Newfoundland and Labrador Premier Danny Williams played no part in a controversial $15-million contract involving former business associates, says a review released Monday.

Auditor General John Noseworthy, who was asked by the legislature last fall to review the Crown's decision to spend $15 million on a fibre optic network that will compete with an existing Bell Aliant system, said taxpayers are getting "good value" in the deal.

Premier Danny Williams had no involvement in a contentious fibre optic deal involving business associates, an auditor general's investigation found.
(CBC)

The deal outraged opposition politicians, who said it smacked of patronage. Two of the key players in the deal had worked for Williams while he ran Cable Atlantic, before he entered politics in 2001.

"The review of documentation, including unprecedented and unrestricted access to cabinet documents, as well as formal interviews with officials, disclosed no evidence that the premier was involved in the project," Noseworthy writes in his summary.

The deal — involving Rogers Communications, Persona Communications and MTS Allstream — sparked allegations of cronyism and unfair dealing.

Dean MacDonald and Ken Marshall, former executives who worked for Williams before he sold Cable Atlantic to Rogers, are involved in the deal. MacDonald is the president and chief executive officer of Persona, while Marshall is a Rogers vice-president.

"I was delighted. We've been vindicated," Williams told reporters Monday.

Williams said the audit affirms his long-standing view that the deal was "squeaky clean" in terms of how cabinet dealt with it.

"I'm pleased that it has come out before the election was actually called, even if it's only hours before, because it would be an outstanding issue and could have been a cloud over our heads for some people in the province."

The government did not escape without criticism.

Noseworthy found that government executives violated provincial guidelines for hiring external consultants, involving a $125,000 contract awarded for work on the project.

As well, Noseworthy found that government failed to comply with the Atlantic Procurement Act, because it did not make public tenders in the Atlantic region.

However, Noseworthy found that officials acted within the Public Tender Act.

Moreover, Noseworthy determined that "the province did receive good value" for its commitment. Noseworthy noted that Newfoundland and Labrador is the only province relying on a single fibre optic system.

"There are a host of economic and non-economic benefits resulting from having a redundant fibre optic line, such as increased penetration of broadband access among businesses and households, fuller participation in medical and academic research efforts [and] improved speed of medical consultation with experts residing in other provinces," Noseworthy's report said.

Liberal Leader Gerry Reid told CBC News before he had the opportunity to read the full report that all of his questions have not been addressed.

"I still question whether the auditor general got all of the information that was required to make that judgment. Not all information is written - a lot of it is verbal," Reid said.

Reid said a fundament question that the Liberals have been raising since last fall remains on the table: why the government subsidized a deal involving large telecommunications companies.

"I also question whether this deal would have gone ahead if the individuals involved in it weren't close friends and business associates of the premier," Reid said.

The spectre of patronage fuelled opposition attacks in the legislature throughout the fall and spring.

In May, the Liberals released correspondence relating to the deal that showed senior civil servants had doubts about the project, although government ministers said the concerns were routine elements of government's review.

Indeed, Noseworthy found that the government exercised due diligence while preparing the deal.

This spring, the Liberals also released an October e-mail from a communications specialist who said an October telecommunications blackout — caused by a fire at a St. John's Bell Aliant switching station — led to more "positive spin [than] if I had of thought of orchestrating the outage myself."

Williams and his cabinet had resisted turning over government documents to Noseworthy's office, but relented under pressure from the opposition.

Meanwhile, Noseworthy reported that reviewing the fibre optic deal was unusual, in that no formal contracts had been signed when his office started its work last December. The final agreement with Persona was not reached until July.

"Therefore, we were effectively reviewing a moving target until July 2007," Noseworthy wrote.