A trusted adviser to the Ontario government played a prominent role in crafting a $275-million settlement to scuttle an unpopular power plant in the Toronto suburb of Mississauga.
Robert Prichard, a politically connected Bay Street lawyer, led talks to compensate the company building the plant and also negotiated an accord with a group of hedge-fund lenders to the project, according to internal government e-mails obtained by The Globe and Mail and interviews with sources close to the situation.
The e-mails show that then-premier Dalton McGuinty’s office, along with his energy and finance ministers, signed off on the deal with the company.
A legislative committee is investigating the government’s decision to pull the plug on two gas-fired electricity plants. The high cost to taxpayers – $585-million – is at the centre of opposition accusations that the government abandoned plans to build the plants in Mississauga and Oakville to save Liberal seats during the 2011 provincial election.
The Globe has reported that the hedge funds pocketed more than twice as much as they lent for the project. And the provincial auditor has revealed that the entire tab for Mississauga, including relocating the plant, was $275-million – $85-million higher than the government initially said.
The e-mails reveal for the first time the role played by Mr. Prichard, chairman of law firm Torys LLP and provincial transit agency Metrolinx. Before the public learned about the steep price tag, Mr. Prichard struck an upbeat tone on the deal with Eastern Power Ltd., the company building the plant. In one e-mail, he lauded the company’s “excellent work and co-operation” and suggested that the lawyers involved get together to toast a job well done.
Mr. Prichard told The Globe that the Ministry of Energy retained him to settle lawsuits launched by the hedge funds and to assist in negotiating the relocation of the Mississauga power plant. “We were pleased to have successfully discharged our mandate as instructed,” he said. “It was a challenging set of negotiations in difficult circumstances.”
Peter Tabuns, energy critic for the New Democrats, said Mr. McGuinty was “willing to write a blank cheque to keep this out of the public eye and out of the courts.”
One of the sources said Mr. Prichard was hired because government officials were concerned about the aggressive legal battle the hedge funds were waging in the courts in New York and Ontario. The funds, all connected to Washington-based EIG Management Co., had sued the government for $300-million in damages.
“The government wanted it done quickly,” the source said, “and they wanted it out of the court system.”
Mr. Prichard began talking to the hedge funds in mid-May, 2012, effectively taking over from a team of lawyers hired by the Ontario Power Authority, a provincial agency that had been in charge of the negotiations. Two weeks later, he had a deal.
In an e-mail dated May 30, Serge Imbrogno, the top civil servant in the Energy Ministry, wrote that Mr. Prichard had cut a deal to pay the hedge funds $146.5-million. That sum was more than twice as much as Eastern Power had borrowed from the funds, but it was less than Mr. Prichard’s negotiating mandate. According to Mr. Imbrogno’s e-mail, the Treasury Board had been willing to go as high as $158-million.
Mr. Prichard also led the negotiations with Eastern Power and reached a deal in early July, 2012. In an e-mail dated July 9 to government officials with the all-caps title “DEAL,” Mr. Prichard wrote, “Done like dinner,” and described the group’s work as “fabulous.”
Despite the generous terms for Eastern Power, there was one silver lining for the government: The company agreed to slightly lower payments for electricity to be produced at a relocated plant in Lambton County, near Sarnia.
“Prichard worked his magic,” Mr. Imbrogno wrote that same day to government officials.
Two lawyers from Torys worked with Mr. Prichard and the firm was paid $335,000, said a spokeswoman in the Energy Ministry.
In a July 9 e-mail to Eastern Power’s lawyer, Carl De Vuono, Mr. Prichard said that all the lawyers should get together and toast a job well done.
Mr. Prichard told The Globe he anticipated that the legal teams would “gather for a beer” to shake hands after a hard negotiation. “In fact,” he said, “we never had the gathering as we all moved on to other matters.”