Industry Committee on Dec. 5th, 2023

[Guy Ouimet]

Yes.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

So you voted in both cases to award the money to the company that you have an interest in. Is that right?

[Guy Ouimet]

Yes.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Sir, do you see how it could be perceived as a problem for taxpayers that you're there as a government appointee, and then you vote to give a company, which you have an interest in, hundreds of thousands of dollars? Do you see how that's a problem?

[Guy Ouimet]

I can answer that.

The problem was acknowledged at the outset. I repeat that we established an emergency measure. COVID‑19 arrived and created a state of emergency. There remained $20 million. As the companies needed working capital, a universal program was immediately set up

We all declared conflicts of interest at one point or another. Well, that wasn't the case for all of us, but it was for a number of directors. You mustn't think that all directors are constantly in conflict of interest.

So that decision was made. We didn't vote blindly, as you seem to suggest. We immediately asked management how the program should be managed, and it ultimately took the form of an allocation to management. Here we're talking about 5% of companies in the portfolio as an addition to the existing contract. We submitted that decision to the legal adviser and subsequently complied with his rule.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

We understand that the amount awarded was a percentage amount; but, sir, there's no way that reasonable people would find these to be reasonable actions. It's unbelievable that we have hundreds of thousands of dollars being paid. We have a government appointee taking taxpayer dollars and then giving these dollars to their own company they have an interest in, because other people, who are also implicated, like the chair of the board, have said that this kind of behaviour is okay. To say that this is a company or an organization that has rigorous ethical standards that have been followed is absolutely egregious.

We saw in the report that the government commissioned that the ethics adviser advise people to backdate their ethics filings. Sir, this is not just problematic; this kind of insider dealing and corruption is very problematic for Canadians.

Sir, we'll have more questions about that. I think I'm out of time.

[The Chair, Liberal, Joël Lightbound]

You are indeed, Mr. Barrett.

I will now yield the floor to Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Good afternoon, gentlemen, and welcome.

I want to turn my attention to a couple of things. The first is the role of SDTC as an incubator, as an investor in the clean tech in Canada.

If I can go over to you, George, how important is that role?

[George E. Lafond]

It's plays very critical role in where we placed it inside the value chain. As I said, when we started realizing that that clean-tech definition was changing dramatically, when we began this journey as a country—it even goes way back to when I was on the National Round Table on the Environment and the Economy—we were really looking at the hydrocarbon issue. That's why, when you take a look at the funds that we had or were initially allocated, you see that it was about biofuels.

We recognized, as I said, in about 2015, 2016, that there was a change in how you would define clean tech, because then you had to overlay IP, you had to overlay data, you had to overlay AI. We recognized that we had to keep up with where the market was going.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I was an investment banker at one time in my life, in my twenties, and it was a pretty unique experience. The traditional metrics when you're a valuation company don't really apply when you're looking at early-stage entities.

[A voice]

That's right.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I'm going to put this question to George, Stephen—and even to Guy, if he wants to chime in.

In the approval process, when project ideas or ideas for investment were submitted to you, there must have been some sort of governance process that you would go through in normal times. All three of you gentlemen are very experienced in this area. In your view, how robust was that governance process that you would be looking at or utilizing in analyzing the project ideas?

We have George and Stephen, and then Guy, if you can keep it quick.

[George E. Lafond]

I remember receiving a briefing note that talked about where we were going to start positioning SDTC, which was in a high-risk area. We basically looked at all of what I call the "silos", whether it was the type of research that's required for technology, or whatever.

You said you were a corporate banker. As you know, when you start doing start-ups, you're really looking at the capital costs, you're looking at the tangible assets, like a factory. In Saskatchewan it would be $200 million for a canola crushing plant. What entrepreneur has that? Basically, you're looking at banks, you're looking at investors, whatever it may be. We recognized we had to be even on top of that tier. When we started talking about the types of loans, or the types of grants, soft loans, whatever they may be, we knew we had to be the point of these issues surrounding the new way in which we had to help fund and support start-ups or scaling up.

I would say to you that the rigour was there, because in many ways when you see how some of the projects that were starting up then moved to scale up, it told me that we were really graduating. We were putting bets on companies that really were saying what they were going to do.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Perhaps we can go to Stephen online, please.

[Stephen Kukucha]

I've seen and done a lot of due diligence in my day. The materials that come from this group are first class. They are top notch. It's to the point that this organization, over its 20-year history, has invested about $1.7 billion into companies, and that has leveraged about $13 billion. That only happens if the due diligence and the effort the organization puts in are respected and viewed by external investors as something that's impeccable.

As a member of the project review committee, I'll receive 1,000 or 1,200 pages to read prior to a meeting a week before, and it is detailed. I'm very confident with the work product that this group and team puts out.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Stephen, you mentioned earlier that you recused yourself on occasions where you needed to and that was the policy that was put in place. Is that correct?

[Stephen Kukucha]

That's correct, sir. Yes.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Guy, perhaps you could comment on what I've asked the other two gentlemen, s'il vous plaît.

[Guy Ouimet]

Is it about due diligence?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

It's on the due diligence and the recusal.

[Guy Ouimet]

SDTC's due diligence process is absolutely robust, and it has evolved. It was initially a way to evaluate projects when SDTC was financing projects with various partners. In more recent years, we've encouraged SDTC to adapt to the market, to finance companies rather than projects. You have to understand that projects sometimes disappear, whereas companies have a greater chance of successfully creating value.

SDTC's due diligence process therefore expanded in the sense that we now focus more on all the components of a company's value, rather than solely on technology. In so doing, we've established a robust process within SDTC using outside resources.

[The Chair, Liberal, Joël Lightbound]

Thank you.

That's all the time you had, Mr. Sorbara.

Mr. Lemire, you have the floor.

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

Thank you, Mr. Chair.

I'll continue with you, Mr. Ouimet.

From what we can understand, the oil industry generates profits of roughly $200 billion. TVA informed us this week, and we mentioned it earlier in the House of Commons, that people in that industry have had some 2,000 meetings with Liberals at the various levels of government, which amounts to an average of three meetings a day.

In all those meetings and all those investments in the political parties, both Liberal and Conservative, can't you perceive an apparent conflict of interest that might be worth pointing out?

[Guy Ouimet]

That's a good question, but I'm not here to talk about politics. That's not my world. I come from the business sector, and I have experience as a director. The role of political parties and oil industry lobbyists is a sensitive topic for me because I'm not part of that world. However, I'm well aware that lobbyists are active in every industry, and the oil lobby in Canada is no doubt very powerful.

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

Do you think that can have an influence on the kind of priorities that certain political parties set or that it can encourage them to put certain questions to witnesses based on the interests of those businesses or their financial interests?

I'll ask my question in a different way. Given all the positive impacts that your businesses can generate in a new oil-free economy, is it possible that the oil companies may perceive the emergence of green technologies as a threat to their own economy and be happy that people ask questions for them based on their monetary interests?