Public Accounts Committee on June 13th, 2024

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

They don't have to be on proper screening to have a conflict. That's total BS.

[Simon Kennedy]

I'm simply noting that the move to the NRC is a major step towards eliminating what is a kind of ongoing—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

As part of the condition of it moving to NRC, will you make sure, as the deputy advising the minister, that this fund—under its new governance rules, they will take direction from you on improving their conflict of interest—will not do business with these companies, so that these directors and former directors, Liberal hacks and cronies, cannot steal taxpayer money anymore?

[Simon Kennedy]

There will have to be—and there will be—a consideration of all of the findings of the Auditor General's report and the Raymond Chabot report. Decisions will have to be made on what to do in cases in which, as the Auditor General said, for example, money went out to an organization that would not, under the terms of the contribution agreement, normally be entitled to receive it. I will say that I am in 100% agreement with the need for increased probity and additional scrutiny.

I do have to note, though, in response to the member's question, that at this point we don't have any evidence of deliberate malfeasance, criminality, etc., so I think it's simply to say—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Look, I have to stop you there. We have asked that it be turned over to the police, that's true, the RCMP, but it's very clear from the evidence that at least $150 million is available on the website. We've had directors admit that they sat in board meetings and voted their own money. We have to stop that, at least going forward. You can set the terms going forward that these companies and these individuals that have this interest cannot profit from the taxpayer in this way anymore. That has nothing to do with police charges.

[Simon Kennedy]

I appreciate the member's question. My only point was to say that, in order to respond to it, I think there's a measure of due diligence that's needed. In the case of recoveries, the money that was put out to ineligible activities, that's black and white. In the case of companies where there's a conflict, the facts on the ground matter—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

They broke the SDTC act and the Conflict of Interest Act.

[Simon Kennedy]

I would simply say that you have to look at each case individually. In the case, for example, of organizations that received money but weren't necessarily compliant with the contribution agreement, the contractual arrangement between the company and SDTC may be such that the company wasn't aware that SDTC was colouring outside the lines. They may have entered in good faith into an agreement—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Colouring outside the lines.... Give me a break.

[The Chair, Conservative, John Williamson]

Thank you very much.

Our last member, Mr. Weiler, is joining us online for five minutes, please.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Chair.

I want to ask another question of Mr. Kennedy.

I have a number of clean-tech companies in my riding that have worked with SDTC in the past, and some were in the process of seeking funding from SDTC when the funding was frozen. This organization provides a critical service for clean-tech companies in Canada, where we do have challenges with access to finance.

I was hoping you could provide a very clear statement to me and to this committee to outline what these companies and other companies across the country can expect with the timeline of what is going to happen with funding and the funding freeze and when they may expect to reopen those conversations so that those processes can continue.

[Simon Kennedy]

Yes, I'm happy to answer that question.

Very briefly, my point in the last question is that we have to look at the facts of each case, because there are going to be cases in which people acted in good faith, and the fact that there is a deviation does not constitute criminality or malfeasance. If we had found evidence of criminality and malfeasance, we would have acted. I think there have been some very incendiary allegations made. As officials, we have a duty to look at the facts and the evidence and make judgments on the basis of the facts on the ground, so it's going to take some time to be able to answer some of the questions that have been raised. That was my only point earlier.

With regard to the restoration of clean-tech funding, this is a major priority. There have been many evaluations over the life of SDTC, going back to its foundation, notwithstanding the serious issues that have been uncovered through these audits and reviews, that have suggested that this organization has played a pretty important role in the development of a clean-tech ecosystem that is regarded, not just by the government but by many independent reviews by international organizations, business periodicals and others, as a leader in clean-tech start-ups.

We have an ecosystem of clean-tech companies in this country that is envied by many other jurisdictions, and SDTC played a role in that. There's a very strong interest in not losing the ecosystem or having permanent damage to many SMEs and others that are working, whether it's in the oil sands, in clean water or in many, many other sectors of the economy all across the country, that we don't sort of lose the ecosystem by virtue of the crisis that's unfolded with SDTC. There's a very strong interest in not having the business sector that has been assisted by this funding be harmed in the long run because of the problems that have been identified.

This is the reason for the minister's action plan and the efforts to transfer the funding to the NRC, to put this back on a sound footing, have oversight mechanisms that are much stronger and give people confidence that the kinds of diligence that you would want to see are in place, largely driven by these concerns about the many companies. There was testimony, to my understanding, before Parliament by members of the clean-tech community, who have spoken about the damage that's been done by the arresting of the funding. That is something that we're very alive to.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Your point is very well taken, Mr. Kennedy.

In terms of timelines about when the resumption of funding might be able to take place, is there a ballpark of what you might be able to say for companies that are asking for such?

[Simon Kennedy]

The funding resumption has already started. There has been some recommencement of funding.

As I noted, we have been working with SDTC as it puts its management response action plan in place. We're now satisfied that all those measures are in place.

Companies in their stable have been put through additional diligence to make sure that we are satisfied and that everyone is satisfied that they meet criteria around eligibility and around conflict of interest. Actually, SDTC has been assisted by a third party audit firm in doing that.

There has already been some funding that's been going out to organizations. That has happened only when there has been fairly extensive diligence to demonstrate that the funding is not going out in a way that's problematic or suffers from the issues the AG found in her review.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you very much.

Lastly, you mentioned it very briefly earlier, but the transition plan for employees from SDTC...?

[Simon Kennedy]

Employees have been informed that it is the government's plan to offer them employment at the National Research Council. That transition work will be overseen by the new board, in particular by Paul Boothe as the board chair. The minister has asked Mr. Boothe and the new directors to take this on.

I have had a meeting with the employees and with the new board chair to explain that it is the government's plan to offer them roles in the NRC. We don't want to lose the expertise of the rank-and-file employees because of the events of the last year.

That will be overseen by SDTC, working closely with the NRC.

[The Chair, Conservative, John Williamson]

Thank you very much.

There's just a point of clarification from the analyst.

For recommendation 6.29, which I'll note was one of the two priority recommendations as referenced by the auditor earlier, SDTC partially disagreed with the recommendation to reassess projects approved. They stated that “written records did not fully capture the robust deliberations made”.

Today, ISED, through you, Deputy, stated that it would proceed to review.

Does ISED, therefore, agree with the recommendations made to SDTC by the Auditor General? You seemed to imply that you supported it, whereas SDTC did not.

Could you just clarify that, please?

[Simon Kennedy]

I'm sorry. I'm just reviewing the material here.

[The Chair, Conservative, John Williamson]

It's recommendation 6.29.

[Simon Kennedy]

Just to clarify, this is language from SDTC. SDTC is saying it will work in co-operation with us to reconfirm that active projects—in other words, projects that are not historic and in the past—will meet the goals, objectives and eligibility criteria set out in the contribution agreement.

We would say that this is job number one. I mean, there are conflict of interest issues and so on, but clearly, our very strong insistence will be that future projects fall within the four square walls of the contribution agreement, and that will be part of the oversight activities we undertake to ensure that.

I think that last paragraph is accurate. It's coming from the organization, but I would agree with that. We will be working closely with them to make sure they follow the rules.

[The Chair, Conservative, John Williamson]

SDTC partially disagreed. Do you reflect that disagreement? Do you share that disagreement?

Again, I ask for clarification because earlier you seemed to suggest that a review would be done.

I just want to know if you're in agreement with that partial disagreement with the auditor's recommendation.

[Simon Kennedy]

What I will say is that I'm speaking for ISED, and we have findings from the Auditor General and from RCGT that raise questions around things like eligibility. I'm just using that as an example, but funds went out, so there's a question that members have put to the government, which is, what are you going to do about that?

We as an organization have to make determinations of what to do in these various circumstances. I already testified today on recoveries, and we see that as pretty cut and dried: We need to be taking action on recoveries. We will be looking at the other areas. We committed that we'll come back to the committee to explain what we're doing in that space.

Again, you have to appreciate that there's new management at SDTC since this report was drafted, so there will be a new management team that may or may not be in exactly the same place. Clearly, SDTC partially agreed with this recommendation, but they would have come to their own assessment of whether projects reviewed during the audit period met the terms or not.

However, that's also a judgment ISED makes. We have a contribution agreement. We will not necessarily, in all cases, come to the same conclusion about whether or not an organization has been following the rules. I can't predict exactly where we'll land, but we will come to our own determination in these cases of whether or not projects that were funded met the terms of the agreement, and then what we're going to do about it. The Crown will come to its own view.

[The Chair, Conservative, John Williamson]

Thank you.

I appreciate as well the recommendation here from the minister. Of course, as the motion was passed by this committee, we are looking forward to hearing from the minister sometime after this spring session.

On that note, I thank Ms. Hogan, Mr. Hayes and officials from the Office of the Auditor General, and Mr. Kennedy and Mr. Bilodeau for their participation today in relation to the study of “Report 6: Sustainable Development Technology Canada”. Any information that's forthcoming can go through the clerk, please.

On that note, I adjourn this meeting. We will see you next Tuesday.