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October

22, 2015

PUBLIC

ACCOUNTS COMMITTEE

The

Committee met at 9:00 a.m. in the House of Assembly Chamber.

CHAIR (Bennett):

Good morning, everyone.

I would

like to bring this meeting or this hearing to order.

We are now being followed by the recording office for Hansard purposes.

My name is Jim Bennett. I am

the Chair of the Public Accounts Committee.

This is a Public Accounts Committee hearing of the Province of

Newfoundland and Labrador.

On my

left are my colleagues, Committee members.

Mr. Hunter is Vice-Chair.

Next to him is Mr. Parsons. Next to

him is Mr. Peach. Next to him is

Mr. Cross. In the next row are Mr.

Osborne and Mr. Murphy.

The

format that we have today will be a little bit different than usual because we

will have two witnesses who will appear by teleconference.

There is nothing inappropriate about appearing by teleconference.

Two former ministers, Mr. O'Brien and Mr. McGrath, advised that due to

other commitments in travel they were not able to be here, but they would be

here by teleconference.

We will

take the morning part of the session, until the morning break, in the ordinary

course, and that will finish around 10:00 a.m. or 10:45 a.m.

Immediately after the break at 11:00 o'clock, we will have Mr. O'Brien by

teleconference. When we conclude

with him, we will take a short lunch break.

At 1:00

p.m., we will go to Mr. McGrath also by teleconference.

When we conclude with Mr. McGrath, any questions that Committee members

have that they were not able to deal with in the morning portion, they will

conclude in the afternoon portion.

Hopefully we will finalize this matter today.

These things are not predictable; however, I think that we are well

coordinated. If we stay on track,

there should be no difficulty in finalizing it today.

The

process that we follow is Committee members each have ten minutes, and it

alternates between a government member and an Opposition member.

They can ask whatever questions that they wish, as long as they are

relevant, not repetitious, and not abusive of any witnesses.

In the last four years, we have never had any issue in any event.

That is for the witnesses' familiarity.

The

procedure that we follow is more inquisitorial, rather than adversarial, so

people do not actually get cross-examined like you see on television

occasionally in court we are more like on television than you see in real

court. It is remedial because the

Committee is looking to find out what, if anything, went wrong and how it can

best be remedied for the future. So

witnesses are here voluntarily.

Nobody is subpoenaed. The House

could subpoena somebody if that was required, but everybody is here voluntarily

today.

Some

witnesses who have been here previously are already sworn, and then there are

other witnesses eight in all who have yet to be sworn or affirmed, and our

Clerk, Ms Murphy, swears the witnesses.

So I am going to ask Ms Murphy to swear the witnesses.

While

she is doing that, I will keep going in the interest of time.

Swearing of Witnesses

Mr.

Scott Barfoot

Mr.

Meade

Brown

Mr.

Noble

Mullaley

Mr.

Jones

CHAIR:

Thank you, Ms Murphy.

Mr.

O'Brien and Mr. McGrath will be sworn or affirmed when they are on the

telephone.

When

witnesses are answering questions, it is important to identify who you are.

Just speak clearly into the mic.

The mic does not amplify but it is picked up for Hansard, and by saying

your name it makes it much easier for the transcribing people to figure out who

said what.

Sometimes we have opening statements; however, in this case, because it is the

second half of an ongoing proceeding, we will dispense with any further opening

statements. It would only seem to

be repetitious.

I will

go to Mr. Osborne, if you would like to begin questions.

MR. OSBORNE:

Thank you.

first question is to Mr. Scott Barfoot. We

were informed at the previous hearing of the Public Accounts Committee that

there was involvement by communications the day following the decision to cancel

the contract. Can you tell me what

the involvement was by yourself on that day?

MR. BARFOOT:

I became aware of the decision on April 28.

MR. OSBORNE:

What was your involvement?

MR. BARFOOT:

My involvement at that time was I received a media call from CBC.

Subsequent to that, I engaged the assistant deputy minister and the

deputy minister to develop key messages.

At that time, I would have advised the minister as well of the media call

that we received. Over the next

day, or two days, we developed the messages.

The interview with CBC occurred in the afternoon of Tuesday, April 29.

MR. OSBORNE:

Okay.

So you

were not aware. We were advised

that communications were made aware the day following the decision.

MR. BARFOOT:

That is not correct.

It was Monday, April 28, when I became aware of the decision.

MR. OSBORNE:

Okay.

That

would have been a month and a half after the fact.

MR. BARFOOT:

Correct.

MR. OSBORNE:

Okay.

The

documentation and briefing notes that you had prepared at that particular point,

did you also prepare notes for the minister for the House of Assembly?

MR. BARFOOT: I

would never have prepared briefing notes.

I would have prepared key messages for the minister.

The general course of action, Mr. Osborne, would be for me

to develop the key messages in collaboration with the assistant deputy minister

and the deputy minister in this case.

We would have walked

through those messages with the minister to prepare him for that first media

interview on the afternoon of Tuesday, April 29; but I did not prepare any

briefing notes.

MR. OSBORNE:

Okay.

So you

had no prior knowledge, prior to April

MR. BARFOOT:

Twenty-eighth.

MR. OSBORNE:

Twenty-eighth, okay.

Mr.

Meade, outside of the Cabinet room you had made two appearances, I believe, on

March 13, I believe just outside the Cabinet room to speak with, at that time,

Minister McGrath. That is correct?

MR. MEADE:

That is correct.

MR. OSBORNE:

Okay.

In the

first conversation that you had with Minister McGrath can you describe that

conversation for us?

MR. MEADE:

The first conversation I

would have had with Minister McGrath outside the Cabinet room would have been

one which would have occurred after he phoned me the first time, first in the

morning, and I would have had a conversation with Gene Coleman of Humber Valley

Paving.

After

speaking to Gene Coleman, I would have gone downstairs outside the Cabinet room.

Cabinet at the time appeared to be about to convene because there was a

fair bit of milling around occurring.

I had a conversation with the minister where I shared with him the

conversation that Gary Gosse and I had had with Humber Valley Paving.

shared with him the circumstances that had been outlined to us by Humber Valley

Paving, that the company had stated they were not in a position to go back to

Labrador, that Gene Coleman had a conversation again around the compensation,

claims for compensation of the forest fire effects, but in the absence of that

they needed to find some way of getting out of the contract, because as Mr.

Coleman had stated to us pretty unequivocally, is that they did not see a way

for them to be able to go back.

In that

conversation, I shared all of that information with the minister in terms of

what Humber Valley Paving's position was.

I then stated to the minister: So, Minister, in this circumstance you

really have two we are at a fork where you have two options in front of you.

One is that we do try and find a way of mutually agreeing to terminate

the agreement; or, the other option is to call them in default.

You can

do one of two things. We could just

wait to see if they go back there.

If they do not, then we call them in default; or, we could action that now based

on the conversation by saying we could write them and then within five days if

they were not to state their intentions of going back we could declare them in

default.

The

minister's response was clear, that he wanted to work with the company.

I would state it is broadly government's perspective that we try to work

with industry. In this case, a

company that we had known for quite some time, a file that we had known for

quite some time, in particular in terms of 1-12.

He wanted to work with the company to try to find a mutually agreeable

solution to it. He clearly stated

that value to me.

With

that, I said: Well, Minister, this will require some further analysis.

I will need to engage David Jones around the legal analysis of this and

what the legal options would be, and what it could look like.

He asked me to do that, and to return upstairs and to engage with the

appropriate officials to do that.

The

other very brief conversation was then around the work that was left to do.

I indicated to him, yes, there is, that sixty kilometres would need to be

dealt with. I knew there was work

in Labrador that was about to be tendered.

We had prepared tenders. I

knew what the upcoming work was in Labrador.

I told

him the other thing I would look at, in the conversations particularly with Gary

Gosse, is what our options were around addressing the sixty kilometres in other

work. That was basically the first

conversation I had with Minister McGrath outside the Cabinet room.

MR. OSBORNE:

Okay.

Was it

your advice to him, then, to cancel the contract, or was it his request to you?

MR. MEADE:

No, there was no decision

made at that point at all. What I

did, again, was presented him the two broad options of we could declare them in

default and pursue that avenue, or we could try to find a way of mutually

agreeing to terminate the contract.

He clearly chose the latter. The

value that was placed on that was that he wanted to work with the company.

He did not want to be injurious to the company; he wanted to work with

the company. That was the value

placed on it.

returning upstairs, that was one of the options we explored.

We also still had lengthy conversations about the other options, but no

decision had been made at that point.

Clearly, the minister placed value around the process at the time of what

his desired outcome was to find a mutually agreeable solution.

MR. OSBORNE:

Okay.

In the

Auditor General's report, in reading that, it was believed you had some feeling

that this was relayed to the eighth floor and Cabinet Secretariat.

That was the reason you had not directly informed them.

Is that correct?

MR. MEADE:

Well, in order to fully give

context to that, Minister Osborne, would be to discuss the second conversation I

had with the minister. In terms of

my belief that this had been discussed with the Premier and with Cabinet, it was

a broader context of the second conversation as well.

terms of the context of the setting, I was outside a Cabinet room not once, but

twice, the context being that I had a conversation with my minister; but I also

had a call from another minister, the context being that I had asked some

questions around process and sensitivity that were answered.

With that, I felt I had enough information that led me to believe that

this, in fact, had been discussed in Cabinet and, in particular, discussed with

the Premier.

MR. OSBORNE:

Okay.

Was

there anything said that would have given you an indication or the belief that

this was discussed with the Premier or at the Cabinet table?

MR. MEADE:

For the second conversation

outside the Cabinet room, which is where there was a full exploration of options

and the clear, unequivocal direction was given to proceed with the mutual

termination of the contract, in that conversation there were a couple of things

that would have led me to believe that, in fact, if it was not discussed, it was

being discussed or was about to be discussed in Cabinet.

One

would be, again, the context. This

is a minister who has been given leave from Cabinet.

It is my understanding that he was given leave and my understanding is

that he did state to the Premier, Marshall at the time, that he was asking for

leave to deal with an issue at HVP.

When we

met outside the Cabinet room, following his direction to me his unequivocal

direction I asked two questions.

The first question I said: Okay, now that you have given me direction, do you

wish for me to move this up the line?

What we would understand, as civil servants, that it means we would

prepare notes, we would put it in the system, and that note would go into the

system for direction and/or for information.

His answer was: No, no, we do not need to do that.

Move on it now. We need to

move on it today.

The

second context that would lead me to believe it was discussed or understood is

the political sensitivity. As a

deputy minister, on a day-to-day basis we deal with complex decisions; we deal

with sensitive decisions. There is

a continuum or a spectrum around that.

Depending on the thresholds and that, you would make certain decisions

and you would follow certain processes.

In this

case again, knowing that we had explored legal options that I had given to him

and knowing that he had given clear direction, I then asked around the issue of

would you like me to put it up the line? I

raised the issue of the political sensitivity of Frank Coleman.

It was as simple as, I said, Minister, Frank Coleman I am John Q.

Public in this regard; I am hearing that he may be throwing this hat in the

ring. We, at this point in time, do

not know where Frank Coleman is with this company.

We knew that he was previously involved with the company, did not know

his status at that point, and I said I am just making you aware of that.

He told me not to worry about that.

So when

it comes to political sensitivity, in this regard, in this context of speaking

to a minister that I had a trustful, respectful relationship with, what I

assumed, what I believed was that, okay, they are aware of the political

sensitivity and they are digesting the political sensitivity.

To this day, that is what I believe.

I do

not know if that answers your question, Mr. Osborne, but that is the context

that I would have worked in that day.

CHAIR:

Mr. Hunter.

MR. HUNTER:

Pass.

CHAIR:

Mr. Parsons.

MR. K. PARSONS:

Thank you very much.

Mr.

Meade, I would like for you to explain to me the two options again.

If they defaulted, what would that mean?

How would the process work?

MR. MEADE: The

process on defaulting is there would have been a couple of sub-options there.

One was we would have just waited to see if they did go back.

When they did not go back on the date in the contract when they should

have resumed work there, we would have then declared them in default.

So we would have played a waiting game to see if they, in fact, did go

back.

The other option would have been to try to get them to act

immediately by putting in writing I could defer to Gary or to Mr. David Jones

on this, technically how it is done; but, as I recall on bonds, when you are

calling them, you do write the contractor and you allow them five days to

communicate a remedy. If in five

days they do not, then they are declared in default.

We would call the bonds. The

bonding company would become involved in assessing that situation.

That is how that option would have been exercised.

MR. K. PARSONS:

Okay.

Normally, when you default on anything like that, what is

the time frame on something like that?

Is it months, years, or how does that work, do you know?

Perhaps (inaudible)

MR. MEADE: It

depends. As the Department of

Transportation and Works we have had varying experiences around bonding

companies, but in the main, they are lengthy processes.

Bonding companies take considerable time to conduct their due diligence.

Obviously, for them it is a payout.

It is somewhat like an insurance plan, so they are going to size up what

the claim is. They would want to

speak to the contractor. They would

have spoken to the department. They

would have tried to ascertain what the true liability there would have been.

It was our belief then and I still hold this now that

in this case, I think it would have been a complicated process.

Particularly given the history of the file with the forest fires and

whatnot, and knowing that force majeure and other things could have been brought

to bear, it was our belief that calling the bonding company would, at the very

least, have been a lengthy process and would have

taken some time.

So,

yes, it does take they can vary from time to time.

There are files in the department that I understand when I was there as

deputy, where we called bonding companies are still ongoing fourteen, fifteen,

sixteen months later.

MR. K. PARSONS:

Okay.

When

you talked about compensation and working with the company, what was the gist of

the conversation? Was it they were

looking for more money, or was it what was the compensation factor they were

looking for?

MR. MEADE:

The conversation around compensation for the forest fires would have been a

conversation that had begun months before, and I am sure it has been already

testified here by others.

Eugene

Coleman made an inquiry to Gary Gosse in February as to whether the department

would be open to compensating for the damages that the forest fire cost them,

and the figure of $2 million was used.

So, as far back as February of 2014, the company clearly had incurred

costs. Knowing the situation up

there in terms of the return of liquid asphalt, camps being closed, works

removed, it was without a doubt a cost to the company.

At the time we discussed it, we saw it as

an act of God.

We did not see, as a department, getting into compensating Humber Valley

Paving for that.

It was

my belief at the time that if you had set that precedent there would be many

companies, I would think, in Lab West and Labrador in general, that would have

been impacted in some way by forest fires.

So we made the determination and the minister would have been a part of

that conversation and was aware of it that we did not think the department was

responsible for those costs. That

is it.

We did

say to Humber Valley Paving feel free to make a claim.

If you wish to make a claim you could submit it and we will look at it;

though, given that it is

an act of God, we do not feel the department is

responsible this time. A claim

never was made.

MR. K. PARSONS:

Okay.

When

you mentioned about the other tenders that were out then, you had the packages

already prepared, or were they being prepared?

How close were you on those other tenders that were ?

MR. MEADE:

We would have had a package prepared.

The exact details I know there was eighty kilometres from Goose to

Cartwright, I think there were a couple of other pieces in it, but it was a

fairly significant tender that was put together.

There was a piece around, I think, Hamilton River Road as well.

That was pretty well ready to roll.

The

thing about Labrador is that as a department, Transportation and Works was

trying to move to get tenders out early.

In Labrador, you have no other choice but to get tenders out early.

Your season is so short up there.

The mobilization of companies is logistically and financially such a

significant part of doing work up there that you have to go out early in order

for it to be truly mobilized and to take advantage of the short season.

Tenders

in Labrador were some of the first that we would have always issued.

This tender for and I guess it was 7-14, I believe is the number, I

stand to be corrected. It was a

tender that we would have had ready.

The specs would have been done and whatnot.

We would have been in the position, within a week or two, to publicly

release that tender.

MR. K. PARSONS:

Okay.

So your

conversation with Minister McGrath that morning, when you talked about the other

tender that was there, was there a rush?

Would there be a I am saying that it has to get out.

When you had the conversation, was it an option you put to Minister

McGrath at the time? Was this

something that you could say, well, we needed to get this done immediately if we

are going to put this on this? How

was the discussion with the minister on that?

MR. MEADE:

When it came to the bundling

and the fact that so when we spoke, I told him that we had looked at how we

could deal with sixty kilometres, that there was an opportunity to bundle it

with the tender that had been drawn up, that that tender had been drafted, it

had been done up, and if we were to bundle we would need to make a decision on

it.

The

bundling opportunity was there. I

stated this to the AG, and it is stated in the AG's report.

The decision need not be made that day about the bundling, but certainly,

from our view as officials, the bundling opportunity would have had to have been

exercised within a week to ten days at the most.

If we had gone beyond that, we would have pushed that tender out too

late.

With

the addition of the sixty kilometres, you just do not tack it on to the tender.

You need to go back. We

would have asked our folks in Labrador to go back and look at sixty kilometres

and how that would have been integrated into that tender.

That would take some time.

So we knew there would have been some time lost there in any event.

Certainly, the bundling window was a relatively short one.

As officials, we would have seen it as a week to ten days.

MR. K. PARSONS:

Okay.

Definitely, doing the bundling would have been a cost-saving factor also,

because to say do another tender on the sixty kilometres, like I said, would

cost a whole lot more to move in the equipment.

Obviously, the bundling thing was done financially.

Is that what you were looking at, at the time, saying this is the best

option for us?

MR. MEADE:

I think the value of getting

it done in 2014 was clearly a value placed by the minister.

In the first conversation, he placed it.

It was very clear in the second conversation that he placed a lot of

value on that, along with the value of working with the company and not being

injurious to the company. That was

clear.

From

our perspective, we did say that the bundling with 7-14 would, it was hoped,

mitigate any risk on cost. That is

why we would have suggested that.

Without a doubt, and I believe the Auditor General's report in fact, as well,

agreed with that analysis, that sixty kilometres in an isolated area of

Labrador, the mobilization, demobilization of going to do that, down the road

you would clearly pay much more for it.

From

the department's experience in knowing the economy, it is a scale that happen

with large tenders, and in this case, not only a smaller tender but the

geographic location of that tender.

Without a doubt, tendering that alone would have cost us substantially more.

MR. K. PARSONS:

Okay.

You

mentioned about working with the company; is that something the department tries

to do in some of these cases? What

is the normal procedure when you have a company come to you that is in trouble

or have some major issues with a project?

How do you ?

MR. MEADE:

I would suggest to you, as a

former Deputy Minister of Innovation, Business and Rural Development, it is

government's hope and intention that it works with industry.

In the

Department of Transportation and Works, we work with contractors.

That is how we do our work.

So whether it is on the work side in buildings, whether it is on the roadside

with road contractors and road builders I think there is a general sense in

the department that we need to work with industry in many respects, whether that

is around the way we do our work, how we do work, when we do work.

All of these conversations would have been things we would have regularly

with industry.

When it

comes to contractual issues, I believe the department has a strong track record

in working with contractors again in ensuring that the public interest is met.

At the same time, if there are unique circumstances that arise with

contractors, that they are analyzed, understood, and that we try to reach a

mutual agreement around it.

There

are many examples of how the department has done that.

One example would be Hurricane Igor.

When Hurricane Igor occurred there would have been many contractors that

would have been impacted in that part of Newfoundland and Labrador in carrying

out their work. We would have

worked with them to adjust schedules, to free them up to work with us on

emergency basis stuff. That is an

example of where you would work with industry.

There

are other examples of where we would be sitting down, I would suggest to you,

almost on a day-to-day basis in the department.

With the size of the department, the volume of contracts that the

department has, almost on a day-to-day basis officials in the department are

working with industry in the best public interest and in the interest of

industry to try to get projects done.

CHAIR:

Mr. Murphy.

MR. K. PARSONS:

Can I have just one

follow-up question?

In your

conversation that morning with Eugene Coleman, did you talk to him about working

with him, and what was the conversation?

MR. MEADE:

The conversation with Gene Coleman, the first conversation that morning with

Gene Coleman, would have been one of me gathering facts.

MR. K. PARSONS:

Okay.

MR. MEADE:

There was no commitment made by me on what option we would pursue.

It was strictly a fact-finding conversation: Eugene, what is the status

here; why do you need decisions; what is going on; et cetera, et cetera.

I tried to get a clear position from them on where they stood and what

they wanted to see as an outcome, but it was fact-finding.

MR. K. PARSONS:

Okay, thanks.

CHAIR:

Mr. Murphy.

MR. MURPHY:

Thank you, Mr. Chair.

Good

morning everybody. It is nice to

have some of you back.

Mr.

Meade, I want to ask you a question around the decision.

The decision was on March 13 that they would move on and mutually agreed

to terminate. Obviously, there

would have to be some form of legal paperwork and everything done that the

parties would have signed. When

would you have informed the legal people on that?

MR. MEADE: The

legal consultation and engagement would have occurred as soon as I came upstairs

from my first meeting with the minister outside the Cabinet room.

So at approximately 9:45-10:00 a.m. I would have come back upstairs.

As I have indicated earlier, I said to the minister I will

need to engage David Jones. David

Jones was a solicitor. While an

employee with the Department of Justice and Public Safety, he was embedded in

Transportation and Works. There is

a solicitor embedded in Transportation and Works because of the volume of legal

work that is undertaken in the department, particularly in the area of

contractual law. So when I came

back upstairs, I would have engaged David right away.

David and Gary Gosse would have been the two officials I engaged

immediately.

MR. MURPHY:

Okay.

Mr. Jones, I am just wondering about the length of time

that it takes to do up one of these decisions.

How long did it take you to do up that decision and get that signed?

MR. JONES: Mr.

Murphy, I could give you an answer in two ways.

There were two aspects of what I was involved with.

The first was, as Mr. Meade said, when he came upstairs.

I received a call I was in my office from his secretary asking me to

go to his office for a meeting. I

did not know what it was about.

That is where we discussed the general nature of the contract.

I can go into that.

If your question is about how long, once I was instructed

or received an instruction to prepare documentation to terminate a contract is

that what you are getting at?

MR. MURPHY:

Yes.

MR. JONES:

After meeting with Mr. Meade and Mr. Gosse, and giving him advice on process and

what could be done and what the options were for termination of a contract in

that particular circumstance, Mr. Meade went downstairs.

I understand he had a further meeting with Minister McGrath.

He came upstairs. That would

have been around 12:00 o'clock or so.

That is my memory.

He provided Mr. Gosse and I with advice

that a decision had been made to terminate that contract by mutual agreement and

asked us to do whatever we could to get that done as quickly as possible in that

particular instance.

pointed out to Mr. Meade that we had done this before.

Mr. Gosse and I had done this before.

The department had done it before.

In the previous year, in September 2013, there was an instance with a

company Penney Paving Limited in Labrador where we cancelled a contract by

mutual agreement. In that

particular instance, Mr. Murphy, my memory is that the contract was cancelled at

the department's request. It

related, in part, to a dispute as to the performance of that company.

Within

six or seven months of doing that, we had gone through that process before.

The process that was used was an exchange of letters with the company

setting out the fact that we wish to terminate the contract by mutual agreement.

When

Mr. Meade gave that instruction, in his presence and Mr. Gosse's, we agreed that

we talked about that particular precedent Gary Gosse would take the first

crack at drafting that letter based upon that precedent.

He went away to do that. My

memory is that he produced a very short draft of a letter, which basically said:

By mutual agreement, the parties agree to terminate this contact as of

such-and-such a date to release Humber Valley Paving from its Performance Bond

and its Labour and Materials Bond.

looked at that and said to Mr. Gosse I did not think that was adequate.

I thought there needed to be some narrative added as to the reasons why

this was being done because this story had to be at least, in some sense, in

my humble estimation put there.

So I said: Gary, look, given the timeliness of this request, I will go to your

office with you. It was around

lunchtime, so my impression was about 1:00 o'clock.

He and I worked on the scripting of that language.

I basically dictated it to him, Mr. Murphy.

He typed it on his computer.

I would say by 1:30 p.m. or 1:45 p.m. we had a draft of that particular language

generated, which we reviewed.

memory is he then went off to talk to Mr. Meade.

My understanding, though I was not there, but from what Mr. Gosse told me

when he came back, was that Mr. Meade had asked him why all the narrative was

there and he pointed out what I just did to you.

MR. MURPHY:

Yes.

MR. JONES:

I understand it was accepted

and acceptable. Later that day, Mr.

Gosse, I believe with Mr. Meade's assent and instruction, was authorized to sign

and send that letter, which is on the public record, to Eugene Coleman of Humber

Valley Paving. I would say, in

fairness, it took about an hour-and-a-half to prepare the letter that actually

effected the termination.

MR. MURPHY:

So these things can happen

fairly quickly?

MR. JONES:

Yes, Sir.

MR. MURPHY:

Okay.

Mr.

Meade, back to you, you know then at this particular time that you have a

decision to terminate the contract.

Obviously, there were going to have to be key messages and everything like that

which were going to be done up because the decision was made.

there any reason why Mr. Barfoot, for example, was not informed?

He says in his testimony here this morning he was not informed until

April 28, but the decision was made on March 13.

It was quite a space of time here.

MR. MEADE:

Communications staff is not

necessarily aware of every decision that is made in the department.

Communications staff is normally engaged when there is a sense that the

issue will be dealt with in the public domain of some type.

That could be the House, it could be in the media, or it could be

whatever.

There

are many times when communications staff and I would suggest to you,

particularly in a department of the size of Transportation and Works will get

an inquiry or will hear about an issue that they know nothing about, and they

will then go and collect that information.

Not

every decision would have necessarily the 'proactiveness' of a communications

plan around it. I would suggest to

you that, for me, the issue here was we found a legal remedy in mutually

terminating the agreement. Mr.

Jones has just testified that we had done something similar to it months

earlier. The legal options were

clear. The minister had clear

authority.

For me,

if there was a communications issue around this, it would have been the

political sensitivity of it. Again,

as per my earlier testimony, I felt that given the circumstances, the context of

being outside the Cabinet room, the questions I had asked of the minister, that

the political sensitivity was that the people who needed to be aware of it,

Cabinet, the Premier, and others who were in the room, were aware of the

political sensitivity. Not only

were they aware of it, they had digested it.

To me, that would have also included they would be aware of any potential

communications issues that would arise from it.

MR. MURPHY:

Okay.

The

reason why I am asking is because the later project involved the bundling.

Who would have been the communications staff, for example, to put out the

tender for Project 7-14? Project

7-14 was done up and released on April 19, if I have my timing right.

Who were the staff people who would have done up that tender and put that

tender out?

MR. MEADE:

Tendering documents are

issued through the tendering division and the communications staff is not

normally involved in that.

MR. MURPHY:

Communications staff does

not handle the tendering, put the tendering out, for example, putting it in the

paper or whatever is done?

MR. MEADE:

No.

There is a tendering division that their sole responsibility is the

development, dissemination, and collecting of tenders.

MR. MURPHY:

Okay.

So Mr.

Barfoot would not have been informed of that tender being reissued?

MR. MEADE:

No.

MR. MURPHY:

So he did not know anything

about it?

MR. MEADE:

Not necessarily, no.

MR. MURPHY:

A question to you, Mr.

Barfoot: Do you feel that well, not necessarily do you feel, but you have no

hands on when it comes to the issuing of tenders, that sort of thing?

MR. BARFOOT:

To build off Brent's point,

once the Tendering and Contracts Division finalizes the tenders and is on the

verge of putting them in the newspapers, communications would be given a

heads-up, at which point in time we would trigger our own communications

activities, which normally would be like a news release for a smaller tender.

For larger tenders, the transportation division might give us more of a

heads-up to say FYI, Scott; this is coming within the next couple of weeks.

We may plan a larger announcement to give some more public attention to

the tendering process kick-starting for a particular piece of work.

MR. MURPHY:

Okay.

Mr.

Meade, the process of informing the powers that be you had two meetings now

with Mr. McGrath and the decision was made.

The message then, obviously, went up the chain of command here.

I would be assuming that Ms Mullaley would have been informed, the Clerk

of the Council at the time.

MR. MEADE:

I am not sure I understand

your question. So your question is

MR. MURPHY:

Well, I am just trying to

understand when the decision was made, Mr. McGrath made the decision to make the

move to mutually agree to terminate the contract and obviously this would have

gone up well, I guess you could say that the decision could have been talked

about at the Cabinet table. That we

do not know, but obviously things were moving here and a further decision had to

be made and further steps have to be taken to inform the powers that be, I

guess, or inform the public whatever is going to happen here.

Was the Clerk informed?

MR. MEADE:

The Clerk was not informed

on March 13, no. Again, the reason

is the context that I have already explained.

So, in this case, as a deputy minister, we on a day-to-day basis are part

of decisions, with our ministers largely, that are complex and politically

sensitive. There are thresholds

that we would be working with in terms of how and when we would make those

decisions.

In this

particular case, given the circumstances of me having a call from one minister

and an interaction with my own minister, the fact that I was having the

conversations outside the Cabinet room and, again, because I asked those

questions of: Do we need to, or should we move this up the line, and are you

aware of the political sensitivity and the responses I received?

I was of the belief that this issue had been not only understood in

Cabinet but had been discussed, or would be discussed.

So, in

terms of informing the Clerk, you inform the Clerk because you need to have the

authority, you need to seek authority.

In this case, the minister had clear authority.

The minister had clear authority to make this decision.

He unequivocally exercised that authority.

So I need not to do that.

The

second would be you would go to the Clerk if you wished to inform the Premier.

Because of the circumstances of that day, that I have just stated, it was

my belief that the Premier was aware of this decision; not only aware, part of

it because it was my belief that it was discussed in Cabinet.

That is as simple as that.

So, no,

I did not notify the Clerk on March 13.

MR. MURPHY:

Okay.

CHAIR:

Mr. Peach.

MR. PEACH:

I just have a couple of

questions. Good morning everybody.

I was

just reading through it, and while you were speaking I was wondering when the

department made the decision to agree to mutually terminate the termination

with Humber Valley Paving. Was this

done by lawyers or was it done by DOT and Eugene Coleman, or who made that

decision?

MR. MEADE:

I am sorry, Mr. Peach, the

question again is?

MR. PEACH:

When you agreed to make a

mutual termination with Humber Valley Paving when you made the agreement, who

made the agreement? Was it the

lawyers for the company and DOT, or was it between Eugene Coleman and DOT?

MR. MEADE:

The letter, which is on

public record as was drafted, is already testified by David Jones and Gary Gosse

with my direction and consent in terms of the content of the letter.

So we would have drafted the termination letter.

MR. PEACH:

So that would have been made

by the department, the minister and officials, right?

MR. MEADE:

Yes, the letter was entirely

drafted by David Jones and Gary Gosse.

MR. PEACH:

Okay.

MR. MEADE:

Then that would have been

submitted to Humber Valley Paving for them to countersign.

MR. PEACH:

Okay, thanks.

There

were some discussions in the last meeting that we had around the overrun costs

for the company. What was the

reaction when DOT went back to the company and said: Look, we are not going to

uphold to this cost. We do not feel

we are responsible. What was their

reaction to that?

MR. MEADE:

Well, they obviously were I would think disappointed, but you need to speak

to the company in terms of how they felt about it.

Obviously, they continued to pursue it.

They did, obviously, incur losses.

I guess

the thing for us is, what still leaves me wondering is why they did not submit a

claim. When we went back and stated

to them that we felt

an act of God would not be the responsibility of the

department, obviously, they would be disappointed if they had inquired into

whether we would be open to that, but that would be it.

On the

day of the thirteenth, the decision was raised again.

We said: Gene, we can go down that road but you know we have already been

down it before. It is something

that we felt was

an act of God and the department was not responsible.

MR. PEACH:

Just going back to my first

question, just for clarity. You

said you drafted the letter. I

think the content of my question was, in the discussions, to come to that point

when the letter was drafted, who did the negotiations with regard to the

agreement? Was it yourself and Gene

Coleman, or was it the lawyers from the department?

MR. MEADE:

Thank you for clarifying.

I understand your question now with clarity.

Thank you.

The

negotiation, if you will, the discussions on March 13 occurred between Gene

Coleman, myself, and Gary Gosse.

Gary Gosse would have been present with me for the first phone call with Gene

Coleman, and he was present with me for the second phone call with Gene Coleman.

The

second phone call was when we would have had the general tenets of our agreement

laid out. That is where I would

have laid out to Mr. Coleman that we can find a way of mutually agreeing, but

The terms of conditions being you cannot file any claims against us, et

cetera, et cetera, et cetera. We

would want to keep the warranty in place and whatnot.

That would have been done between Gary Gosse and I, and Gene Coleman.

MR. PEACH:

Okay.

I have

one other question here. The option

of assigning the contracts for Project 1-12 to a third party; was this done by

the department or was this done through Gene Coleman and the third party?

MR. MEADE:

What is the contract number you have quoted, Mr. Peach?

MR. PEACH:

One to twelve, that was the

contract for the completion of the contract, I guess.

It says there Project 1-12.

MR. MEADE:

Okay, I am sorry.

So 1-12 is the contract that we are talking about here, and your question

is ?

MR. PEACH:

It says there, The option

of assigning the contract for Project 1-12 to a third party contractor for

completion. While this would be a

business-to-business arrangement outside the control of the Department, there is

no evidence that HVP was asked if this is an option they could pursue.

I am just wondering if they did the negotiating with the third party to

get this contract finished.

MR. MEADE:

The assignment is a

business-to-business deal. As we

know, the record now shows that they did have another contract with us at the

time, 55-13. Subsequent to 1-12

being mutually terminated, they did come back after and seek that to be

assigned.

Assignment is initiated by the company.

A company comes forward.

Transportation and Works has facilitated assignment of contracts before, but it

is done through companies.

Companies will come forward and say we would like to assign this contract to

company A.

In this

particular case, assignment was not raised by Humber Valley Paving.

So, again, it would be initiated we did not initiate it.

Our analysis would be that it would be a very difficult piece to assign.

Given its isolation, given the percentage of work that had already been

complete, over 60 per cent of it, that it was not viable.

We did not see how it would be viable as an assignment in any event.

So assignment was not pursued as an option.

MR. PEACH:

So it didn't happen?

MR. MEADE:

Assignment of 1-12 did not

happen, no.

MR. PEACH:

Okay.

MR. MEADE:

Project 1-12 was mutually

terminated.

MR. PEACH:

It was not work that was

subcontracted out or anything, was it?

MR. MEADE:

No.

MR. PEACH:

Okay.

That is

all I had, Mr. Chair.

CHAIR:

Thank you.

Mr.

Osborne.

MR. OSBORNE:

Mr. Meade, you have

testified that it was your belief that Cabinet and the Premier knew of what was

happening with Humber Valley Paving.

This is important, because a deputy minister, as you know, is appointed

by the Premier and is responsible to report to the Premier and to Executive

Council. In this particular case,

you did not report to the Premier, you did not report to Executive Council.

That was because you say you believed it was discussed inside of Cabinet.

Was it

just a belief or was there more than just a belief?

Was there any verbal indication by then Minister McGrath that this would

have been discussed inside the Cabinet room, that other ministers were aware of

it, or that the Premier was aware of this?

MR. MEADE:

Again, the spectrum of

complex, sensitive decisions and as a deputy minister, we work with ministers.

The Premier is the first minister.

He creates a Cabinet. He

creates ministers. He then works

with the Clerk in the appointing of deputy ministers who will work with those

ministers. When we are given issues

or decisions to make, we create options.

We create fearless advice for our ministers.

They give direction. If it

is within their authority, they give direction, and we then loyally implement

those.

In this

particular case, options were presented.

They were all legally sound and they would have been rational options in

my belief. The minister placed

value around certain things and then led to making an unequivocal decision and

then directing us to pursue that.

He had the authority to do that.

respectful and trusted relationship on March 13 was with Nick McGrath.

As a deputy minister, my respectful and trusted relationship was with my

minister, twice: once on the margins of Cabinet; the second time on him taking

leave from Cabinet, again with my understanding that the Premier knew he had

leave to deal with an HVP issue. My

exploration with him of those options, his unequivocal direction, his response

to my two questions around do I need to move this up the line, no; the political

sensitivity, do not worry about it; I felt that I had enough information given

to me that this was clearly understood, being digested, and processed in that

Cabinet room.

That is

the way that they unfolded. That is

the assumption I made. That is

where it is, Mr. Osborne.

MR. OSBORNE:

Okay.

This is

important in getting to the nucleus of because this was a very politically

sensitive issue, as you have outlined.

I mean, I understand that you had a trusted and respectful relationship

with Minister McGrath, but your obligation was to report to Cabinet Secretariat.

Is that a correct statement?

MR. MEADE:

I do not know if I would use

the word obligation. We go to

Cabinet Secretariat, to the Clerk again, back to my earlier point if we feel

we need authority, we do not have authority, we are seeking authority; and

secondly, in particular, because you want to raise something with the Premier.

That is when you would engage the Clerk.

In my experience, you would call the Clerk to raise a matter that you

feel is important for the Premier's office to be aware of either to be aware

of, or to seek direction on.

In this

case, again, what I have already stated, it was my belief that the Premier was

aware of the decision and was part of it.

I mean, obviously, Mr. Osborne, hindsight is 20/20, and the perversity of

this situation is that it was so politically sensitive that to this day I cannot

fathom the fact it was not discussed in Cabinet.

If I had my time back I mean, obviously in hindsight, 20/20, if I knew

then what I know now, I would have known that the Premier was not in the loop

and I would have clearly made contact with the Clerk; but, because it was my

belief that the Premier was not only aware but was digesting and part of the

discussion, again, in Cabinet and again back to the responses that Minister

McGrath would have given me, I felt that I exercised the best judgement I could

that day with the information I had, and therefore would not have seen the need

to go any further than what my minister was clearly directing me to do.

MR. OSBORNE:

Okay.

I once

sat at the Cabinet table. I know

that the deputy is appointed by the Premier and reports to the Clerk of

Executive Council, correct?

MR. MEADE:

In our system, as I have stated, the Premier does appoint deputy ministers

they are Lieutenant Governor in Council appointments.

He or she appoints ministers.

Deputy ministers, in our system that has evolved over time, work with

ministers. Ministers are agents of

the Premier, in many respects, and it is through ministers that it is reported

back into the Cabinet system.

I would

suggest to you that having respectful trust relationships with ministers is also

a critical element of this, and the way our system has evolved is that deputy

ministers do report to and work for ministers.

Again, in the context of this, I had the belief, based on the respectful

trust relationship I had with Minister McGrath, and again, back to the context

and environment of the margins of Cabinet and all of that, and a second minister

calling me, that the minister had carried out his responsibility and had made

the Premier aware.

MR. OSBORNE:

So you had no responsibility

or obligation to report to the Clerk of Executive Council or to the Premier on a

very politically sensitive issue.

Is that what you are saying?

MR. MEADE:

That is not what I am

saying. I am saying I would if I

knew that the Premier was not aware of it.

In this case, because I was working with the minister and, again, in the

context of the Cabinet meeting, I thought that political checklist, if I shall

put it that way, was being carried out and done.

MR. OSBORNE:

Okay.

Was it

just an assumption or was there more than an assumption for you to believe that

the Premier and Cabinet were aware?

We are now being told or led to believe that this was not discussed inside of

Cabinet.

I find

that difficult to believe as well.

I mean, a minister excuses himself from Cabinet to discuss a very politically

sensitive issue literally on the day before the former head of Humber Valley

Paving was about to become the head of government the head of the PC Party and

ultimately the head of government, the Premier of the Province.

So this was a very politically sensitive issue.

I find it difficult to believe myself that it was not discussed inside of

Cabinet.

Did you

operate on an assumption that it was discussed inside of Cabinet and that the

minister had informed other ministers and the Premier, or was there more than

just an assumption?

MR. MEADE:

I would have made an

assumption that it was discussed in Cabinet largely around two things; one is

because it was happening around Cabinet.

The minister had leave from Cabinet.

From my understanding, he was given leave to deal with an issue at HVP.

The second would be the questions that I asked him, following his

direction.

questions were intended to get at two things.

Okay, so now you have given direction.

He had authority to give that direction.

That was clear. His

direction was unequivocal.

I asked

two questions; the first is, okay, now that you have given me direction and made

a decision, would you like to move this up the line?

Which would have been move it up the line, contact the Clerk, submit a

note, whatever form that would be.

The response was no, fine, proceed, which leads me to believe that he would

have, as a minister, understood the process and said no, that has been done.

That has been dealt with.

The

second would have been the political sensitivity, which as a deputy, we work in

the political arena and we identify from time to time political sensitivities.

I think it is our responsibility to make ministers aware of them, of

those political sensitivities, and to ensure that those political sensitivities

are being digested and processed and that is what our responsibility would be.

Again, based on that second question and the response, it was obvious to

me that he felt that it was.

MR. OSBORNE:

Okay.

It was

obvious to you that the minister felt that this was politically sensitive, or

understood that this was politically sensitive.

I am trying to wrap my head around your understanding of your role.

Is your first responsibility to your minister, or to report to the

Premier or the Clerk of Executive Council when something as politically

sensitive as this decision is about to unfold?

MR. MEADE:

My responsibility is to the

minister that I was serving, in a respectful relationship, who gave me

direction. That said, I still feel

I exercised my due diligence in asking him the two questions of do I need to

move this up the line; should we move this up the line.

The second of okay, you are aware there is a heightened political

sensitivity around this, I have raised the awareness of it; given the response,

it was obvious to me that not only was he aware of it, that they seemed to be

processing that. That is what I

feel my responsibility is.

Again,

Mr. Osborne, it is because the minister is also responsible to the Premier, in

this case making the assumption that it was being discussed in Cabinet, that I

did not need to question him to say based on those conversations around where

I assumed, based on those conversations as I have said, obviously, hindsight

is 20/20. Knowing what I know now,

I would have done things differently; but, at the time, based on the

information, the way I drew it out, the questions I asked, I felt I made a

judgement call that was the best I could make in that situation.

Obviously again, knowing what I know now, would I do things differently, knowing

that the Premier did not know I mean, if I had any inkling the Premier did not

know any inkling clearly, I would have pursued other things, including

contacting the Clerk.

CHAIR:

Mr. Cross.

MR. CROSS:

Just a couple of questions

that I need to sort of follow up on.

We understand all the context of the meetings and decisions, and who

made, who called, and who assumed.

There are many assumptions here and we may never know everything that happened

because we cannot repeat everything.

Most of

what the public is concerned about was the expenditure of the money.

The people I still talk to still have a perception that by releasing the

bond and cancelling the contract, we gave Humber Valley $20 million.

Now, I would like again just to put out and probably from Mr. Meade's

point of view, the question was sort of asked in previous times what actually

was paid to Humber Valley? What did

we relieve them of? What is the

full deal on the breadth of this contract?

MR. MEADE:

Humber Valley Paving and I

would leave, if need be, to Mr. Gosse in particular to speak to the details.

My recollection is that they did approximately 60 per cent to 61 per cent

of the work and they were paid for 60 per cent to 61 per cent of the work.

I think it was approximately $11 million they were paid.

Humber Valley Paving would have been paid for what they did.

That is it.

mutually terminating the contract what we would have done is there would have

been two bonds that would have been released; the Performance Bond would have

been released. That would have been

our concern because a Performance Bond is to ensure that the work is carried

out. The second is the Labour and

Materials Bond would have been released.

So you

are right, while there was some public discourse that suggested there was money

moving around and all of that, it is not in fact the case.

What would have occurred is in cancelling the contract and we had

lengthy discussions about this.

When we were looking at the mutual termination, the bonds go with the contract.

If you mutually terminate a contract, the bonds as well go.

I do not know if that answers your question, Mr. Cross.

MR. CROSS:

Okay.

connection to that and we asked many questions the last time around to Mr.

Gosse about the benefit of the decision of time that was made at that time with

mobilization and bringing in extra crews.

The fact that the bundling was there, then the apparent decision had to

be made close to that time or else you would have lost that ability to bundle

and do these other things.

That I

guess in a question: Are there any other options that could have been

considered, other than what we have seen and what was presented here?

MR. MEADE:

No, I think the Auditor

General's report lays out the four options, of which we looked at three of

them would have been discussed.

Really, your options here are those that are articulated in the AG's report:

either assignment; declare default; look into some type of compensation process;

or to mutually terminate. Those are

really your options.

MR. CROSS:

Okay.

With

that in place, and these are the options, these are the directions that need to

be taken at that point in time, there was one other question that was presented

to hon. Minister Brazil from our Committee after.

The question is there; there was no evidence in two occasions I think

the Auditor General said there was no documentary evidence of any influence

here. So, we are here, we look

back, and the question is: Are you aware or did you feel there was any undue

influence on the minister to make that decision at that time, or it was clearly

his decision, simple?

MR. MEADE:

I have no evidence of undue influence in terms of the legal

interpretation or

definition of undue influence. I

was not aware of any undue influence, no.

MR. CROSS:

Okay.

CHAIR:

Mr. Murphy.

MR. MURPHY:

Thank you, Mr. Chair.

Mr.

Meade, you mentioned on the morning of that there were two meetings.

The first meeting was initially over w, well, in the Cabinet sitting

somewhere, people milling about. At

the first meeting around 9:45 a.m. the discussion happened around the problems

with the contract and the options were going to be talked about.

Did anything else happen there that might have given you the hint that

Mr. McGrath was going to be talking about this around the Cabinet table and that

he would come back to you with an answer as regards to what sort of decision

might come out of Cabinet?

MR. MEADE:

No, there would not have been any comments or discussion that would have led me

to that. The only thing that was

clear to me was the urgency of us doing the work which, again, would feed into

the context of Cabinet is convening, Cabinet is meeting today, and he wanted

some urgency in us to do some further analysis.

So that would be the extent of it.

MR. MURPHY:

So Mr. McGrath knew that

there was an issue and he was asking you to deal with it?

MR. MEADE:

Yes.

MR. MURPHY:

Okay.

He did

express the urgency of the matter?

MR. MEADE:

Yes, he expressed the

urgency, because the first contact with Minister McGrath on March 13 was at

approximately 8:45 o'clock when he phoned me.

MR. MURPHY:

Yes.

MR. MEADE:

It was clear then that he was aware of an issue with HVP, wanted us to

investigate that, and to do it in an expedient manner.

Which then, of course, the sequence being we did call Eugene.

I went to see the minister on the margins of Cabinet as it was convening.

Then the next time I would have seen the minister was a little bit later

in the morning when I would have laid out more fully the options.

MR. MURPHY:

So that was after the 9:45

o'clock meeting?

MR. MEADE:

I had two meetings with the minister.

MR. MURPHY:

Right; outside of the phone

call, of course.

MR. MEADE:

Outside of the phone call.

MR. MURPHY:

Okay.

So at

the second meeting, how much time was between the first and second meeting?

MR. MEADE:

If I recall, it was probably a couple of hours.

MR. MURPHY:

Okay.

So there would have been time for a discussion, possibly, to have

occurred around the Cabinet table at that particular time?

MR. MEADE:

I suppose so, yes.

MR. MURPHY:

Okay.

So the minister came out then the second time.

MR. MEADE:

Yes.

MR. MURPHY:

You met the second time.

Was the Cabinet meeting still going on?

MR. MEADE:

Yes, it was.

MR. MURPHY:

It was still going on?

MR. MEADE:

Yes. He had leave from Cabinet.

MR. MURPHY:

So this was the second time

now that he had leave from the Cabinet table?

MR. MEADE:

The first time, I do not believe Cabinet was technically convened.

I think it was about to convene the first time.

MR. MURPHY:

Okay.

MR. MEADE:

I do not think they had actually begun their Cabinet meeting.

MR. MURPHY:

Okay.

So there were other Cabinet ministers milling about and

MR. MEADE:

Yes.

MR. MURPHY:

obviously, possibly some

communications staff or constituency assistants or whoever, besides Cabinet

people.

MR. MEADE: I

cannot recall exactly who was around, but I believe at that point Cabinet was

commencing at 10:00 o'clock and this would have been ten or fifteen minutes

before. Usually for Cabinet, they

may have a bit of breakfast or something beforehand.

So they were kind of milling.

MR. MURPHY:

Okay.

MR. MEADE: I

remember the milling. I remember

that it was obvious that Cabinet was about to convene.

MR. MURPHY:

Okay.

So the

second time then he comes out, the Cabinet meeting is still ongoing.

What did he tell you?

MR. MEADE:

The second time was when I would have had some further discussions, obviously,

with Gary Gosse and with David Jones.

We had more clearly laid out the options, which is what I did.

So I reiterated the options; reiterated again the option that we could

declare them in default and whatnot.

That

said, the values that he placed clearly on the conversation of, work with the

company to ensure that we could see if the sixty kilometres could be done in

2014, led me to more fully explain that option to him of what that could look

like. So I would have explained how

mutual termination could occur. Our

view was that if we were to do it, we would try to hold us harmless from any

other claims they could make, knowing this was a file that we had known for

quite some time and that there had been conversations about wanting to be

compensated for losses, that we would build that in.

I spoke

to him about the bundling with the other tender 7-14 and that we felt that was a

way of, at the very least, minimizing the costs here.

By doing so, we create the economies of scale.

At that time we had hoped it would mean that we could get it done in

That is

when he would have given his unequivocal direction of that is the option he

wished to pursue. That is when that

would have occurred. That is also

the time when I would have asked those two questions that we have spoken about.

MR. MURPHY:

Did he mention at that

particular time at the second meeting when obviously they had to talk about

the options. He talked about the

options before the second meeting?

MR. MEADE:

He would have been aware

between the first and second meeting out he would have been aware.

At the first meeting, he was aware of broadly the two options of declare

them in default, or try and find a way of mutually agreeing to terminating the

contract.

MR. MURPHY:

After the first meeting, he

did not render a decision to you on the options.

MR. MEADE:

No, he placed value on them,

though.

MR. MURPHY:

Right.

MR. MEADE:

Right.

MR. MURPHY:

It was after the second

meeting, so he obviously had time to discuss it with his counterparts around

Cabinet if that option was there.

We still do not know if that happened, but he came back and he rendered a

decision to you then to go ahead and mutually terminate the contract.

MR. MEADE:

That is right.

MR. MURPHY:

Okay.

Before

the Cabinet meeting started, did you see who was there?

Which ministers were there?

Obviously a Cabinet meeting is going to be the full Cabinet and Premier.

MR. MEADE:

I honestly cannot recall,

Mr. Murphy, who had been there.

MR. MURPHY:

Okay.

MR. MEADE:

I just remember they were

milling; they were starting to convene.

MR. MURPHY:

Okay.

So now

the decision has been made by the minister.

What direction did he give to you outside of the known process now?

Obviously the decision to go ahead involved drawing up the legal

paperwork and everything. What time

of the day was it that you informed them to get that done?

That was around 12:00 o'clock.

Am I right on that? It was

around (inaudible).

MR. MEADE:

After he had given the

direction and stated he wanted it to proceed that day because that would have

been really, I guess, the third point.

It would have been a point of do you want to send a blind political

sensitivity. The third point is do

you want this done today, and the answer being yes, I would have gone back

upstairs and I would have convened Gary Gosse and David Jones again.

That is when I said to them the minister's direction is clear.

This is the option we are going to pursue.

David,

you have suggested the letters, the format.

I asked for you to please, start drafting that; between the both of you

to start drafting that letter. Gary

and I then called Gene Coleman and stated to him: Gene, further to our

discussion this morning, we have had some discussions internally with the

minister. We are prepared to

consider mutual termination of this contract with the following conditions and

the conditions would have been what is stated in the letter not that you

cannot come after us for claims on the forest fire, et cetera, et cetera.

Gene

expressed an openness and said, that sounds reasonable but I would like to see

it in writing, obviously. We said

we were working on drafting something up, and that is where that conversation

ended up. So, then later that

afternoon, as Mr. Jones has already testified, the letter would have been

drafted, I would have reviewed it, and then it would have been sent out just

after 4:00 o'clock. It would have

been sent by Gary.

MR. MURPHY:

Okay.

So you did not have any communications staff review that letter or

anything like that?

MR. MEADE:

No, and communications staff normally would not review contractual work, not

work that David Jones would be doing.

MR. MURPHY:

Okay, but at 12:00 o'clock

we knew I think that was the time Mr. Jones mentioned earlier, that the

decision was made to write up the letter.

I think the process started around 12:00 o'clock.

Am I right on that?

MR. MEADE:

Yes, approximately, yes.

MR. MURPHY:

Okay.

At that

particular point in time we have what could be an issue, and was a politically

sensitive issue, that the message had to get out to Cabinet or the Premier or

somebody, that this issue was probably going to be coming up.

This, to me, would be borderline crisis in communications.

I think it could be that you would have a crisis situation here on your

hands or the potential of.

Were

there any communications people who would have been informed then about the

potential of messaging that has to come out from that?

That would have been done by Mr. Barfoot?

MR. BARFOOT: As

I indicated earlier, and as Brent pointed out, communications people are engaged

by departmental officials and senior executive on some matters, but they use it

at their discretion. At this

particular time I was not engaged until April 28

in response to a CBC media

query that we received.

provide you a little bit of a context as to what our next steps were from that,

myself and the ADM and the deputy minister, and later with Mr. Jones, just to

make sure that everything was correct from his perspective, developed key

messages and questions and answers, and we started the process of briefing the

minister and preparing him for an interview, which we knew would generate

attention.

CBC

came by our offices on Tuesday afternoon; that would be April 29.

We did a fairly lengthy interview; it was about an hour.

The story sorry, I apologize; a CBC reporter followed back up with me

again on April 30, which was the Wednesday, looking for a little bit more

information, just to fact check to clarify some things, which we provided fairly

quickly, and the story aired on Wednesday, April 30.

The

minister went onto a call-in radio program that evening as well.

The process of communicating the decision happened in response to the CBC

media query at the end of April.

CHAIR:

Mr. Hunter.

Mr.

Parsons.

MR. K. PARSONS:

Mr. Meade, I just want to go

back to your conversations with Minister McGrath that morning.

At any time did he indicate that the Premier was aware?

MR. MEADE:

Not explicitly, no.

MR. K. PARSONS:

Did he say that this was

discussed in Cabinet and

MR. MEADE:

No, not explicitly, other

than again what I have already testified in that I understood he had leave from

Cabinet. Again, the context being

that he was in Cabinet; he was in and out of Cabinet.

MR. K. PARSONS:

Have you gone to the Cabinet

room any other time ever to have a conversation with a minister?

MR. MEADE:

Yes, many times.

MR. K. PARSONS:

That is the normal procedure

that when you need to speak to the minister not only in your department but,

say, in other departments you could assume that the deputy minister would

probably go down and have a conversation or

MR. MEADE:

Yes.

I would suggest to you that it is common practice that ministers would

from time to time call their senior officials outside the Cabinet room to

discuss any number of matters.

MR. K. PARSONS:

Okay, so that is something

that normally happens. It is not

something that is new that all of a sudden you get up from the Cabinet table and

everyone is saying where are you going to; it is something that is commonly

done.

MR. MEADE:

I cannot comment on the

protocol or practice in the Cabinet room for ministers, but it is my

understanding that ministers do frequently take leave.

My understanding is, in respect to the Premier as Chair of that meeting

and as Premier, that they would seek that leave and receive permission for that

leave from the Premier in order to leave the room.

MR. K. PARSONS:

So there is no way of

knowing if Minister McGrath got up and actually said he is going out to talk to

you about Humber Valley Paving. It

is just that just you assumed that, right?

MR. MEADE:

No, I did not assume that. I have

asked Minister McGrath explicitly, pointedly, when he left the room was the

Premier aware of the purpose for his leave.

He has advised me that he told then Premier Marshall that he was seeking

leave to deal with a matter with Humber Valley Paving.

MR. K. PARSONS:

Okay.

That is

all I have.

CHAIR:

That was very short.

So maybe we will go to Mr. Peach.

MR. PEACH:

I have no questions right

now.

CHAIR:

Mr. Cross.

Mr.

Murphy.

MR. MURPHY:

I think Mr. Osborne

CHAIR:

Sorry about that.

You are right.

Mr.

Osborne.

MR. OSBORNE:

I am just going to harp on

this a little longer, Mr. Meade, and then I will move on to another line of

questioning.

In the

Auditor General's report, one of the findings there: as the head of the

department, the deputy minister is responsible for ensuring the appropriate

information is forwarded to the Clerk of Executive Council who would then

provide it to the Premier's office for information or decision, as the case may

be.

One of

the recommendations is: Departments should ensure that normal protocols are

followed when dealing with sensitive matters.

Deputy Ministers should not assume that a Minister will convey sensitive

information in a timely manner.

We do

know that it is a responsibility of the deputy to ensure that this is brought

up. I know in the previous Public

Accounts meeting of September 9, in a question to the current deputy minister I

said, A deputy minister is appointed by the Premier and answers to the Clerk of

Executive Council. The normal

course of action for a deputy minister because what happened here was

exceptional. The normal course of

action would be for a deputy to inform the Clerk of Executive Council,

especially with a situation as sensitive as this .

Just

knowing how the process is supposed to work and the obligation Ms Companion,

you are now deputy minister, so you are aware of that obligation to report to

the Clerk of Executive Council.

Her response was: Absolutely.

I then

went on to say, I am finding it difficult to rationalize why a deputy minister

who is obligated to report to the Clerk of Executive Council, who had informed

the minister that this was a sensitive issue as you did the deputy

minister knew this was a sensitive issue.

Obviously, the minister knew it was a sensitive issue; yet, the deputy

did not inform the Clerk of Executive Council or the Premier's office.

Ultimately, the deputy is responsible to the Clerk of Executive Council

and to the Premier. On something so

sensitive, why would that integral piece of the puzzle be missing?

The

response from the current deputy, The only thing I can offer is if the deputy

minister would have thought that the Premier's office or the Clerk had been

involved in the discussion or had been informed by the minister.

In our normal course of business, deputy ministers definitely advise the

Clerk of sensitive issues that need to be brought to the attention of the

Premier's office.

Mr.

Meade, I just want to go back. I

need to understand for myself and I think the people of the Province need to

understand as well. Was this simply

an assumption, or did you have more concrete information to indicate that this

issue was being discussed at the Cabinet table?

MR. MEADE:

Mr. Osborne, I testified on

this question and it is very similar to your earlier question.

Again, it was based on the context and the conversation that I had with

Minister McGrath on March 13. The

context again being that it was outside the Cabinet meeting, that he had leave

from Cabinet as I understand, with the understanding of the Premier to deal with

an issue on HVP, and that he exercise his authority.

There

is no doubt that Minister McGrath had authority to exercise this.

In response to my two questions around whether we should move this up the

line and the political sensitivity of this, his response was one that led me to

believe that this was dealt with, yes.

MR. OSBORNE:

You are aware, Mr. Meade,

that Mr. Coleman was about to become the Leader of the Progressive Conservative

Party, were you?

MR. MEADE:

Yes and again, that was the

second point I made to the minister.

My recollection of the way I put it to him was: Minister, I am John Q.

Public, like everybody else, and hearing that Frank Coleman may be throwing his

hat into the ring in elected official capacity.

I said: We do not know where Frank Coleman is with this company right

now.

He was

a president at some point. Whether

he still is, we do not know. We are

dealing with Gene. I just want to

make you aware that we have not looked at where Frank Coleman is on this, but

you need to be aware that we have highlighted that as an issue obviously.

So yes, I was very aware.

MR. OSBORNE:

Okay.

This

decision was obviously made with a great deal of haste.

It was literally from the morning that the issue had come to your

attention, I think it was 8:45 in the morning you received the call from

Minister McGrath. Is that correct?

MR. MEADE:

That is correct.

MR. OSBORNE:

Okay.

So just

before Cabinet, he had asked you to come outside the Cabinet room to discuss the

issue with him. Then he had called

you later that morning if memory serves me correctly, it was shortly after

11:00 or thereabouts that you were called to come back to the Cabinet room

again.

MR. MEADE:

Yes.

MR. OSBORNE:

Again, I understand your

position because I find it very difficult to believe that this would not have

been discussed inside the Cabinet room, especially with the minister having been

excused from the Cabinet room to discuss this very issue on the eve of Mr.

Coleman becoming acclaimed as the or putting his name in the race to become

the Leader of the Progressive Conservative Party.

I guess

with the decision made so quickly, in less than four hours to cancel the

contract, I understand that there was no paperwork.

The normal course of action are decision notes or briefing notes that

weigh the pros and cons of a decision of this magnitude, especially a very

politically sensitive issue. I

understand there were no briefing notes that morning because of the haste.

There were no decision notes, but there was no paper trail for a full

month-and-a-half later. Why?

MR. MEADE:

There would have been a

paper trail. The paper trail on the

file would have been the mutual termination letter.

That is the way it would have been exercised on March 13.

MR. OSBORNE:

That was a letter directly

to Humber Valley Paving.

MR. MEADE:

Right.

MR. OSBORNE:

Within the structure of

government, the ordinary course of business would be decision notes, briefing

notes, evaluations. Is that

correct?

MR. MEADE:

Ideally, yes, you would

normally do that, and I know that my colleague who testified last time said that

those are the tools that we use. In

this case, there would have been no decision notes sent after the thirteenth

because the decision was made, so that would not have been necessary to send a

decision note. There was no

information note sent because you would send information notes with the

understanding that you are trying to make the Premier's office, in particular,

aware of an issue. Again, it was my

belief that the Premier's office was not only aware, they were processing and

part of the discussion.

The

third point I would make is I am aware of those tools because I, in fact, asked

the minister if he wanted me to generate one.

By asking would you like this to be moved up the line, would you like me

to put something together, and the answer being no; that, from where I sit, is

recognition that I understand the processes that you could undertake, but I also

understand that the minister exercises authority.

MR. OSBORNE:

So for a full

month-and-a-half there is nothing on paper until there was a briefing note

prepared for the Premier's office a month-and-a-half later?

MR. MEADE:

The first note would have been developed on April 28.

MR. OSBORNE:

Okay.

I have

a question for Milly Brown. When

did you become aware of this issue?

MS BROWN:

I became aware of it on April 29.

MR. OSBORNE:

That is the first time there

was any discussion, whether in writing or verbally, that you had become aware of

this issue?

MS BROWN:

That is correct.

MR. OSBORNE:

Okay.

within the department actually, I want to go back for a second, you received a

call at 8:45 a.m. from Minister McGrath.

Can you tell me what was discussed, what he had raised, and your

responses in that particular phone call?

MR. MEADE: The

8:45 a.m. call was one where Minister McGrath contacted me and the conversation

went along the lines of: Brent, are you hearing anything about Humber Valley

Paving? I said: In what context,

Minister? He said: Well, they want

out of the contract in Labrador.

I said: Well, Minister, I am not aware of that.

As you know, we have had issues with this file and as you know, they have

made representation to the department that we should consider claims, though

they have never submitted them; but I am not aware of any conversations or

desire for them to get out of that contract.

So that is the first I have heard of that.

He said: Well, it is my understanding they want to.

I said: Well, Minister, in order for me to get to this, we need to get to

the company, obviously. So would

you like for me to contact the company and to talk through this with the

company? He said: Please.

I said: Does this need to be dealt with today, because my calendar that

morning actually had me out of the office?

He said: Yes, I want it dealt with immediately.

I said: Okay. So I had to

clear my calendar and that is when I said: Okay, we will get Eugene on the phone

and we will try and see what is going on here.

That is when I subsequently would have gotten Gary Gosse to

come in and both of us would have called Gene Coleman.

MR. OSBORNE:

Okay.

A little more than a half hour later you received a call

from Minister O'Brien. Can you let

us know what Minister O'Brien had said to you and your response back to him?

MR. MEADE: The

call from Minister O'Brien came and

Minister O'Brien said:

Brent, are you aware of Humber Valley Paving and some issues with their

contract? I said: I am, Minister

O'Brien; and, in fact, I am dealing with my minister on it, I have already

spoken to my minister on it, and we are looking at it.

He said: Good, good, good, thank you very much.

That was basically the extent of the conversation.

MR. OSBORNE:

It is somewhat unusual for a

deputy of one department to receive a call from a minister of another department

and delve into an issue. Is that

correct?

MR. MEADE:

Normally, they would do it through ministers, yes, and I raised it with my

minister when I saw him that, just so you know, I received a call from Minister

O'Brien on this. Minister O'Brien

is a minister, I will say this, that when he was in government as a minster

frequently called deputies. He was

one of those ministers who did that, and would call on particular files.

Transportation and Works I know we had a couple of schools on the go out in

Central, out in Gander area, that he would frequently call us directly on.

In the main, yes, it is usually ministers work through ministers in those

conversations. In this case I

cannot speak for Minister O'Brien I will say I did find it a bit odd that he

would call me on a file that I could not, at that point in time, in all honesty

make a connection to him on.

I know

subsequently he has testified that he called because of his role in Fire and

Emergency Services, but on that day that was not apparent to me.

The conversation was pretty well as long as I just cited.

It was: Are you aware of HVP and their contract issues?

I said: Yes, I am speaking to the minister.

Good, good, thank you very much.

MR. OSBORNE:

Okay.

There

was no mention of the fires in Labrador at that time?

MR. MEADE:

Not in the conversation I had with Minister O'Brien, no, he did not

MR. OSBORNE:

No concern raised?

MR. MEADE:

His intent for the call was not clear to me, nor was it stated.

MR. OSBORNE:

Okay.

CHAIR:

We should go to a government

member. Does any government member

have questions?

Mr.

Parsons.

MR. K. PARSONS:

Mr. Meade, though, the

conversation with Mr. O'Brien, so he just picked up the phone and called you?

What time of day was that?

MR. MEADE:

He called me around 9:45 a.m. or so, I believe.

MR. K. PARSONS:

So that was before the

Cabinet meeting?

MR. MEADE:

Yes, it was before Cabinet.

MR. K. PARSONS:

Okay, all right.

His

concern was just what was on the go with Humber Valley Paving.

MR. MEADE:

Yes, basically, Mr. Parsons, the conversation was almost word for word the way I

just put it, as I recall it.

MR. K. PARSONS:

Okay, and it was before the

Cabinet meeting?

MR. MEADE:

It was before Cabinet, I do know that.

MR. K. PARSONS:

Okay, thank you.

That is

all I have.

CHAIR:

Mr. Cross.

MR. CROSS:

Was that also before you met

with the minister outside of Cabinet, because you met before the Cabinet

convened?

MR. MEADE:

Yes, it was.

MR. CROSS:

Okay.

CHAIR:

Mr. Peach.

MR. PEACH:

With Minister O'Brien, have

you ever received any calls from him before on other matters?

MR. MEADE:

Oh yes, many times.

MR. PEACH:

So it is not uncommon for

him to do that?

MR. MEADE:

No.

As I stated, it is not uncommon for Minister O'Brien to call deputies to

have queries about projects or files of interest to him.

MR. PEACH:

Okay.

CHAIR:

Mr. Murphy.

MR. MURPHY:

I was just wondering about

the time. You mentioned

CHAIR:

Yes, we are running the

clock a little bit to make sure we get as much in as we can.

MR. MURPHY:

All right, okay.

CHAIR:

We will have time to have a

very short break.

MR. MURPHY:

All right.

question, I guess over to Ms Brown, if I can ask you about the process.

When you found out about the issues that were ongoing, on what date was

that again?

MS BROWN:

It was April 29.

MR. MURPHY:

It was on April 29.

Your job at that particular time was what?

MS BROWN:

I was Director of

Communications in the Premier's office.

MR. MURPHY:

In the Premier's office.

Who was it that informed you at that particular time that there was an

issue?

MS BROWN:

I found out through a

decision note that had come through Cabinet Secretariat.

MR. MURPHY:

There was a decision note

done at that particular time?

MS BROWN:

Yes, that day.

MR. MURPHY:

Okay.

When

the decision note came down about this, were there any other people that you

you obviously had to get some people involved in the message handling.

Can you tell us what happened in that particular sequence of events?

MS BROWN:

Well, what happened was I

would have read the note. I chatted

with the then Premier about it. I

realized at that time that the department was involved because the Premier had

engaged the minister and the deputy.

So I knew the department would have been dealing with key messages at

that point.

MR. MURPHY:

How were you informed of the

issue? You were briefed by the

Premier or ?

MS BROWN:

Through the decision note.

MR. MURPHY:

Through the decision note,

in that way.

MS BROWN:

Correct.

MR. MURPHY:

Were you aware of this issue

MS BROWN:

Not a decision note, I am

sorry. What is the correct it was

an information note.

MR. MURPHY:

An information note, okay.

MS BROWN:

Yes.

MR. MURPHY:

The information note was

done up by who?

MS BROWN:

It would have been the one

Mr. Meade has referred to that they developed on Tuesday, the twenty-eighth.

MR. MURPHY:

Okay.

So people would have known about this before.

When

you received that decision note, obviously, you had to get together with

communications people to talk about the issue.

There was no sign of anything that was happening before, for those

thirty-seven odd days, that might have made you aware there was an impending

issue around this from March 13?

MS BROWN:

Absolutely nothing.

MR. MURPHY:

Absolutely nothing.

It was silence in the building from that?

MS BROWN:

I had no idea.

MR. MURPHY:

Okay.

So you

have this issue on your hands. Who

was there when you developed the key messaging for that?

MS BROWN:

Well, I would not have

developed the key messaging. That

would have been done at the departmental level.

Mr. Barfoot would have done that.

MR. MURPHY:

From then on there, did Mr.

Barfoot inform you of the decisions that would be made as regards to that when

it came to the decision of what the key messaging would have been?

MS BROWN:

We would have had a meeting

the following morning. Let me just

check who was there. I believe it

was Minister McGrath and Mr. Meade.

MR. MURPHY:

Okay.

MS BROWN:

At that point we were really

gathering information, trying to get the details.

I knew Mr. Barfoot was already developing key messages.

In fact, the minister had done an interview, so I knew there were key

messages already developed.

MR. MURPHY:

Okay.

Did you

know the interview was going to be happening before you had the information

note?

MS BROWN:

I did not.

MR. MURPHY:

Okay.

I am just trying to think here now, putting things together here.

Mr.

Meade, I want to come back to you as regards to the information obviously was

being passed around within the department and a month and a half has gone by

before any communications people have found out.

Can you quantify that as to the reason why thirty-seven days would have

passed by without anybody in communications being informed that they might have

a job to do on their hands?

MR. MEADE:

Well again, as I have stated

previously, communications staff are engaged.

Either they will get an inquiry and come to the departmental staff or

executive to seek information, or in some instances we will create communication

plans around things.

In this

particular case, knowing that sensitivity from my perspective was largely a

political one, and with the understanding that the political sensitivity was

acknowledged, had been processed in Cabinet and with the Premier's understanding

that was what I believed at that time I saw, at that point, no need to

engage with communications in that period.

There would be other decisions.

I do

not believe we would have engaged communications when we mutually terminated the

contract in Happy Valley-Goose Bay, for example.

I do not believe we did.

There might have been a subsequent media call around it that we would have, but

it was one where a decision was made.

Not every decision in the department would necessarily have the

communications staff directly involved right away.

MR. MURPHY:

Okay.

So a

month and a half has gone by before anybody has found out, but you have a

potential crisis that is on your hands.

I do not understand why it would have been passed over not passed over,

have communications people involved.

Maybe you can help me out here when it comes to that, as to the reason

why we do not have any communications people involved for thirty-seven odd days.

I am still having trouble quantifying that, because we have a tender that

has gone out under 7-14 and communications people obviously have to put together

the tender messages.

So we

have the breaking of a contract the mutual termination of the contract, I

should say, that has happened here and not a single question has arisen from any

of the communications people. Did

anybody ask why, at that particular time, this particular piece of the contract

from Humber Valley Paving was lumped in suddenly with 7-14?

MR. MEADE:

No, not that I am aware of.

MR. MURPHY:

Do you see what I am saying?

People were in the know that part of the contract was not fulfilled and

something had happened along the way, and not a single question arose from

anybody as regards to how come the bundling was happening.

Somebody had to type up the tender or something to send it out to the

media to get it published.

MR. MEADE:

Right, but the understanding

being, of course, this would have been us doing our business.

MR. MURPHY:

Yes.

MR. MEADE:

We entered into a contract,

we mutually terminated a contract.

We took a piece of it and put it into a tender.

We just carried on and did our business, as we would around roadwork.

Really,

for us, I do not think in that point in time we would have seen any

communication issues around that type of thing.

Again, yes, there would have been a political sensitivity around a

political race, quite frankly, that it was a party political race.

So I could characterize this as this was not a departmental issue.

This was a political issue, clearly a political issue.

I carried out my due diligence in making them aware of it in saying, do

you see this, I understood they processed it; but, from a communications

perspective, I would not have engaged Scott Barfoot to say you need to do a comp

plan because there is a political process unfolding out there that we are not so

sure about what his role is in this.

If I

could speak frankly to that, I mean that is where I would have sat on it.

So I think for us, we just carried on.

We carried on with the contractual work we had to do.

When it became apparent the media had heard about this and were going to

pursue it, that is when we would have engaged communications.

MR. MURPHY:

Did you or any of your staff

receive any orders to the fact that this was political and to stay away from it?

MR. MEADE:

No.

MR. MURPHY:

No.

MR. MEADE:

There was no conscientious

decision not to communicate. There

was not a conversation where we were saying we are not to communicate this, no.

MR. MURPHY:

Okay, all right.

So we

have what happened, happened, obviously.

We have had two meetings with the minister, and the minister is solid in

his decision. He has decided that

this was going to happen, to proceed with the mutual agreement to terminate.

It is your belief that there was no way around it, that this had to be

discussed at the Cabinet table. It

was your belief that it was brought up, obviously.

I am right in that assumption?

MR. MEADE:

Yes.

MR. MURPHY:

Okay.

people knew and they still did not develop any kind of a communications plan

around that particular issue, around the political sensitivities.

So we are left to ask the minister, I guess, the next round of questions

on that.

MR. MEADE:

Yes. I mean as a bureaucracy, we

would not have witnessed that. A gain,

back to the assumption that the Premier's office was aware and the Premier was

aware of the decision. I would

assume that if they felt there were political sensitivities there, they were

going to figure out how they were going to manage those from a communications

perspective.

MR. MURPHY: How

did Mr. McGrath tell you? You said

you made the assumption that it was all being dealt with, so there was no need

then at that particular time to do up a decision note.

Did he say, I had a chat with everybody around the Cabinet table and it

is all being looked after? What

exactly did he say?

MR. MEADE: No,

I do not recall him being as explicit as that.

I just know that in asking the question, his response was, no, that is

necessary, proceed to work on terminating this today.

MR. MURPHY:

Okay. So it is not necessarily the

fact then that everybody knew. It

was the fact that he had made this decision and he was sticking by it.

That was at the first meeting or at the second?

MR. MEADE: The

second.

MR. MURPHY:

That was at the second meeting, okay.

CHAIR: Mr.

Murphy, we should go to a government member, and then we will take a very short

break. Mr. O'Brien will call in at

11:00 o'clock.

MR. PEACH: I

just have one question. I guess one

can assume that this being an election year and one can assume that Frank

Coleman is running for the Premier's office.

You mentioned earlier the length of time in between things

that happened. I guess it is a

normal process for DOT to eliminate contracts or deal with different people on

contracts and not have to go public with a lot of these things.

In your statement earlier you had said that until the media

got involved you did not have to go to your communications people to make

statements. That is pretty much a

normal thing, isn't it? Because

lots of things go on within DOT that nobody hears about, with regard to

contracts. A contract comes out, it

is awarded, there is a statement made by DOT, and that is about it.

So it is pretty much a common thing.

If this

did not happen with Frank Coleman, and this being an election year right now, I

do not think all of us would have been here really; but, because of Frank

Coleman, I guess the media were the ones who really dug into this and got things

rolling on this, DOT ended up in the situation they ended up in publicly and

politically.

I just

want to ask, it is a common thing for DOT to make these kinds of decisions and

just carry on with the day-to-day operations, isn't it?

MR. MEADE:

It is. As I stated earlier, there

are hundreds of contracts in play at any given point in Transportation and Works

from my time there, and almost on a daily basis.

Again, it is one of the reasons why there is a solicitor from Justice and

Public Safety embedded in the department.

Contractual law is a big part of the work that a solicitor would be

doing. Contractual agreements are

being drawn up, they are being amended or whatnot.

You are correct; they are not always publicly communicated.

That

said, I do acknowledge the recommendation of the Auditor General.

The Auditor General has clearly recommended in the case of cancelling

contracts, that that should be publicly communicated.

I acknowledge and accept that recommendation.

CHAIR:

We will take our morning

break. It is a little later than I

thought, but I think we covered a fair bit of ground.

Mr.

O'Brien will be calling in at 11:00 a.m.

So if people could be back here just a minute or two after that.

Thank

you.

Recess

CHAIR:

Good morning.

MR. O'BRIEN:

It is I, Sir.

CHAIR:

Yes, this is Mr. O'Brien

calling; this is Jim Bennett, the Chair.

Now,

you are familiar with this process.

As you know, we need to have you administer the oath first.

You probably have it with you.

MR. O'BRIEN:

Yes.

CHAIR:

Did you want to read it out?

MR. O'BRIEN:

Jim, if you can actually

read it and I will repeat it, because I could not open the attachment.

CHAIR:

Okay.

Do you

swear or affirm?

MR. O'BRIEN:

Swear.

CHAIR:

Okay.

Kevin O'Brien

MR. O'BRIEN:

I, Kevin O'Brien

CHAIR:

do solemnly swear

MR. O'BRIEN:

do solemnly swear

CHAIR:

that the evidence I shall

give

MR. O'BRIEN:

the evidence that I am about

to give

CHAIR:

on this examination shall

be the truth, the whole truth, and nothing but the truth, so help me God.

MR. O'BRIEN:

on this examination will

be the truth, only the truth, so help me God.

CHAIR:

Thank you.

Mr.

O'Brien, we alternate with questioners and they have approximately ten minutes

each.

MR. O'BRIEN:

Yes.

CHAIR:

We are sitting in the

Chamber right now. I cannot say

everybody is looking at you because you are on the telephone, but everybody is

listening to you.

MR. O'BRIEN:

Absolutely.

CHAIR:

Tom Osborne is going to

start first and then we will alternate with George Murphy and, occasionally,

some government members may want to have some questions.

MR. O'BRIEN:

Sure.

CHAIR:

Mr. Osborne.

MR. OSBORNE:

Good day, Mr. O'Brien.

How are you?

MR. O'BRIEN:

Good morning, Tom.

How are you?

MR. OSBORNE:

Good, boy, good.

You had

contacted the deputy minister by telephone I guess about a half hour after Mr.

McGrath had contacted him. What was

the purpose of your call to the deputy minister on the morning of March 13?

MR. O'BRIEN:

The purpose of the call was

two-fold I guess. I had two issues

within my district that I needed to talk to the deputy and, as a matter of fact,

I will answer the question the same way I answered it to Terry Paddon.

My call to the deputy minister was no different than the many calls that

Terry Paddon got from me as an MHA and as a minister in regard to issues within

the Department of Finance.

The two

issues that I had to talk to the deputy or someone in the department with was,

number one, the flooding for a constituent of mine on the corner of McGee and

Gander Bay Road, or Cooper Blvd now I think; and the other one was when the work

was going to start on the Trans-Canada Highway, east of Gander, from the Cooper

Blvd intersection on the Trans-Canada Highway, east and inclusive of the top of

just before the park actually I think.

Anyway

I wanted to see when that work was going to start because I was getting some

calls concerning that. As a side

issue, I asked if there were any issues with Humber Valley Paving.

He indicated that there were issues with the work that had happened in

Labrador and the minister was dealing with it.

That was the end of the call.

MR. OSBORNE:

Okay.

We had

questioned Deputy Minister Meade just prior to your call actually.

I think his recollection was somewhat different than yours just now,

Kevin. He indicated that you had

called and asked if he was aware that Humber Valley wanted out of the contract.

Can you clarify that?

MR. O'BRIEN:

Well, I heard in the

grapevine I was not the Minister of Transportation and Works and I might very

well have said that because I was listening to people, including yourselves,

because you all knew that I was gathering names for Mr. Coleman in regard to his

nomination papers. So I probably

did ask if there were any issues with Humber Valley Paving.

MR. OSBORNE:

Okay.

Now you

later testified that the purpose of your call was because of your role as Fire

and Emergency Services.

MR. O'BRIEN:

No, the call was not

because, it was a curiosity question.

I was the Minister of Fire and Emergency Services when we had to make a

decision up in Lab West in regard to the fires and safety issues surrounding

that. There were some concerns in

regard to the impact that may have on the economy and all that kind of good

stuff when we made that decision.

So it is only just a curiosity question, really.

MR. OSBORNE:

Okay.

You

indicated that you were gathering names for Mr. Coleman and I think that was

public knowledge. Is that how you

found out there were issues with Humber Valley Paving and them wanting to get

out of the contract?

MR. O'BRIEN:

No, absolutely not.

As a matter of fact, I heard it in the House of Assembly.

MR. OSBORNE:

Okay.

You

heard in the House of Assembly?

MR. O'BRIEN:

I think so, from colleagues.

I cannot remember exactly.

There was chatter on the go between colleagues, yourselves across the House or

whatever it may be.

cannot recall exactly who said what to be quite honest with you, Tom.

There were some questions in regard to Mr. Coleman and if he was going to

run or not. People were

speculating, I guess, if we want to put it that way.

That had no concern of mine; I was just gathering names.

That was all that was to it.

MR. OSBORNE:

Okay.

I know

from our perspective and Mr. Murphy can speak for himself we were not aware

until April that the contract had been cancelled.

The chatter would not have come from us on the fact that they wanted out

of the contract for sure.

MR. O'BRIEN:

Oh listen, I did not know

that they wanted out of the contract.

That is not what I indicated, Tom, to be quite honest with you.

All I knew was that people were saying that there were issues up in

Labrador and it was a curiosity question on my part, being the minister

responsible at the time that shut down any movement up there.

That is all. I want to be

clear on that.

MR. OSBORNE:

Okay.

The

morning that you contacted Deputy Minister Meade, did you indicate to him or ask

him if he was aware that Humber Valley had issues with their contract?

MR. O'BRIEN: I

had heard, yes, absolutely. I said

to Mr. Meade: Are there any issues with Humber Valley Paving in regard to the

Labrador contract? It was a

curiosity question because of Fire and Emergency Services.

He indicated there was, that the minister was dealing with it, and that

was the end of the call.

MR. OSBORNE:

Okay.

So you were not aware when you made the call to Deputy

Minister Meade that Humber Valley wanted out of the contract?

MR. O'BRIEN:

No. All I heard, I did not know I

want to be very clear on this, Tom. I

did not know. All I was asking was

were there any issues. He indicated

there were issues with the contract.

Other than that, I did not know what was being done about it.

Neither did I care, for that matter.

MR. OSBORNE:

Okay.

You asked if there were issues but you did not pursue it

further or did not care what the issues were.

MR. O'BRIEN:

No, absolutely. It was not my

department. I was not the minister

so no decisions that would be made or any of the transactions or whatever made

in Transportation and Works would have any bearing on me.

I would not have any bearing on it.

MR. OSBORNE:

Okay.

Did you have any discussions with Nick McGrath on March 13

about Humber Valley Paving?

MR. O'BRIEN:

No.

MR. OSBORNE:

Okay.

Was there any discussion with other Cabinet colleagues or

inside of the Cabinet room, not necessarily a part of the Cabinet meeting but

not excluding that, about Humber Valley Paving?

MR. O'BRIEN:

None.

MR. OSBORNE:

Okay.

So Mr. Coleman was about to enter the race the very next

day, March 14. Was there any

discussion about Mr. Coleman with Cabinet colleagues on the morning of March 13?

MR. O'BRIEN:

None.

MR. OSBORNE:

The issue of Mr. Coleman was not talked about in quiet corners or in chatter at

all on the morning of March 13?

MR. O'BRIEN:

Not that I am aware of, Tom. I

mean, quiet corners are quiet corners I suppose, but there are not quiet corners

in Cabinet. You sit at your seat

and you deal with the agenda at hand.

MR. OSBORNE:

Yes. There are often side

discussions, both outside in the waiting area and inside the Cabinet room, prior

to a meeting starting.

MR. O'BRIEN: I

would not be aware of any.

MR. OSBORNE:

Okay.

there was no discussion at all of the potential candidates or the fact that the

deadline was drawing very close to closing and Mr. Coleman was about to

announce?

MR. O'BRIEN:

Say that again for me, Tom.

MR. OSBORNE:

There were no discussions at

all about the fact that the nomination process for the Progressive Conservative

Party leadership was about to close or of Mr. Coleman's potential candidacy, him

announcing the next day?

MR. O'BRIEN:

At Cabinet you mean?

MR. OSBORNE:

Yes, with Cabinet

colleagues.

MR. O'BRIEN:

No, absolutely not.

MR. OSBORNE:

Okay.

So you

were soliciting support for him but the discussion never came up?

MR. O'BRIEN:

No.

That was at my free will.

MR. OSBORNE:

Okay.

There

was no discussion at all about Humber Valley Paving and the fact that there were

contract issues either informally with Cabinet colleagues or formally as part of

the Cabinet meeting?

MR. O'BRIEN:

None.

MR. OSBORNE:

Okay.

When

did you become aware that the contract was cancelled?

MR. O'BRIEN:

I would not be able to put a

date on it, maybe the same time as you.

MR. OSBORNE:

So you were not aware until

April.

MR. O'BRIEN:

No, not to my knowledge.

It would not be for me because that is not my department.

MR. OSBORNE:

The twenty-ninth or

thirtieth, somewhere in that range, I think is when I became aware of

MR. O'BRIEN:

It would probably be the

same time as yourself. I do not

know; maybe after you Tom. It is

not something I kept an eye on, to be honest with you.

MR. OSBORNE:

Okay.

Are you

willing to agree to the release of your transcripts of your testimony with the

Auditor General?

MR. O'BRIEN:

Sure.

MR. OSBORNE:

Okay.

Thank

you.

CHAIR:

Mr. Murphy.

MR. MURPHY:

Good morning, Mr. O'Brien.

MR. O'BRIEN:

Good morning there, Mr.

Murphy.

MR. MURPHY:

How are you?

Good?

MR. O'BRIEN:

Not bad at all.

MR. MURPHY:

Good.

Just a

couple of questions I guess. Mr.

O'Brien, you said you did not have any discussions on March 13 about the Humber

Valley Paving contract. Am I right?

MR. O'BRIEN:

What is March 13?

You are going to have to I do not know the dates, right.

MR. MURPHY:

That is when you called the

deputy minister and asked about the Humber Valley Paving issue.

MR. O'BRIEN:

That was only just a side

issue, a curiosity question after the other two that I had in hand for my

district.

MR. MURPHY:

There was a Cabinet meeting

that morning. Am I correct?

MR. O'BRIEN:

There was, yes.

MR. MURPHY:

But you phoned the deputy

minister before the Cabinet meeting?

MR. O'BRIEN:

Yes, normally I do.

I try to get my work in early in the morning.

I am in early in the morning.

MR. MURPHY:

Okay.

So that

particular part of your work, and even though it was outside your purview, that

could not wait for the minister at the Cabinet level?

MR. O'BRIEN:

No, you are assuming wait

now, George. You are assuming I

phoned only on the Humber Valley Paving issue, I did not.

That was not the nature of the call.

The nature of the call from me was the two issues in my district, and

then as a side issue I asked if there were any issues with Humber Valley Paving.

I was told, yes, there was in regard to the tender and the minister was

dealing with it. That was the end

of the call.

MR. MURPHY:

Why would you have had

concerns around Humber Valley Paving when you made the call?

MR. O'BRIEN:

Because I was the Minister

of Fire and Emergency Services at the time that the contracts were held up, and

I was curious to the impact that might have had on any of the contractors up

there.

MR. MURPHY:

Did Humber Valley Paving

discuss with you any problems with the contract because of the fires in Labrador

at the time?

MR. O'BRIEN:

No.

MR. MURPHY:

So how did you become aware

there was a problem of the fires in Labrador?

MR. O'BRIEN:

I just heard my people

talking in the industry and colleagues.

MR. MURPHY:

You heard from colleagues

before March 13 that there were issues because you did not make the phone call

until the morning of March 13.

MR. O'BRIEN:

Yes, I was hearing it

probably way back, to be quite honest with you, George.

Probably maybe even in late fall, because it was in the construction.

MR. MURPHY:

Okay.

MR. O'BRIEN:

I am connected to the

construction world. I heard there

were issues with contracts up in Labrador.

MR. MURPHY:

Okay.

MR. O'BRIEN:

It was just a curiosity

question.

MR. MURPHY:

Okay, but it was not your

department. Obviously beforehand,

you must have talked to the minister on this issue?

MR. O'BRIEN:

No, I did not.

No.

MR. MURPHY:

Previous to March 13 you

never?

MR. O'BRIEN:

No, I did not.

MR. MURPHY:

You never discussed it with

Humber Valley Paving, but still you knew about it?

MR. O'BRIEN:

Yes, sure I did.

I heard it from the industry, the same way as you heard.

MR. MURPHY:

Well, no, I did not hear it

from the industry. I heard it in

the House or heard it on the news when it first came up.

MR. O'BRIEN:

Well, I was connected to the

industry being the Minister of Municipal Affairs.

MR. MURPHY:

Humber Valley Paving did not

discuss this issue with you?

MR. O'BRIEN:

No, they did not.

MR. MURPHY:

Transportation and Works

never discussed this issue with you previous to that, even though you had a

concern?

MR. O'BRIEN:

No.

MR. MURPHY:

I do not understand the

concern. If it was still a matter

for the Department of Transportation, why would you have had a concern under

even Fire and Emergency Services?

What was the potential for Fire and Emergency Services to have been involved in

this?

MR. O'BRIEN:

Well, they were not.

Like I just said to you, and I will say again, it was a curiosity

question in regard to me being the Minister of Fire and Emergency Services at

the time. It was no concern for me,

nor was it a concern for Fire and Emergency Services.

It was a pure curiosity question.

MR. MURPHY:

So in your curiosity you

asked about Humber Valley Paving?

MR. O'BRIEN:

Yes.

MR. MURPHY:

I do not understand.

You see I am trying to establish that I am trying to ask you the

question, the reason why you would be concerned over the contract with Humber

Valley Paving if it was not your position?

MR. O'BRIEN:

Well, it was well known I

was gathering names for Mr. Coleman, and I guess he was connected to Humber

Valley Paving. So it was a

curiosity question, really.

MR. MURPHY:

So, you were

MR. O'BRIEN:

That is all I can say to you, George, to be quite honest with you, because I had

no involvement into it whatsoever in regard to the letting of the contract.

I was not the Minister of Transportation and Works.

I was the Minister Responsible for Fire and Emergency Services when that

horrific fire was ongoing. I was

trying to deal with it and I had to make certain decisions.

MR. MURPHY:

What decisions would those

have been that you would have had to make?

MR. O'BRIEN:

Closing down the roads, no

traffic going through.

MR. MURPHY:

Right.

MR. O'BRIEN:

All that kind of good stuff

that goes with the advice of officials.

MR. MURPHY:

Okay.

At any

particular time did Humber Valley Paving discuss with you the possibility that

they would be looking for remediation or losses because of the fires in

Labrador?

MR. O'BRIEN:

No.

MR. MURPHY:

So none of that came up?

MR. O'BRIEN:

None, no.

MR. MURPHY:

You were working on the

political campaign gathering signatures for Mr. Coleman, and no discussions

happened about issues with the contract?

MR. O'BRIEN:

No, absolutely not.

MR. MURPHY:

At no particular time?

MR. O'BRIEN:

At no time.

MR. MURPHY:

I am still curious about the

link between the industry, even knowing that there were problems, how word of

that would have gotten to you as regards to the problems that Humber Valley

Paving was having up in Labrador.

MR. O'BRIEN:

I would not be able to

enlighten you. It is just that I

heard it on the grapevine. Like

things happen in regard to rumours, but I never gave it any thought.

Then when I was hearing it, I just asked a question.

I was told that there was and it was being dealt with, and that was the

end of the discussion. I would not

have any influence or any discussion in regard to anything ongoing in

Transportation and Works. I was not

the minister.

MR. MURPHY:

So previous to March 13, you

had been hearing rumours about this in the grapevine.

MR. O'BRIEN:

I heard it in the grapevine,

yes, absolutely.

MR. MURPHY:

About how much time before

March 13?

MR. O'BRIEN:

Oh, I would not know.

I thought I heard about it in the late fall.

MR. MURPHY:

So you heard it well before

March 13?

MR. O'BRIEN:

Yes.

MR. MURPHY:

You heard it in the fall, so

that would be

MR. O'BRIEN:

Yes.

MR. MURPHY:

four or five months.

MR. O'BRIEN:

It could be.

I would not be able to say right now, George, to be quite honest with

you, because I did not mark it. It

did not really mean anything to me, to be quite honest with you.

MR. MURPHY:

If it did not mean anything

to you, why would you have asked the question?

MR. O'BRIEN:

In the previous four or five

or six days or so I was hearing that there were issues with Humber Valley

Paving. I was gathering names, so

as a curiosity question, because Mr. Coleman was running and I was gathering

names for him. Other than that, it

did not matter to me.

MR. MURPHY:

You heard about the issues

in the fall?

MR. O'BRIEN:

Yes.

MR. MURPHY:

Now this is March and you

called the deputy minister.

MR. O'BRIEN:

Yes.

MR. MURPHY:

You did not have one

conversation with Nick McGrath, the minister at the time, over what was

happening with Humber Valley?

MR. O'BRIEN:

No, I would not, because I did not have any participation in it.

I am not the minister.

MR. MURPHY:

That is right and that is

probably one point, but my point is you have heard about this now for four

months, from the fall until March, and you did not ask Minister McGrath once

about if there was an issue with Humber Valley Paving?

MR. O'BRIEN:

No.

MR. MURPHY:

Yet, you heard there were

problems all throughout

MR. O'BRIEN:

No, I did not hear it all

throughout. I heard in probably

late fall maybe there were issues with regard to contracts not getting finished

or whatever it was in Labrador big deal.

I have heard tons of things in regard to tenders on schools, whatever it

may be. That is it.

You just hear it on it the grapevine.

Other than that, I had no concern.

That is a concern for the department, not me.

MR. MURPHY:

My point is that if you

heard concerns out there in the marketplace or through your grapevine that there

were issues with Humber Valley Paving, you did not inform the minister at the

time that there were possible issues with Humber Valley Paving?

MR. O'BRIEN:

No, I do not because I would

assume they would know.

MR. MURPHY:

If you heard a concern

through the industry that there was a problem, potentially, with Humber Valley

Paving and you did not inform the minister of that?

MR. O'BRIEN:

No, I had no reason to do

so.

MR. MURPHY:

You had reason to call the

deputy minister on the morning of March 13 and say: Have you heard anything

about Humber Valley Paving? So you

waited

MR. O'BRIEN:

Back to that again, George.

I did not call in regard to Humber Valley Paving.

I called on my two issues with my district.

It was a curiosity question at the end of the conversation and that was

the end of it.

MR. MURPHY:

You did not have that

curiosity question four months previous in the fall when you first heard the

rumors.

MR. O'BRIEN:

No, I did not because there

was no reason why. These kinds of

things happen, not on a daily basis, but they happen periodically in regard to

business with government; you just do not pay attention to it.

It just so happens that I was dealing with gathering names and it was a

curiosity question.

MR. MURPHY:

There was a potential here

for the loss of government of probably $20 million in taxpayers' money and you

did not see any concern to inform the minister at that time that there were

these rumors out there and to check them out.

There was nothing discussed?

MR. O'BRIEN:

George, listen here now, to

be quite honest with you, I would not have two clues in regard to what that

tender or what that contract entailed.

The simple reason is I am not an official of the Transportation and

Works, nor was I the minister. So I

would not have any idea what kind of an impact that would have or not have.

MR. MURPHY:

You heard the

MR. O'BRIEN:

I want to be clear with

that.

MR. MURPHY:

Yes, but you heard the

rumour out there.

MR. O'BRIEN:

Yes, I just heard the

rumour. It is simple.

It is very simple, George.

It is

very simple. I heard a rumour that

there were issues with contracts, not specifically Humber Valley Paving, in

regard to the paving that was happening up in Labrador during the time that I

was Minister of Fire and Emergency Services.

That was the end of the story.

I have no detail to it. As a

matter of fact, at that particular time, I did not know if there were two or

three contractors actually. It is

no concern to me.

MR. MURPHY:

It was not any concern to

you that taxpayers' money was possibly at risk and you did not inform the

minister up until then?

MR. O'BRIEN:

George, I just said to you

that is a process within Transportation and Works.

I would not have any kind of an idea what kind of a negative impact that

would have on anybody anybody.

CHAIR:

We should move back to Mr.

Osborne now.

MR. MURPHY:

Okay.

CHAIR:

Every ten minutes we change

the questioners, Mr. O'Brien.

MR. O'BRIEN:

Yes.

MR. OSBORNE:

Okay.

Kevin,

when we had questioned Deputy Minister Meade he had indicated that the

conversation he had with you that morning was very brief and outlined the

entirety of the conversation. The

two issues that you raised were not brought up as part of that conversation by

Deputy Minister Meade.

There

is a bit of a discrepancy in his recollection of that phone call and your

recollection of that phone call.

Did you discuss anything to do with Fire and Emergency Services?

MR. O'BRIEN:

No.

MR. OSBORNE:

Okay.

MR. O'BRIEN:

No, I asked him to check on

my two issues, and that was very brief.

He might not be able to remember it, I do not know.

I had some concerns with the flooding down on the corner of Magee for a

resident, also the work that was supposed to happen on the Trans-Canada Highway

that a stop-work order was put on the summer previous, and then I asked the

question. That was the end of the

conversation. The conversation was

no more than a minute.

MR. OSBORNE:

Okay.

When

the Auditor General had questioned you back some time ago about this issue, he

had determined that you had inquired with the deputy minister as to whether or

not he was aware of what was happening with Humber Valley Paving.

It seemed like it was more than just a curiosity question.

MR. O'BRIEN:

It might seem to you, Tom,

but it was to me because I had no information whatsoever.

I had no detail to the contract itself; I had no detail in regard to what

work was done or not done. I did

not have anything, period. So, from

my perspective, it was a curiosity question

MR. OSBORNE:

Okay.

MR. O'BRIEN:

and that is all I can say

to you. I cannot say anything else,

because I had no participation whatsoever in the everyday operations of

Transportation and Works.

MR. OSBORNE:

Okay.

What

exactly did you mean when you had inquired as to whether or not the deputy was

aware of what was happening with Humber Valley Paving?

MR. O'BRIEN:

No, I did not say that

either. I did not say was he aware,

I asked a specific question, really.

I said: Is there anything going on with Humber Valley Paving and

contracts in Labrador? He said:

Yes, the minister