering how many other McKenna-era hands are at work on the NB Power deal.
"How many friends have they fed on it? How many are involved in communication? How much money are they spending on it now?" Volpé said.
The provincial government hasn't released what the consultants are billing taxpayers for their work.
McKenna's advice sought
Premier Shawn Graham has hired other McKenna-era staff as well as current associates to help with the NB Power sale. (CBC) In a recent media interview, Premier Shawn Graham said that he has been keeping McKenna informed on the NB Power deal and has been seeking his advice.
The province has indicated that McKenna is not being paid for any work on the NB Power file.
Graham said in the interview, however, that the former New Brunswick premier offered some names of people who could help lead the discussions.
Brian Levitt, a Montreal-based lawyer with the Osler law firm, has been the lead lawyer in the deal's negotiations. The firm's website indicates that Levitt is one of the country's "leading corporate governance and [mergers and acquisitions] advisers in Canada."
Levitt also sits on the TD Financial board of directors where McKenna is the chairman.
The PC Opposition is questioning the choice of Levitt, not because of his McKenna connection, but because his office is in Quebec.
Other former McKenna associates
Other McKenna-era names linked to the proposed agreement include Francis McGuire, the chairman of NB Power and former McKenna deputy minister, Maurice Robichaud, the deputy minister of Communications New Brunswick and former McKenna press secretary, and Doug Tyler and Bernard Theriault, both top advisers to Graham and former McKenna cabinet ministers.
McKenna's own record on NB Power is mixed. Hoping to run NB Power more like a business, he made the position of the utility's chairman a non-cabinet job; until then, it was a ministerial position.
A report was written in 1998 by then natural resources minister Alan Graham, father of the current premier, that said the utility's debt was too high after 20 years of building new generating stations and not raising rates high enough to pay for them.
Unfinished business
Donald Savoie, one of Canada's top public administration experts, quoted McKenna in his 2001 book Pulling Against Gravity, which explored the legacy of McKenna's economic policies, as saying that he wished he had been able to reform NB Power.
"In hindsight, I should have done more with NB Power. But we were pioneers in many, many areas and there is a risk in overloading your agenda for change. We were always pushing the envelope," McKenna was quoted.
Savoie said he understands McKenna's reluctance to overhaul NB Power considering the reforms he made in a variety of other policy areas during his decade in office.
"If you sit in the premier's chair, there are all kinds of things you want to do. You have to establish some priorities. I think Frank McKenna established his priorities, and in hindsight he did a lot of good work, frankly," Savoie said.
One of the problems with NB Power, Savoie said, is that the utility hasn't been able to run as an efficient business because premiers of all stripes have wanted to use it as a job-creation tool.
"Politicians over the past 40, 50 years have pushed and pulled NB Power in all parts of the province to do all kinds of things," Savoie said.
"It was not run as a business. It was not run as a commercial enterprise. It was used, perhaps appropriately, as an economic development tool. And it was pushed and pulled, and now we've inherited this kind of problem."
He said at least Graham has decided to do something with the utility, even if it may not be the ideal solution. Savoie has suggested reforms, such as putting a cap on how much rates could go up after the five-year freeze on residential rates ends in 2015.
