To me, the fact that the Pallister appointed board walked on this speaks volumes.
Hydro is bleeding money right now and they need to finish Bipole III. Pure conjecture here, but my guess would be a cost analysis was done on the cost of delays if the MMF starts protesting and stopping the project (lawsuits, setting up road blocks, disrupting construction, etc) vs. paying them the $70 million and clear the path to get to project completion. And the $70 million is cheaper.
So if Pallister won't approve the $70 million, nor even meet with the board to discuss other options, that leaves the road to finishing Bipole III impossible to go down and everyone abandons ship because who wants to go down on a sinking vessel.