The Quebec government has asked the province’s financial watchdog to investigate ferry contracts awarded to Chantier Davie Canada Inc., a company that is caught up in an RCMP investigation into allegations that Vice-Admiral Mark Norman leaked cabinet secrets.
The requested probe would be part of a broader look by the province’s Auditor-General into the financial management of the government ferry corporation, Société des traversiers du Québec.
Transport Minister Laurent Lessard’s staff said in an interview the minister has asked the watchdog to pay particular attention to the contracts awarded to Davie.
The contracts at issue in Quebec – construction of ferries – are not related to the Davie contract to provide a supply ship for Canada’s navy that is at the centre of the RCMP probe.
An investigation by the Auditor-General would put a spotlight on a company that a Globe and Mail investigation has discovered has a complex web of ownership that can be traced from Canada and Britain to the tax havens of Monaco and the British Virgin Islands.
Ottawa and Quebec governments have poured hundreds of millions of dollars into the Davie shipyard over the past decade, including a $229-million federal Export Development Canada loan to the previous owners for three offshore exploration ships for the oil industry. Only one of those ships was completed, at Davie’s shipyard in Lévis, Que., in 2014.
Quebec’s political opposition has accused the provincial ferry agency of mismanaging contracts, including the 2015 purchase of a $175-million Italian-built ferry that is operating in the eastern part of the province and often breaks down.
The most frequent political attacks have come in relation to the contract to Davie for two ships that will offer ferry services between Tadoussac and Baie-Ste-Catherine in Quebec’s Charlevoix region.
Davie is still working on the two ships, which were supposed to be delivered in 2015 but have been plagued by major delays and a $100-million cost overrun. They are to be powered by liquefied natural gas (LNG).
The Société des traversiers has already paid $125-million to Davie for the two ferries. This includes a $20-million payment that was made “under protest,” meaning that the provincial agency has reserved the right to seek repayment at a later date, according to a spokeswoman for the agency.
The Quebec government also provided a $14.2-million interest-free loan to Davie in December to address the company’s “short-term liquidity problems.”
An independent arbitrator is being hired to determine the value of the two ferries and set the final price tag for the government, a senior provincial official has told The Globe and Mail.
Alex Vicefield, chief executive officer of Inocea Group, an offshore consortium that bought Davie five years ago, declined to discuss the matter or the details of the shipyard’s ferry contract.
“You will understand that we cannot possibly comment on how the Quebec government manages its Crown corporations and all of its various projects,” Mr. Vicefield said in an e-mail.
“Regarding our LNG ferry program, we retain an excellent working relationship with the government of Quebec and we are working positively towards a resolution of the commercial dispute.”
Separately, the Royal Canadian Mounted Police on Thursday said the investigation of Vice-Admiral Norman continues.
The Mounties alleged in court documents earlier this year that Vice-Adm. Norman leaked cabinet secrets to help Davie put pressure on the Trudeau government to stick with a controversial federal project to provide a temporary supply ship for the Royal Canadian Navy. The senior military officer has been suspended from his job as vice-chief of the defence staff.
The government is paying upward of $580-million for the supply ship. Instead of buying it, the Canadian military will effectively rent the vessel, even though the money Ottawa is spending is equivalent to – or more than – what it costs NATO allies such as Norway and the Netherlands for similar supply vessels. Davie’s backers, not Canadian taxpayers, will still own the new ship at the end of the day.
Donald Martel, an opposition MNA in Quebec City, has criticized the provincial Liberal government over the ferry agency in recent weeks. In an interview, he alleged the ferry corporation has in the past been led by patronage appointees who lacked the necessary skills to manage big procurement projects properly.
“There is a lot of incompetence at play,” said Mr. Martel, who represents the third-place Coalition Avenir Québec party.
He has called for the Auditor-General to look at all contracts that were awarded in recent years, including the one to Davie for the two ferries.
“They can’t tell us how much the ships will cost, and they are already two years late,” he said.
A spokesman for Mr. Lessard said the request for an examination of the cost overruns at the provincial ferry agency was made in a letter to the Auditor-General last month.
“There is a commercial dispute between the agency and Davie, and ultimately, the minister asked the Auditor-General to take a specific look at this contract,” said Mathieu Gaudreault, press secretary to Mr. Lessard.
“The Auditor-General will look at how the contract was managed by Quebec’s ferry agency. This is not an accusation, the minister just felt it was his duty to ask for a particular focus on this contract,” Mr. Gaudreault said.
Davie was passed over for major federal government shipbuilding contracts in a 2011 disbursement of work because it was insolvent and under court protection from creditors. The bulk of big-ticket military and non-military work went to Irving Shipbuilding’s Halifax shipyard and Seaspan in Vancouver. The Davie shipyard emerged from bankruptcy protection in November, 2012, after the ownership changed, and began lobbying Ottawa hard for major work.
Davie and its workers have hoped that contracts such as the naval supply ship deal and ferry project could renew the shipyard and help it obtain more government and private work.
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