By Jorge Barrera
APTN National News
Calls are growing for an investigation into Intergovernmental Affairs Minister Peter Penashue’s family and business ties to a multi-billion dollar project in his home riding of Labrador.
Penashue’s links to the $7.4 billion Muskrat Falls hydroelectric project have triggered questions about the Labrador MP and former Innu leader’s involvement in discussions over whether Ottawa should come through with a loan guarantee for the development.
Penashue’s brother and former business partners have already landed a contract with the project and are bidding on a second.
“If you have a company or an interest in a company that is going to bid on a contract, you have to remove yourself from the discussion,” said federal Liberal Newfoundland MP Scott Andrews, who is his party’s ethics critic. “It is something the Ethics Commissioner should look into.”
The federal government is playing an important role in the development through its decision on whether to issue a loan guarantee for the project to dam Muskrat Falls and transmit power to Nova Scotia. If the loan guarantee goes through, it is expected to save Newfoundland and Labrador hundreds of millions of dollars in borrowing costs.
During a campaign stop in the 2011 federal election, Prime Minister Stephen Harper told a St. John’s rally that if elected his government would likely issue a loan guarantee for the project.
Penashue has also commented publicly on the issue since elected and has addressed the topic of Ottawa’s pending decision on the loan-guarantee.
Penashue’s office issued an emailed statement to APTN National News stating the “loan guarantee was a campaign commitment that was made prior to both Minister Penashue’s election and his appointment to cabinet.”
The statement said that “the federal government has no role in determining which companies receive contracts through this project.”
Penashue’s office was silent on whether the minister has since been involved in discussions and did not comment on the business and family links which were outlined in APTN National News‘ email request seeking a response.
There is no straight line between Penashue and the Muskrat Falls project, but the winding path begins with his filings to the Conflict of Interest and Ethics Commissioner and flows through a company headed by his wife and a separate firm headed by two senior executives with Newfoundland and Labrador firm Pennacon.
Pennacon is in a business partnership with Penashue’s brother Max Penashue and their firm is actively pursuing and landing contracts from the Muskrat Falls project.
- According to his filing, Penashue disclosed that he has an investment in a company called Penashue Group Inc., which he jointly owns with his wife, Mary Ann Penashue.
- Penashue Group has an interest in a company called Miskus Construction, according to the filing. Newfoundland’s corporate directory lists Mary Ann Penashue as the sole director of the company.
- Miskus Construction holds an interest in Miskus Avani Construction, according to Penashue’s filing. Miskus Avani counts two of Pennacon’s senior executives, CEO Larry Puddister and senior vice-president Edward Murphy, as directors, according to Newfoundland and Labrador’s corporate database.
- Pennacon is also connected to Penashue’s brother Max Penashue through a partnership in a firm called Liannu LLP. Max Penashue holds a 51 per cent stake in the firm.
- Liannu has already landed a contract to build a 22 kilometre access road and is bidding on a second contract to construct a 1,500 person dormitory with kitchen, dining and recreation areas.
In a short telephone interview, Puddister said his business ties with Penashue were severed after the election.
“We have dissolved all business relations,” he said.
Former Labrador Liberal MP Todd Russell said the ties should be probed.
“These things definitely need to be investigated. There are very serious questions about the impartiality of the minister,” said Russell who lost to Penashue in the 2011 federal election by 79 votes. “These are serious questions about whether the minister has direct personal interest in Muskrat Falls.”
Russell is also president of NunatuKavut Community Council which has gone to Federal Court to stop the project, arguing it didn’t get a full environmental review.
Duff Conacher, founding director of watchdog group Democracy Watch, said it may be unethical for Penashue to involve himself in discussions around Muskrat Falls if he has family and business links to the project, but it wouldn’t be illegal.
“He definitely should be investigated,” said Conacher. “If he is taking part in the decision making process then what he is doing is unethical and wrong, but you also have to say it’s legal.”
Conacher said Penashue would likely be cleared of any breaches even if he was found to have ties to firms or individuals involved in the project because of the development’s massive scale. Because so many other businesses and individuals would benefit from the Musrkat Falls project, Penashue would not be found in breach of conflict of interest laws, he said.
Conacher said former prime minister Paul Martin created the loophole and the Harper government has made no moves to close it.
“Martin gutted the conflict of interest code by saying that you don’t have to avoid a conflict of interest of any kind if you are dealing with a matter of general application that affects a broad class of people,” he said. “It means the Act does not apply to 99 per cent of what ministers or senior officials do which is to make decisions that affect a broad class of people.”
Penashue’s ties to Pennacon have also come under scrutiny as a result the ongoing election spending controversy that has engulfed the former Innu leader.
Penashue received five donations from five company officials that were all registered under a postal code also used by Pennacon’s St. John’s headquarters. Three of the donations were for $1,100 and two were for $550.
The 824 megawatt project at Muskrat Falls is the first phase of the Lower Churchill development project.