Public Accounts Committee on June 13th, 2024

[Simon Kennedy]

For GIC appointees, there is a standard process the government follows. Typically, there's a poster or an advertisement made about an opening. People are invited to apply. There's a deadline set. There is a screening process that is typically managed by the Privy Council Office, in partnership with the lead department. Through that screening, a more limited set of candidates are identified. There is then an interview process.

I apologize. I don't know what happened with these individuals, but having been involved in a lot of these processes in the past in other contexts, there are sometimes psychometric assessments. There are usually reference checks, and so on. At the end of this process, the government decides, of those who make it through the screen, which ones will be selected, and then they are approved by the cabinet through the GIC process.

There's a very elaborate process. It typically includes conflicts of interest checks, security checks, etc.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Were any of the seven members who were elected by the board directly involved with these conflict of interest cases?

[Simon Kennedy]

I would have to look at my notes to determine who was implicated or not, but as it was noted, the majority are appointed by the members of the organization, which is at arm's length from the government, and then there are GIC appointees.

I don't know whether the Auditor General might want to speak to that. I'm sorry.

[Karen Hogan]

I can actually provide some information on that.

In the 88 cases that involved directors, there were 10 directors. Out of the 10, seven were Governor in Council appointees.

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

Mr. Cooper, this begins our fourth and final round. You have the floor for five minutes, please.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you, Mr. Chair.

Mr. Kennedy, you stated that your department, ISED, acted swiftly upon learning of mismanagement at SDTC when it received information from the whistle-blower on February 16, 2023.

With the greatest of respect, I say simply that this is not sufficient. Your department was responsible for overseeing compliance with the contribution agreements and ensuring that there were no conflicts of interest. We now know that $400 million of taxpayers' dollars improperly went out the door. Much of it went to pad the pockets of Liberal insiders who sat on the green slush fund board.

As deputy minister, do you accept any responsibility for that?

[Simon Kennedy]

Mr. Chair, I was on the record at the beginning of the meeting, agreeing with the findings of the Auditor General's review that—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Do you accept responsibility? Answer yes or no.

[Simon Kennedy]

Mr. Chair, as I said at the beginning of the meeting, we agree with the Auditor General's report and the necessity of ISED doing additional oversight of the organization, and we have a fairly detailed plan to—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

You don't accept any responsibility. That's what you're saying.

Maybe you can help Canadian taxpayers, who have been ripped off, understand how it is possible that your department never received or requested conflict of interest records from the green slush fund.

[Simon Kennedy]

Mr. Chair, as I noted at the beginning, we agree with the Auditor General's finding that there needs to be additional oversight done by the department.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

No kidding.

How is it possible that your department didn't even ask for any receipts? While we're at it, maybe you can explain why your department failed to conduct even a single audit to determine SDTC's compliance with the contribution agreements with your department.

[Simon Kennedy]

Mr. Chair, as I noted in my comments at the beginning, this is an organization that has an unusual status. It isn't even normal—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

The Auditor General found, sir.... It's very clear. Paragraph 6.67 of the Auditor General's report sets out the responsibilities that your department has, which I referenced.

The notion that it's at arm's length doesn't mean your department has no responsibility. There was $1 billion in taxpayers' dollars that went to SDTC, so don't tell me that because it's at arm's length, it somehow gives your department the basis to say, “Well, it wasn't our fault,” when you never requested conflict of interest records, when you didn't conduct a single audit and when your department failed to request any information from SDTC about terminated funding agreements.

Quite frankly, sir, I would ask if you can point to anything your department did right.

[Simon Kennedy]

The Auditor General's report notes a range of activities we did as part of our oversight.

Clearly, those were not sufficient to catch the problems at the board level, but I would note that this is not an organization that even typically would be subject to audit by the Auditor General, unlike, say, my organization or the NRC, which are regularly audited. This is a private sector organization that is far removed from the government. It is not government property.

The principal responsibility for enforcing these rules was with the board. Our oversight was not sufficient to catch the fact the board wasn't fulfilling its duties—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

You had an assistant deputy minister sitting in on the meetings, observing conflict after conflict. Your assistant deputy minister did nothing, your department did nothing and there was no direction from the minister for your department to do anything. It is a complete and utter breakdown from the standpoint of proper oversight, and Canadian taxpayers are out $400 million as a consequence.

I want to ask you about the $38 million in unlawful COVID payments that the board approved, millions of which went into their own companies.

They didn't recuse themselves. The chair even moved the two motions in which her company was enriched by several hundred thousand dollars as a result of those COVID relief payments. The Auditor General's report is very clear that your department was aware at the time that the board approved those payments.

Can you explain why your department turned a blind eye to what amounted to a black and white violation of a contribution agreement with respect to $38 million that went out the door?

[Simon Kennedy]

Mr. Chair, I've already spoken to this issue. I would simply note that the reason that this organization is being moved to the NRC—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

You knew about it.

[Simon Kenned]

—is that it's very—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

You knew about it, right, sir? You knew about the $38 million that went out the door unlawfully, in violation—

[Simon Kennedy]

Mr. Chair, I feel like I've already spoken to this issue.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

I'm asking you—

[Simon Kennedy]

I'm happy to provide some elaboration.

[The Chair, Conservative, John Williamson]

Mr. Cooper, your time just ended.

I'll give Mr. Kennedy time to respond. You have the floor, sir.

[Simon Kennedy]

I would simply note—and I think there has been extensive testimony today—that the very design of this organization, which by statute has to have members on the board with deep experience in the clean-tech industry, is that it's at arm's length and is not subject to a lot of the usual checks and balances that call for additional oversight and scrutiny.

We agree—