Industry Committee on Jan. 31st, 2024

[The Acting Chair, NDP, Brian Masse]

You have about another 30 seconds.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Can you explain to me again, and for everybody who's watching, what managed conflict means?

I've served on a number of boards. You don't go on a board, first of all, if you have a conflict and you're doing business with that organization. That's just normal corporate and individual ethics. You don't do that. Also, if you are on a board and a conflict comes, then you probably choose to leave that board if that conflict isn't more important to your business interest than being on the board. You make a choice.

In this case, it doesn't seem like managed conflict means that. It means that you can have your cake and eat it too, it seems.

[Leah Lawrence]

While I can't speak for the board members, I can tell you what the process is.

They have to declare their conflicts. Conflicts are talked about at the beginning of every meeting. When a conflict has been declared they do not receive the materials related to that conflict. They have to leave the meeting, as part of the conflict of interest policy, when anything related to their declared conflict is discussed. That's how it had to be managed once people had conflicts declared.

[The Acting Chair, NDP, Brian Masse]

Thank you, Mr. Perkins.

Now we need to move to Mr. Van Bynen, who has been patiently waiting online since the start of the meeting.

Mr. Van Bynen, you have six minutes.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you very much, Mr. Chair.

I'd like to begin by acknowledging the ongoing work and the investigations from the Office of the Auditor General and the Ethics Commissioner, in addition to the law firm that's looking into the HR concerns.

You also appeared before the ethics committee on November 8.

My question is this: Why did you request to be reinvited to this committee when there's so much ongoing work to get to the bottom of these issues raised by the whistle-blowers and SDTC?

[Leah Lawrence]

First of all, I will say that I did speak to the Auditor General this week. I am participating in all of those processes, even though I'm an individual and no longer employed by SDTC.

I requested to come here because I thought it needed to be known that SDTC's team and I did try to raise the concern that a chair appointed with a direct conflict would cause potential damage to both SDTC and Ms. Verschuren.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

You've had the concern. You've referenced the concern a number of times. A few times I've heard the phrase that these were “known” conflicts. Can you tell me what you did with these known concerns? Were they documented? Were they highlighted? Is there evidence of those discussions within the records of the corporation that we can use to verify those things?

[Leah Lawrence]

I was giving the advice that I thought would be taken and that would be common sense, which would be that a person with a direct conflict would potentially damage the organization of SDTC if they became chair.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

If I may—

[Leah Lawrence]

My advice is not in writing, but I do believe there were conversations at the ministerial level. There may be things in writing between my team and the minister's office staff. You'd have to ask SDTC if there are those kinds of exchanges.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

So there could be documentation that could be made available as part of resolving the issue. That's good to know. If you could give us some indication as to where those documents might be found in order to assist in the review, that would certainly be appreciated as well.

When reflecting on what came to light from the fact-finding mission, what did you learn? What things would you have done differently, in hindsight?

[Leah Lawrence]

I think the fact-finding mission had some recommendations related to administration and governance. That's another reason that I came here today, to speak to some of those. In my view, as I said in my opening statement, the ISED implementation plan actually does not cover some of the governance issues that need to be addressed.

With respect to the administrative issues and their implementation, I was involved in launching those before my resignation. It's my understanding that SDTC has filed the conclusion of that implementation with ISED and they're waiting for feedback on those.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Okay.

I'd like to go back to Mr. Perkins' comments, that if it's not written in your charter or your operating documents that things shouldn't happen, these things can happen. When does it become an evaluation of things being unethical as opposed to looking for a document that says it's okay, when you know from the values you've learned in business that it's not the right thing? When does that override the strict adherence to documentation?

[Leah Lawrence]

I'm not sure I understand the question. I don't think strict adherence to documentation should override direct conflicts.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

It sounds to me like that's what was brought forward. You had indicated that there was a conflict that you felt was a problem—how you made that known is still to be determined—and then the response you received was that there's nothing to stop that from happening. When do we say that there may be nothing that says it shouldn't happen—but ethically it should not happen? When do we get into those discussions? Were there discussions like that?

[Leah Lawrence]

Yes. As I said in my opening statement, I raised concerns that she had a direct conflict, that she had a contract with the organization, and I raised concerns that there would be perceived and direct conflict problems to manage. But once the minister makes an appointment, once we're instructed by the department to implement, and the Ethics Commissioner okays it as well, we have to put in place a process and a procedure to manage.

The manage is that we would send out that there's a declared standing conflict. I think Ms. Verschuren talked about that. The second piece is that on circulation before each meeting, there would be any new companies put forward. Board members would respond to that. Then, it would be discussed and in the board minutes for every meeting who had declared a conflict and what the nature of that conflict was. In the case where recusal was required, the individual would leave the meeting when a particular item was discussed.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

As I understand it, the minutes didn't necessarily reflect that. Is that correct?

[Leah Lawrence]

This was one of the findings, that minutes required to have more clear documentation of these matters. The materials, though, had clear statements that were circulated in the board packages.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

When you became aware of the allegation raised by the whistle-blowers, what was your organization's initial plan and reaction to address this?

[Leah Lawrence]

The whistle-blowers made their complaint to the board of directors. The complaint included allegations against both me and the chair. We were immediately told that we would not be part of the investigation and we would be asked to speak to them at the appropriate time.

From my understanding, the board put in place a special committee to investigate the whistle-blower complaint. They hired a third party law firm to do a review and they worked with that law firm to produce a report. That law firm pulled tens of thousands of documents from the IM/IT team. There was an artificial intelligence review and they did just less than 30 hours of interviews with the staff. That was what happened when the complaint from the whistle-blower was received.

[The Acting Chair, NDP, Brian Masse]

Thank you.

I'm sorry, Mr. Van Bynen, but your time is up.

Mr. Garon, you have six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much.

Welcome to the committee, Ms. Lawrence. Thank you for being with us and taking the time to answer our questions.

Perception is extremely important in our world. Sustainable Development Technology Canada, SDTC, is governed by the Canada Foundation for Sustainable Development Technology Act and by regulations. The organization distributes public funds and is therefore subject to scrutiny by parliamentarians and the public, which is legitimate.

Given that, I'd like to pick up on the example of Ms. Verschuren, who accepted the position of chair of SDTC's board even though some of her companies were receiving funding from the organization. We also know that they got more funding subsequently, but we were told that legal opinions had been produced.

So, on the one hand, there was a determination that it wasn't illegal to do that, but, on the other, there were significant concerns about the ethics of doing so. Normally, when a legal opinion is sought in a situation like that, wouldn't it just make sense to step back and turn down the position or decline the funds?

[Leah Lawrence]

I'm sorry, but the interpretation was cutting out.

I think your question was whether the directors should have declined the funds once they had been appointed. Is that correct?

[Jean-Denis Garon, Bloc, Mirabel, QC]

I also suggested that Ms. Verschuren could have declined to become board chair.

[Leah Lawrence]

When I spoke to Ms. Verschuren and when I spoke to assistant deputy minister Andrew Noseworthy this was why I raised the concern that her coming forward to be chair posed a real and perceived conflict of interest.

I had thought that they would advise her of those concerns and that the Ethics Commissioner would also give her more strict guidance, but this did not happen. I agree with you, sir. I would have expected something greater.