Industry Committee on Nov. 28th, 2023

[Andrée-Lise Méthot]

We were extremely impressed to be receiving calls from entrepreneurs, even if they were only those from our portfolio at Cycle Capital.

There was a whiff of panic among them. In many instances, their businesses weren't profitable, and that's why they didn't meet the criteria of other available programs. Those companies develop technologies and invest in technology, but they don't turn a profit. Consequently, panicking entrepreneurs were wondering if they had to declare bankruptcy or lay off their employees. However, losing human resources means losing business intelligence. You have intellectual property, but without engineers and experts, it's very hard to turn that asset into real products and build an actual commercial enterprise that's globally viable.

Many scenarios were possible, depending on the phases of COVID‑19, obviously. Looking in the rearview mirror, we can see that we may have vastly undermined those businesses. Some very serious studies show us that more than 85% or 90% of new technology intellectual property in the water industry, for example, is owned by Chinese interests. In addition to the brain drain, that intellectual property could have been a target.

Let's say you stop all that, take a break and then start over. You will then have to find employees, people who understand and are capable of doing what's called “scaling”, which is the real commercial rollout, without losing knowledge.

I would have been more embarrassed here if you had asked me why we did nothing. I'm glad that we did something and that this committee is looking into this matter.

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

Yes, as I remember it, the risk was tangible. Someone mentioned the devaluation of Air Transat to this committee. In your case, we're talking about emerging businesses that have specific expertise; so there was an enormous patent risk.

Since I don't have much time, I'll get right down to your board's deliberations. I have training as a certified corporate director, a CBD, and I like the way you talk about declaring real, apparent and potential conflicts of interest and about withdrawing or recusing yourself as necessary.

Would you please tell us more about your board? How many directors at the table were in conflict of interest when the board voted on that emergency measure during the pandemic?

[Andrée-Lise Méthot]

It's hard for me to give you an exact number because I don't have the same status as everyone else.

However, I can tell you that the in‑house practice was to recuse yourself. We had a productive discussion about this on the board, and the minutes recording the discussion between us and our legal adviser, an experienced lawyer who guided us in our decision-making, were very well written.

I would remind you that I'm an engineer and a finance expert. My role on the board was to review technical and financial aspects, and I followed the opinion provided, as did the others.

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

The motion that we previously discussed includes the whole aspect regarding the declaration of conflict of interest. Perhaps the committee will have the answer to that if we adopt this part of the motion soon.

So as I understand it, you declared at least four conflicts of interest with regard to the emergency fund, but you didn't actually withdraw. Why didn't you do so when it came to voting for the emergency fund?

[Andrée-Lise Méthot]

I felt that the opinion and the debate that we had gave me enough information to let me continue sitting on the board. However, I should also tell you what the actual exposure of our funds was.

All the motions together amounted to $38.5 million. The Cycle Capital funds in the businesses that received that money amounted to 0.26%. Cycle Capital doesn't own 100% of the businesses, just 4%, 5% or 10%. The Cycle Capital manager owned 0.0026%, which means an exposure of $996 from an accounting materiality perspective.

In my case, because I'm a Cycle Capital shareholder, it's 0.00078%, or $298, in all our businesses that received funding from the COVID‑19-related measures.

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

We're reminded of the unusual context of this matter.

I feel like asking you if you would do it differently if you had to do it over.

[Andrée-Lise Méthot]

When I look at the present economic situation—I'm not an economist, but all you need to do is read a little in the newspapers around the world—I understand that there are economic risks. I think we secured our economic future. I believe that some of those hundred or so businesses will be the “green Googles” of tomorrow in Canada. So we did our duty.

We can definitely improve things, but, at a time when there was no vaccine, when people couldn't see their grandparents or parents, and our children stopped going to school, it was the only decision we could make as Canadians to preserve our business capital.

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

Ms. Méthot, I hope that all the witnesses in the studies conducted by parliamentary committees are as transparent as you are.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Mr. Masse, the floor is yours.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you for being here today.

How did you get appointed to the board?

[Andrée-Lise Méthot]

There are two processes, as I understand it. Personally, I was appointed by the members. I was co‑opted by the civil society representatives under the chairmanship of Jim Balsillie, who created the BlackBerry.

[Brian Masse, NDP, Windsor West, ON]

What was the process for other members to get appointed?

[Andrée-Lise Méthot]

I'm sorry, but I didn't follow that process. What I know about it is that there's a process involving members of civil society—

[Brian Masse, NDP, Windsor West, ON]

You don't know how the other board members were appointed.

[Andrée-Lise Méthot]

No, I know how the directors are appointed, but not in detail. What I know is that you put your name forward. It's a direct selection by the government rather than by members of civil society.

[Brian Masse, NDP, Windsor West, ON]

I'm assuming that it's the minister, at the end of the day. I guess we'll get that clarification. Maybe I can put that to the table as to who appoints the board members. I understand that Madame Méthot is appointed by those who are appointed, but I want to know who appointed the original board members.

I want to make sure that it's clear for the public, too. This board, then, is comprised of a number of different people who may or may not have several companies that SDTC then can provide financial assistance to.

[Andrée-Lise Méthot]

Yes, I think that's possible, and there's a reason for that, if you want to hear it.

Would you like me to continue my answer?

[Brian Masse, NDP, Windsor West, ON]

No. I have limited time, but I'll try to come back.

I'm sure there's expertise, and there will be different things in that, but I guess the thing is that.... Walk me through how you recuse yourself during a meeting.

I have meeting minutes here that show that some of your companies received some money, and it says that it was unanimous. Now, you may have recused yourself. Does that mean that you leave the room and then come back? Walk us through that, if you could.

Thank you.

[Andrée-Lise Méthot]

We received the list 10 to 14 days before the board met. That let the members know whether they were in conflict of interest as a result of such and such a factor on the list. I was absent from certain board meetings and from meetings concerning businesses in our portfolio. In some cases, everyone was absent for the entire meeting, and generally that was clearly noted in the minutes. When I was in attendance and had to leave temporarily, I left the meeting room. That's something that all board members did, and it's something that the minister's representative saw every time.

[Brian Masse, NDP, Windsor West, ON]

You would come back. Did you learn then what the vote was? Was that provided to you?

I know the minutes show that.... This, I think, is where some of the public and others have difficulty. It seems pretty comfortable. You come back, and it's unanimous, so it's kind of like rotate a person in, rotate another person out, rotate a person in, rotate another person out, because it's unanimous.

That seems like a very cozy way of going through things, and I have some minutes here that don't even show that; they're always unanimous.

What do you think of that?

[Andrée-Lise Méthot]

I'll answer both parts of your question.

When we left—

[Brian Masse, NDP, Windsor West, ON]

Thank you.

[Andrée-Lise Méthot]

May I continue?

[Brian Masse, NDP, Windsor West, ON]

Yes, all right; thank you.

[Andrée-Lise Méthot]

Thank you. I apologize, this is a bit stressful. I don't know how a committee proceeds.