Industry Committee on Dec. 5th, 2023

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

My impression is that, when it comes to analyzing businesses to determine which ones to invest in, the federal government has vast expertise in the oil and gas sector but perhaps is less specialized in emerging technologies and that it's also less familiar with all that has to be done to ensure that investments, especially involving public money, prosper and further the development of intellectual property that will create employment and be sustainable in Quebec and Canada.

In that context, isn't dealing with a board of expert directors an entirely appropriate way to proceed?

[Guy Ouimet]

I think it is. However, I can't assess the federal government's competencies. I'll let others do that.

In 2001, the federal government decided to create SDTC and to give it a mandate and form of governance. SDTC isn't a group of entrepreneurs who have constituted a non-profit organization. The government created SDTC. I think it decided to use the proceeds from the sale of Petro-Canada to establish a green fund. It then chose a form of governance that would function in the prescribed manner, and that's how it has functioned ever since. Its expertise in the field has developed.

The organization was initially in the start‑up phase. Today, we have a pan-Canadian clean energy image with a logo that many people are proud to adopt.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

You're still an active member of the board, aren't you?

[Guy Ouimet]

That's correct. I was appointed on November 8, 2018. My term was extended by a year at the request of the Governor in Council.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Following the allegations and the ensuing investigation report, SDTC suspended new project approvals and stated that it wouldn't accept new applications until the recommendations had been implemented.

How many new projects would normally have been approved in the ensuing months?

How many applications are normally accepted during that same period and can't be accepted now as a result of this uncertainty dynamic?

[Guy Ouimet]

I don't know the number offhand, but I can tell you that SDTC generally invests between $175 million and $200 million a year in businesses in tranches of $2 million, $3 million, $4 million, $5 million or $7 million a copy, as they say. So it's a considerable amount of money.

There can be seven or eight projects to be reviewed at every meeting of SDTC's investment committee. Since there are six meetings or so a year, SDTC considers some 50 projects annually. If you add up the amounts involved, they come to a considerable sum.

And that's not all. Businesses that are already in SDTC's portfolio are waiting to move on to the next phase of their projects. For some of them, phase one may simply lapse because phase two won't be starting. And that's not counting the businesses that have been neglected.

Consequently, there's a serious risk that the clean technology ecosystem may be damaged for reasons that warrant our presence here today. It's unfortunate to have to suspend funding.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

In the meantime, the minister is attending COP28 alongside oil executives.

[Guy Ouimet]

I can't comment on the minister's work. I perform my role as a director.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

You're doing well.

Could it have an impact on SDTC's overall mission in future?

[Guy Ouimet]

I think it's a matter of time. Reports have been written on the allegations. To date, all the investigations have confirmed that they were baseless. Every report included a series of administrative recommendations, and they were highlighted in a management report that was submitted to the minister and tabled on December 1. As a result, the minister will be informed of all the corrective measures put in place, which may afford him some support in resuming funding for the businesses subject to certain conditions. That's what counts.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

Thanks as well for your commitment.

[Guy Ouimet]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Go ahead, Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Mr. Lafond, I will start with you.

Maybe walk us through the process of declaring a conflict of interest in the boardroom there. Walk us through what happens.

How does that come about? Do you just basically say it, leave the room and come back in? Maybe walk us through that experience.

[George E. Lafond]

In 2015, 2016 and 2017, we began to realize that our organization was really beginning to respond to the marketplace. In other words, we were responding to what was given to us and to our obligations through our statutory requirements through the order in council. We recognized that we were stepping into a much higher-risk profile with high-risk profile companies, so we had to change our conflict of interest to keep pace. We also had to recognize the types of risks we were now moving into.

We really began to deal with conflict of interest by getting good advice from, I believe, KPMG, which would give us examples as to what was happening inside IP, inside of AI, in data and how we could make sure we protected those.

Basically what would happen is, as board members, in advance of a board meeting, we would get a list of the companies we were about to receive and would be making a decision on at the next board meeting. We were to declare any perceived or clear conflict of interest. It would be a profile from left to right, saying that this is the amount; these are the actors, whether it's a VP or...; and these are the other investors inside of it. It would list the sector—whether it was the tech sector or the oil and gas sector—and what it intended to do.

Then we would respond back and say, “I have a conflict”. When the discussion came through inside the board discussion, people would say that there's a conflict and I recuse myself and leave the room.

[Brian Masse, NDP, Windsor West, ON]

When you get that package, does it include all the information for where you might have a conflict of interest? Do you get a pre-package that would list all the potential decisions of the investments and not have information...? Do you get the full package that could involve some of the information that you might be in conflict with?

[George E. Lafond]

No.

Like I said, it's left to right. Usually it's the amount, the people involved, the sector it's in and what is there. Is it oil and gas, are they doing something with water treatment, or is it hydro? Are they doing new modular thinking regarding using a technology that allows them to be more cost saving?

Then you would say that you don't know anybody on the board or any of the investors and you're not involved in this sector. You would really look and ask what the value of it is. Then you would basically say if—

[Brian Masse, NDP, Windsor West, ON]

You wouldn't have any information about what the case would be and then they would send subsequent information about all those investments. You would get two packages.

[George E. Lafond]

That's right.

[Brian Masse, NDP, Windsor West, ON]

Okay. Thank you for that.

I'm trying to understand a little bit about the culture of the board. Were there board members who would personally know each other outside of the boardroom—professionally, perhaps in co-ownership or joint ownership of other companies or on other boards, or in social circles?

Was it common in the time you were there to have mixed experiences with other board members?

[George E. Lafond]

For me, it was zero. I had zero awareness of any other board member in this area and in the regions across Canada.

You have to remember that I come from a very specific community. As I said, there was almost no involvement inside the clean-tech industry.

If it was the oil and gas industry, sure; I know a lot of people in the oil and gas industry. If it was people in the potash company, yes; I knew what was going on. In clean tech, I had no involvement with anybody else on the board. It was all new to me.

[Brian Masse, NDP, Windsor West, ON]

Thank you. That's helpful.

Mr. Kukucha, how about you? What's your experience of the board?

You have been there for a while. Do the board members socialize together? Do they sit on joint ventures together? Do they sit on other boards together? What's the environment?

Second to that, are there any rules about board members talking about the contents of the meeting prior to the meeting or is that not restricted?

[Stephen Kukucha]

I have sat on a lot of boards, both in the United States and Canada. This is one of the most professional boards I have sat on. The quality of people who sit on it is impressive.

Because of that level of professionalism, there was not one conversation I had outside of the boardroom referring to any of the projects. There's no coinvestment and there are no relationships that extend beyond that.

Social occasions tend to be about social occasions and whatever activities people are up to. I have never ever seen a discussion and I have never had one myself that was related to anything regarding investment or the projects.

[Brian Masse, NDP, Windsor West, ON]

Okay. I guess there were social times as well when board members would be together too.

[Stephen Kukucha]

Periodically, we'd have a dinner. Most of those dinners were filled with, for instance, expert speakers or people who would come in to talk about government programs. Even the board dinners were largely working. Conversations in the hallway or a drink afterwards were largely related to what we were doing as an organization.