Industry Committee on Dec. 11th, 2023

[Simon Kennedy]

Mr. Chair, the ministry was advised, but my staff.... Certainly, my recollection is that they told me very rapidly that this was unfolding, because we needed to discuss how to respond. It was on February 16. We had been approached by a complainant with a fairly substantial dossier expressing concerns about events inside the organization and seeking to have the department follow up. That would have been February 16 of this year.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Can you explain the process of going from hearing from the whistle-blowers to having the third party firm RCGT conduct a fact-finding exercise?

[Simon Kennedy]

Effectively, we received the complaint on February 16. It was a voluminous complaint. I'm just making a factual observation. There was a lot of detail in there. It took a bit of time to digest it and determine what the obvious next steps would be.

The other thing is that we were aware, because we'd consulted other colleagues in government, that the complainant had made representations to other organizations. There were conceivably at least two or three potential leads to pursue in a fact-finding, investigatory process.

For example, as I mentioned, there is a minority of members who were appointed by the Governor in Council. Some of the allegations concern the behaviour of the board and the chair. There was a question: If there were to be fact-finding, would it be something led by ISED, or would it be something led, for example, by the Privy Council Office? They ultimately manage the process for government appointees. We had to do an internal government consultation to determine who was on first. The judgment was that ISED should take the baton and do the investigation.

We issued a contract to RCGT on March 17. I should say that the minister was briefed well prior to that. There was a period between February 16 and the end of February when we did those internal consultations and reviewed the documentation. The minister was briefed in the first week of March. Then we issued a contract to RCGT on March 17, to execute the fact-finding review.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Mr. Chair, I'm assuming I'm out of time.

[The Chair, Liberal, Joël Lightbound]

Yes. Thank you, Mr. Gaheer. You're almost out of time.

Mr. Lemire, the floor is yours.

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

Thank you, Mr. Chair.

Without prejudice, I am not sure that the information given by my colleague Mr. Perkins matches what we heard from the witnesses last week. I am referring specifically to Ms. Méthot. I would be curious to validate that in the minutes, because it seems to me that the amounts were not as large. Since we are talking about the reputation of some people, I think it is something that should not be taken lightly.

Mr. Kennedy, based on the allegations and subsequent investigation reports, SDTC has frozen the approval of new projects and will deny any new applications until the implementation process is complete. According to last week’s testimony, it is undeniable that this suspension has serious consequences for companies operating in the sustainable technology sector.

How does the government intend to ensure that this situation will not irreversibly affect development and innovation in the Canadian environmental technology sector?

[Simon Kennedy]

Thank you for the question.

I do not have the document in front of me, but I understand that the minister has already commented on this subject. We are well aware of the risk of a significant impact on businesses in the field of environmental technologies, and we are looking at how we should solve this problem.

The minister has made it clear that we will review the results of ongoing investigations and take action. However, at the same time, we do not want to create problems for businesses.

We are studying the solutions now. I am not in a position to discuss the decisions, it is up to the government, but I would like to say for the record that we are well aware of this risk and that we are looking at ways to resolve that. Those are my comments for now.

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

What do you think are the biggest consequences the suspension can have on the new technology sector in the short and long term?

Can this result in companies losing expertise, contracts, or intellectual property, and being bought out?

[Simon Kennedy]

Frankly, we do not want those negative impacts. So we are now working on this issue, and our goal is certainly not to create problems for the sector. However, we understand that there is a risk and that if we continue for several months without providing any funds, it could become a problem. We are aware of that and we will try to take action to solve this problem.

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

What new measures or directions does the government plan to put in place before resuming project approval at SDTC? What kind of transition period do you have? Do you have a timeline?

[Simon Kennedy]

As a public servant, I have to let the minister make the decision. I can only tell you that there are solutions to allow for investigations to continue while providing funds. We are looking into that now.

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

I am still concerned. I would like to know how the department intends to restore the confidence of businesses, innovators and the public in the integrity of SDTC’s management. Are there any communication and transparency initiatives in place for that?

[Simon Kennedy]

Mr. Speaker, we are also concerned about the confidence of businesses and Canadians in the management of public funds. Right now we are doing an analysis of SDTC’s response to the action plan that we submitted to them to see if that is sufficient.

We are also looking at the board of directors, as some seats are vacant. We may appoint new members. We look forward to McCarthy Tétrault’s review. Our goal is to take the necessary steps to restore—I do not know exactly how to explain this—business confidence.

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

In your opinion, has an operation of this magnitude already been done in the oil sector, where investment funds and the credibility of these funds are questioned?

[Simon Kennedy]

I do not think I fully understand the question.

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

Is this type of witch hunt specific to the new technology sector? Is that already being done in the oil industry, which is heavily subsidized?

[Simon Kennedy]

This is the first time since I am with the department that we have seen an investigation and issues like that. We take that very seriously. We do not want to repeat that or repeat it in other areas. I will stop there.

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

It reminds me a little bit of what we have already experienced in this committee, especially when we studied the Fox project and Rogers' takeover of Shaw. I think you were present at that study. It seems to me that there are a lot of similarities. There may be companies that benefit from seeing this type of fund sink.

My final question is, who is responsible for informing clean-tech companies of the approval suspension, and ensuring the continuity of these organizations during the transition?

[Simon Kennedy]

Certainly SDTC has a relationship with businesses. In this case, communications were ongoing with these companies and are still ongoing. Clearly, Innovation, Science and Economic Development Canada also has some responsibility, because we are the lead department. We will clearly communicate the decisions that will be made. Those are the next steps.

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

Thank you very much.

[Simon Kennedy]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you.

Mr. MacGregor, the floor is yours.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you very much, Mr. Chair, and thank you to the witnesses for being here today.

I'm here today replacing our regular member on this committee, Mr. Brian Masse. I understand that when the minister appeared before the committee, Mr. Masse asked him about extending employment opportunities to the employees of SDTC who have come forward.

He was wondering if I could ask you whether the department has begun that process and what the outlines and expectations of that process might be to ensure that those employees are protected.

[Simon Kennedy]

I don't think I can go further than the minister's answer with regard to that specific question, but I would say that there have been, since that time, steps taken with the board to put in place this independent legal review and, as part of that, to ensure that employees or former employees who wish to come forward will have the potential liability they might otherwise accrue be waived. That's a formal process that has been put in place in writing, and it will have legal standing.

There have been steps taken to ensure that those who wish to express concerns will be able to do so without attracting liability and be safeguarded from those kinds of issues.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you for that.

As members of Parliament, we're often in reactive mode to what our constituents bring to us, and I think your department is now generally in reactive mode to these allegations coming forward.

The review by RCGT identified a number of instances where SDTC was not in compliance with its contribution agreement with ISED.

I guess what I want to know is, in trying to learn a lesson from this and find ways of being proactive, have you identified other situations in other contribution agreements where this potential may exist? What lessons are you taking from this?

I understand that you're waiting for a full review, but surely you must be taking this and saying that there could potentially be other troubles out there. What are you proactively doing to make sure that other contribution agreements are in compliance?