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.
Liberal
The Chair Liberal Joël Lightbound
Dear colleagues, we'll resume, as it is 8:00 p.m. sharp.
For the next part, we have a witness who, at his request, prefers that we not mention him by name. I ask you to comply with this request.
Let us get started now.
Sir, I will yield the floor to you. Thanks for being with us tonight at this late hour to share your perspective with this committee. It's much appreciated.
You have the floor for the next five minutes.
Witness-Témoin 1 As an Individual
Thank you, Mr. Chair and honourable members of the committee.
Before I begin, I would like to clarify my intentions. I am not here to attack SDTC, its workers or the companies it funds. SDTC plays a critical role in the Canadian economy. I genuinely believe in its mandate. I can personally attest to how effective the organization is at utilizing taxpayer money to create jobs and develop new industries. The organization needs to survive. The employees working there need to be protected, because empowering those SDTC employees is crucial for the successful delivery of its mandate.
The only way to get SDTC back on track is to discuss the facts and set the record straight. I believe accountability is the cornerstone of a just society. That's the sole purpose of my presence here. The SDTC board, executives and senior management must be held accountable for their gross mismanagement of taxpayer money and the gross misconduct that's been perpetrated by the toxic senior management team, which has victimized countless employees. The federal government must also be held accountable for the embarrassing lack of oversight that has allowed these problems to persist and the egregious cover-up of the truth that occurred this fall.
At the beginning of this year, a comprehensive, 345-page presentation was created and submitted to the Privy Council Office at the request of the Office of the Auditor General of Canada, whom we originally went to. This package contained documents that outlined gross mismanagement across every aspect of SDTC's operations and governance. It highlighted non-compliance with the SDTC act and contribution agreement across all of the organization's funding streams, and serious breaches of the conflict of interest policies by the executives and board.
The package also included evidence of the toxic workplace culture that was created by the CEO, Leah Lawrence, and her friend and still current VP, Zoë Kolbuc, who have been allowed to continue abusing and harassing employees by a passive senior management team and board that protect and hide the abuse.
All this information underwent review by PCO and was then forwarded to ISED, which subsequently engaged RCGT to conduct an independent fact-finding exercise to validate this information. I will outline the findings for everyone.
The seed fund, ecosystem fund and scale-up fund were all found to be ineligible due to multiple violations of the contribution agreement, significant deviations from the due diligence process, and conflict of interest breaches by board members and executives. This finding encompasses nearly 200 companies that all received over $80 million, all of which was improperly funded using taxpayer money.
The two COVID payments in 2020 and 2021 were also given to the full portfolio of companies. They totalled almost $40 million. They were also deemed to be ineligible, as the use of these funds was not effectively tracked. Several board members in that instance also violated conflict of interest by approving almost $4 million to themselves—to over a dozen companies in which they all hold significant ownership or executive positions.
The report also revealed that SDTC lacked HR processes or policies. Issues were never even reported to the board. Conveniently, the RCGT investigators couldn't find even a single record of any complaint ever being made in the history of the organization.
This is a staggering level of incompetence, wilful ignorance and corruption that has resulted in SDTC improperly distributing almost $150 million in taxpayer dollars just in the past few years, and abusing dozens of people who have only tried to talk about the truth.
The organization deserved to be suspended. The organization also deserved a new board, executive and senior management team, but that never happened. Not a single one of the individuals responsible for these issues has faced a single consequence. No executive or board member was terminated or put even remotely near handcuffs. Every single person who was directly implicated even had their name redacted and protected by ISED in the RCGT report.
Even more shocking is the fact that despite these findings, ISED continues to allow these individuals to manage taxpayer dollars. It also allows them to continue perpetuating the abuse against employees who have been desperately seeking protection from their own government for over a year. That cannot stand.
The SDTC's board and executive continue to insist that the issues are just minor inconsistencies, while ISED and the minister continue to claim that no findings warrant serious action. These are false narratives, and I'm here to provide documented proof of all the lies that continue to be perpetuated by both SDTC and ISED.
I believe that my testimony can provide an in-depth overview of the key issues at SDTC, because I worked on the financial due diligence and compliance of projects at SDTC for the key two-year period that coincides with the most serious findings in the RCGT report.
I am also intimately aware of exactly how ISED understood the issues, and the clear direction the total bureaucracy had laid out. The minister and PCO have been aware of this file longer than they are telling the public. There is documented evidence that they even engaged with everyone at ISED to make sure there were edits to the briefings before they were officially sent to them.
All of this is backed up by documents, transcripts and recordings, some of which we've already submitted to this committee.
Thank you, and I welcome all of your questions.
Liberal
The Chair Liberal Joël Lightbound
Thank you very much, sir.
To start the discussion, I'll turn it to MP Barrett.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
I have six minutes, so I'll ask you a question, and I'll give you up to a minute to respond to each. I'll try to do this in six questions, if I can.
Can you confirm that in your opening statement you said that up to 150 million in taxpayer dollars have been misappropriated, in your estimation?
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
How many board members and executives were in conflicts of interest and were funding companies in which they had a financial interest?
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Are you able to provide some examples to the committee?
As an Individual
Key examples would include ex-CEO and ex-chair Annette Verschuren, and Leah Lawrence.
What they've said before is not the full truth, because Annette Verschuren said that she had never applied for anything at SDTC, but she in fact applied to SDTC for her Verschuren Centre in 2021 and tried to get funding for that organization, which was ultimately rejected.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
You mentioned you have documented proof of the things you've said.
Is there any information you have not submitted to the committee that you would be able to provide to the committee, specifically with respect to your testimony today?
As an Individual
We are willing to provide all the information, under the condition that it's also publicly released.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Okay. Will you be able to forward that to the clerk?
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
The conflicts of interest that we have seen, that have been identified with respect to appointees of the Liberal government, totalled more than $600,000, specifically with respect to COVID payments to Ms. Verschuren and Mr. Ouimet.
These were not isolated incidents with respect to those COVID payments. Is that correct?
December 11th, 2023 / 8:10 p.m.
As an Individual
That's correct.
When we're talking about the COVID payments, we need to talk about two payments that were made. The findings of the RCGT report didn't just say that the conflict of interest rules were broken. The report also found that all of the $40 million that was given out was not even effectively tracked, because anything that was funded by SDTC had to be tracked for eligible funding. None of that happened for either payment, as found by the RCGT report.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
How much money flowed to the companies that were in conflict of interest?
As an Individual
For both of those payments, it would have been almost $2 million each time, to likely a dozen companies or more. It's hard for us to really know, because we were not really made aware of all the conflicts of board members most of the time.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
You just heard testimony from ISED officials and the deputy minister.
To your knowledge, in their opening statement or in response to questions from members of this committee, did they mislead or fail to provide fulsome answers?
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Can you provide details of that assessment?
As an Individual
With regard to the ISED situation, ISED representatives were open and transparent about the investigation from day one and provided weekly debriefs on the progress. There was no coercion in any of this.
Here are the real facts of the matter. ISED representatives have said on multiple occasions that there were no briefings made to the PCO regarding the situation. This is a lie. We have evidence that the deputy minister and ADM were in continuous conversations with the PCO, because the investigation included GIC appointees. The minister said, on the record and multiple times, that he was briefed on the outcome only on August 27, but that's definitively not true. He lied at the ethics committee. The deputy minister spoke to the minister's office and the minister on several occasions before the briefings were finalized, including about edits that were made on behalf of the minister's office.
The real truth of the matter is that there was a definitive consensus across the bureaucracy at both ISED and the PCO that the full board and executive team at SDTC needed to be terminated. This was described to us in detail and on multiple occasions in late August and September. The outcome of this situation changed only when the minister's office became involved. He is ultimately responsible for SDTC. He is the one who needs to tell the truth about what the real situation is.
With regard to some of this, we have already submitted clips and transcripts from September 1 and September 29 that provide all the detailed information. If I have some time, I'd like to go over some of that.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
I have 60 seconds.
Conservative
As an Individual
On August 25, this is what was said: “The overall thematic is kind of where we've come to sort of understand...as well, which is that there's a lot of sloppiness and laziness, and there's some outright incompetence, and the situation is...untenable at this point, and that doesn't even include any of the allegations related to the way in which the place is managed. Just on the basis of the administration of the agreement, the governance, the conflict of interest and shoddy management of the COI, the situation is untenable.”
On September 1, there was this:
The report implicates the board in terrible ways. By not following process, by not following the COI regime and by not being prudent fiduciaries, they've missed out on so many [issues]. It's...a board failure altogether...and this is how we're briefing it. This is how it's well understood by us and the deputies, and I think it's understood by PCO as well, because it's not the first time they've seen this kind of situation.
The final one is on September 29.
Since we last spoke, most of the week, for us, has been involved in finalizing the briefing to the minister. Obviously, there's been verbal briefs from the deputy to the chief of staff and to the minister himself, just so he gets a heads-up as to what's coming, and that's resulted in tweaking to the briefing package and all that...stuff.