Evidence of meeting #103 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was board.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Simon Kennedy  Deputy Minister, Innovation, Science and Economic Development Canada, Department of Industry
Mitch Davies  Senior Assistant Deputy Minister, Strategic Innovation Fund, Department of Industry
Andrew Noseworthy  Assistant Deputy Minister, Industry Sector, Department of Industry
1  As an Individual

Viviane LaPointe Liberal Sudbury, ON

Thank you, Mr. Chair.

Hello, sir. I, too, want to thank you for coming here this evening. I see that you also took time to prepare your five-minute statement, and I want to thank you for the time you put into that. It is important for this committee to hear from you.

With reference to that opening statement, I want to make sure that I have been able to understand in a very accurate way the information you're giving us, so can you clarify the timeline, the chronology? Because there were so many dates there, I want to make sure that I've captured it.

8:35 p.m.

As an Individual

Witness-Témoin 1

Is that with relation to the complaint?

Viviane LaPointe Liberal Sudbury, ON

It's in relation to the overview of the timelines of the events related to the concerns that you've raised.

8:35 p.m.

As an Individual

Witness-Témoin 1

In terms of all the issues at the organization, they've been ongoing for years, so that could go back even to 2017 or before.

As it relates to the issues at hand and how the complaints moved forward, it was initially brought to the Office of the Auditor General in December of last year, and after they reviewed the information, they asked that the information be sent to PCO, and that's when all of the information was then packaged into the 345-slide presentation, which, again, included all of the documents and all of the references to make sure that it was comprehensive—so that it wasn't just allegations.

After that, PCO passed it off to ISED, and then ISED initiated the fact-finding in March.

In May, what was told to everyone was that the findings had been made, so every single issue that ISED had noted to suspend SDTC in October was founded all the way back to May. They had been sitting on this for over four months between that time, and this is when the minister's office initially got involved, because, once it was mentioned to them, they provided us some indication that, “These are all of the subsequent investigations.” At that point it was a fact-finding exercise, so the whole outcome of that was a six-week review, which, if anything was proven, would then initiate the required investigations for it, which would be a due process investigation. That would involve the Office of the Auditor General, reviewing all the HR issues and a review by ISED, because there were major issues that they found in the compliance agreement on the contributions side.

All of that was what they said was founded, and they said they planned to initiate the investigation. Once it got to June, after they had initiated some of those conversations with the minister's office, it was suddenly said that they needed more time to fact-check.

Viviane LaPointe Liberal Sudbury, ON

Who do you mean when you say “they?”

8:40 p.m.

As an Individual

Witness-Témoin 1

They are ISED, senior ISED executives. When I mention ISED, it's always senior ISED executives.

In June they then said that this was now a smaller-level investigation. They even stated to us that this was not a fact-finding exercise anymore, that this was an investigation, and they could provide details to prove that point.

Viviane LaPointe Liberal Sudbury, ON

Did they state that to all employees?

8:40 p.m.

As an Individual

Witness-Témoin 1

No, they did not state that to employees. Again, none of the information as it pertains to the investigation was ever given directly to SDTC employees, even though ISED asked SDTC to provide those optics. SDTC executives continually withheld information regarding the progress of the investigation and even the initiation of the investigation from employees, until the media started reporting on it.

Going back to that timeline, once it got to June and July, what was then said was that they had found that they could not even trust SDTC executives with the documents, because what RCGT and ISED were finding was that documents were being changed. There was a level of mistrust within ISED even on what SDTC was sharing with them. That's why in July they asked us to provide additional documents that they were not able to get from SDTC.

In August is when everything changed. That request was then cancelled. They said they were going to fire all the executives and board members. It was ISED that began the conversations around how they were going to fire everyone. Then, in October, they suddenly said, we aren't going to do any of that.

Viviane LaPointe Liberal Sudbury, ON

Let me understand. When you were bringing concerns forward, were you doing that through HR or the next level up?

8:40 p.m.

As an Individual

Witness-Témoin 1

I'm sorry. Do you mean at ISED? I don't work at SDTC anymore. The whole situation at ISED was an indirect.... There was no legitimate system in terms of, like.... Because SDTC's outside of the purview, as they've stated, there isn't even a process that exists to take these complaints in, which is why it went from the Office of the Auditor General to PCO and then to ISED. They had to figure out who dealt with it.

Viviane LaPointe Liberal Sudbury, ON

Did you have direct interactions with ISED?

The Chair Liberal Joël Lightbound

Madam Lapointe, I'm sorry.

Mr. Lemire, you have the floor for two and a half minutes.

Sébastien Lemire Bloc Abitibi—Témiscamingue, QC

Thank you, Mr. Chair.

Thank you again for being here, sir.

Last week, Mr. Kukucha told us that the internal investigation process had been followed and that he was committed to it. He stated that he received a complaint. Are you, by any chance, the person who approached Mr. Kukucha under those circumstances?

8:40 p.m.

As an Individual

Sébastien Lemire Bloc Abitibi—Témiscamingue, QC

You did not talk about that.

8:45 p.m.

As an Individual

Witness-Témoin 1

I do have information around that situation.

Sébastien Lemire Bloc Abitibi—Témiscamingue, QC

What can you tell us about these facts or your experience with him?

8:45 p.m.

As an Individual

Witness-Témoin 1

The Osler process is something that ISED themselves were told about when the initial investigation was started by ISED. A complaint was made to the board member, Stephen Kukucha, at the end of January. He stated that they had asked for information from the whistle-blowers, who were internal employees, and that they never received anything. We are willing to provide all of the emails around that situation.

What happened was they picked Osler, which is clearly a conflicted law firm that has been used consistently by SDTC to put people under NDAs. Some of the most significant complaints that were involved required that NDAs be waived, because how can you investigate a situation if the people who are pertinent to it are not even being interviewed?

There was a back-and-forth that happened between employees and Osler. Once it was decided that Osler was going to investigate, they mentioned that they were going to use the SDTC ethics policy as the guiding framework through which the investigation was going to happen. However, when the employees mentioned that the same policy requires disclosure and transparency around what the investigation is and what the outcomes are going to be, Osler immediately reneged on that. They then suddenly said that this is actually not under the ethics policy, which they themselves had said to the employees was in place.

Once that happened, it was clear that this was a cover-up. When ISED started their investigation in March all the way to now, they've consistently had that same view of it. This whole situation on SDTC using Osler is clearly made to divert attention and hide the actual truth.

I know that Osler also provided investigation outcomes. None of those investigations and issues were even investigated correctly. What he says is completely false. Again, we are willing to provide all of those documents. They are unwilling even to tell ISED about that, but ISED knew about all of those emails back and forth.

The Chair Liberal Joël Lightbound

Thank you, Mr. Lemire.

Mr. MacGregor, the floor is yours.

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Thank you, Chair.

A lot of the focus that I've seen so far at this meeting has been about what the executive branch of the government is going to be doing. In other words, we've just had the deputy minister and his assistants here talking about what they're going to do internally, but that's all in the executive branch. I want to focus my question more on what the legislative branch can do. You're seeing part of that in action right now through a parliamentary committee investigating this issue, issuing a report with recommendations.

You've been detailing all of the problems as you've experienced them, and you are in touch with other employees. Looking at the legislative authorization that SDTC gets through the Canada Foundation for Sustainable Development Technology, do you think there is another role for the legislative branch in looking at stronger legislative guardrails?

Have you ever thought about that part of the question, and would you have any recommendations for this committee to look at?

8:45 p.m.

As an Individual

Witness-Témoin 1

When we're talking about the SDTC act legislation, one of the issues that we found was that it seemed like no one was actually keeping organizations in compliance as it related to that. The act exists, and when I'm mentioning these committee members who were illegally being appointed to the board, we still didn't know who had authority to oversee that issue. It's still not being addressed, even though that's a serious issue of governance at SDTC.

There are obvious rules that already exist for, let's say, board members. I can read off the federal government's ethics policy, where it says:

Governor in Council appointees are required to perform their duties in the public interest. Their personal and professional conduct must be beyond reproach.

I don't think anyone here can actually say that the conduct of the SDTC board was beyond reproach. On top of that, there's also other language within that agreement that says:

Public office holders have an obligation to perform their official duties and arrange their private affairs in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law.

That's the other thing. Many board members and executives come here and say they have done everything right, because they talked to their own lawyers. That's not good enough when these are taxpayers' dollars. There's clear language across multiple acts and across multiple policies the federal government has that clearly shows that everything that has been done up to now by the executive and board members doesn't even meet that minimum threshold. I think the issue is, even if there's more language that exists, who's going to actually enforce this? There's no enforcement in any of this.

Had ISED actually enforced its contribution agreement, none of this would ever have happened. That's where the issue was. You can have as many agreements as you want, but if no one's enforcing anything and no one's overseeing the actual day-to-day functions.... There was even a non-observer board person, but that person was clearly incompetent and didn't understand what was going on.

The Chair Liberal Joël Lightbound

Thank you.

Mr. Barrett, you have the floor.

8:50 p.m.

Conservative

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

I have five minutes. I'm going to split my time with Mr. Perkins, so I'll try and get through these questions quickly, with your help, if I can.

Is there missing context related to the bonuses and the COVID payments that you can provide us with?

8:50 p.m.

As an Individual

Witness-Témoin 1

One of the things the committee needs to understand about the COVID payments is that it wasn't just about conflict of interest rules being broken. Both of these payments were done within days of the end of fiscal year 2020-21, and both times the amount of money that was sent out made a significant impact on the bonuses that executives got. When on one side board members were getting all of their companies and all of the information.... They were getting all of this funding on one side, and by approving this funding, where they broke conflict of interest rules, they were also giving bonuses to all the executives, who were the ones who presented that information to the board members.

On top of that, the other issue was that for the second COVID payment, it just wasn't the COVID situation. SDTC's board members, in the fall of 2020, had already agreed that they were not going to make any blanket payments as they had already done. That was in the board presentation, which, again, we can table. The SDTC even did a full survey of the total portfolio of SDTC companies, which showed that, on average, every single company had over 14 months of runway, which was more than enough, so they didn't need any funding. Instead, board members were presented with another COVID payment, which they then agreed to, and in this case, board members are coming here saying that the companies were desperate; they needed it, and it was a requirement. That's absolutely false. The companies didn't need it, and the executives chose to give it to everyone.

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

I have 30 seconds remaining before I turn my time over.

The minister said that he continually received evidence. Is that correct?