Industry Committee on Dec. 11th, 2023

[Simon Kennedy]

It is a question that certainly I've asked as the deputy minister, and it's a good question to ask in a situation like this.

I'll mention a couple of things. One is that in carefully reviewing the results of the RCGT report, the department did formulate a fairly detailed management response and action plan, which we've given to SDTC. I would say that's part of the response to your question in the sense that we've looked through all the concerns that have been raised by RCGT and asked ourselves questions: How can the organization directly address these issues? Are there things that can be done differently? For example, can we strengthen some of the language in the contribution agreement to make sure that some of those issues are dealt with?

I would say that in the constellation of organizations that ISED supports, SDTC is somewhat unusual in the sense that it's a shared-governance corporation. For example, with a lot of the organizations we support, we have a contribution agreement. The funds go to an organization for a specific purpose. In this case, though, the organization is for all intents and purposes in the private sector and is sort of at arm's length. The board makes most of the decisions. The board decides how to spend the money and so on.

The contribution agreements that we have with other organizations aren't necessarily directly analogous, but we still think it's a good question to ask whether there are things we can be learning more generally for the other contribution agreements we have. We are certainly undertaking that work now.

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

Thank you for that.

There's been much conversation about SDTC's conflict of interest policy. I won't go into detail on it. I think we've covered that quite consistently here. You're aware of the issues that members of Parliament have.

Have other independent agencies had this same problem with a conflict of interest policy? This is similar to the question I just asked you, but are you proactively identifying those and putting together an action plan on how you could evaluate those and so on?

[Simon Kennedy]

I would say conflict of interest is something that we take very seriously, in particular with organizations that have either a board or an advisory board that is meant to have expert individuals on it. In the case of SDTC—by statute, actually—part of the design of the board is to have people who are knowledgeable.

There's always a risk, given that, for example, the clean-tech sector is relatively small. Canada is a relatively small economy, relative to some of our peers. There's always going to be a risk, when you have experts from the sector on a board, that you're going to run into conflicts. That makes conflict management really, really critical. That's been my experience in government, in multiple jobs. It means documentation, having minutes, carefully enumerating things and so on.

I would say that one of the things the RCGT report demonstrated here was that this was an area that needed to be strengthened. The management response and action plan makes it quite clear that more needs to be done in that space. It is an area that's very important. We treat it very seriously across the organizations we deal with. This is a reminder of the importance of ensuring that these things are treated very seriously. Frankly, having processes is important, but demonstrating the very strong processes and having very good record-keeping and making sure you're covering all your bases are important in the public sector context especially, for sure.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Kennedy.

Mr. Barrett, the floor is yours for five minutes.

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

Who made the decision to suspend the funding to SDTC? Was it the minister or you, Mr. Kennedy?

[Simon Kennedy]

The minister was quite concerned that we suspend funding, so I would say the minister asked that that be done. It's certainly something we supported.

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

What evidence was used to justify that suspension? Was it the results of the RCGT report?

[Simon Kennedy]

Yes, it was the work that RCGT had done, demonstrating that there were problems in the controls and the processes.

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

You received those results in May. Is that correct?

[Simon Kennedy]

I received the results....

Forgive me. I'm just looking at the chronology. We had been working with RCGT throughout the months of, I would say, April, May and June—

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

While you consult your notes, I'll continue, if I could.

You've heard the recordings of your employee, the chief financial officer for ISED, Mr. McConnachie. He spoke to this issue. He said that you indeed were in possession of those results in May and that PCO would need to be informed so that they could brief the Prime Minister's Office.

The minister came to committee. He said the department acted immediately, but there's a gap between the suspension of funding, the date that you said was September.... Let's say it was late September.

[Simon Kennedy]

We briefed the minister formally on September 27.

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

On what date did you suspend the funding?

[Simon Kennedy]

Maybe I can just elaborate very briefly.

When this process got under way, when the allegations were made and we had hired RCGT to do this fact-finding report, SDTC had, to my recollection, just gone through.... They have kind of a funding cycle. They make awards and then—

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

Respectfully sir, I really just need a date.

[Simon Kennedy]

It's directly germane to the question.

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

If you don't have the date.... My time is very limited.

This is what Mr. McConnachie allegedly said on May 15 this year: “It's fairly clear that, like, being in receipt of the results of the fact-finding exercise, like, it's not something we can sleep on. We can't just go, ah, it's nothing, and sweep it under the carpet. We're compelled to act.”

You were meant to discuss with the minister the gross mismanagement of a fund, of taxpayer dollars, worth $1 billion, and the conflicts of interest in the management of it. That conversation was supposed to have happened in early June.

Did the meeting happen in early June?

Answer yes or no, please.

[Simon Kennedy]

I'm sorry, Mr. Chair. I can't account for the comments of my staffer. I don't agree with the comments that were reported to me. I certainly can't account for what he said.

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

You don't agree with what you heard him say, or you don't agree that I repeated what he said.

[Simon Kennedy]

I can't account for why my staffer said the things he said. I believe he's spoken already on the record about the context for that.

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

He said you had the results. He said the minister was going to be briefed. Then, there's this big gulf in time in terms of action. He also said a series of actions were going to be taken. It seems that his oars were pretty deep in the water on this thing and that there was going to be a new office responsible for it. They would have someone, an eminent Canadian, overseeing it. He made pretty grand overtures about it and said that your department absolutely believed the concerns that were raised by the whistle-blowers.

You talk about restoring confidence, and the minister talked about this in the House today—restoring confidence in the governance of this organization. You talked about the good work that the organization has done. For Canadians to have confidence in this organization and its governance, I would say there needs to be an accounting for the tax dollars that have been misappropriated.

There's now an Auditor General's investigation. Two government appointees are being investigated by the Conflict of Interest and Ethics Commissioner. RCGT itself found multiple instances of mismanagement of public funds outside of the contribution agreement.

Is there a plan to have the misappropriated funds returned? Answer yes or no, please.

[Simon Kennedy]

I think we're waiting to see the results of the Auditor General's review. If I could just—

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

I'm going to ask you a couple of questions, and then I'll give you the last 30 seconds of my time to respond.

Sir, if you haven't prepared a plan for the minister to have the funds repaid, if the minister hasn't prepared a plan for the funds to be repaid, I would say that Canadians are going to find themselves out of pocket and that the insiders who benefited are going to find their pockets a lot fatter. That's unacceptable to Canadians. They are not going to be able to have restored confidence in this organization.

I have 15 seconds left. I would love to know what the plan is to have the funds restored.

[Simon Kennedy]

Mr. Chair, as a public servant, I think we're bound by the facts and the processes that have been set out. The Auditor General is doing a review. We look forward to the results of the review. We'll take action in accordance with her recommendations. That's what I would say at this point.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Kennedy.

Mr. Sorbara, the floor is yours for five minutes.