Public Accounts Committee on Sept. 18th, 2024

[Witness 1]

I worked there from July 2020, I believe, all the way to June 2022, during which time I was directly involved in the approvals and disbursements of over $200 million in funding. That would include funding and reviews of projects across every single one of the different funding streams that the AG has mentioned in her report.

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

Okay. I'm looking to understand if you served with the previous board chair, Mr. Balsillie, or was your term strictly under Ms. Verschuren's chairmanship?

[Witness 1]

It was just Verschuren.

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

CBC reported last December that whistle-blowers such as yourself had fears that when ISED took charge of the file, the department would hesitate to get to the bottom of things because the target of the probe was funded and supervised by the department.

Over the last year, ISED launched two independent investigative reviews through third parties and even welcomed an AG investigation in order to get to the bottom of claims at SDTC.

What were your fears based on exactly?

[Witness 1]

I hope you listened to the recordings that were in those audio clips, because I think they would provide some context.

I mean, the whole SDTC situation is a conflict of interest, so why wouldn't ISED, which is implicated in its own mismanagement of SDTC, be conflicted in hiring a third party that is supposedly independent, but again, if they were actually independent, why would they have such long legal disclaimers that disclaim all responsibility against what their findings were? If the minister claims that all of these were independent and truly factual, why do all of the actual reports say that none of this is actually factual or legally binding or even meets a minimum threshold of any sort of professional, legal or accounting standards?

When you compare that to the Auditor General, there was no disclaimer. There was nothing there that would say, “Hey, we don't know what we're talking about and this is not legally binding or this doesn't meet a requirement on the professional standards.”

I would also mention that there are over 37 hours of recordings that we are fully willing to provide, which would clearly show how the situation actually evolved, versus how the public would know.

[The Chair, Conservative, John Williamson]

Thank you.

That is the time, I'm afraid, for Ms. Bradford.

Our interpretation system has changed.

Witness 1, can you hear me in English?

I'm just going to test the earpiece.

Perfect.

Ms. Sinclair‑Desgagné, you have the floor for six minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

I want to thank the witness for what he has shared with us, for his courage and for being forthcoming in answering our questions today.

For starters, I want to reiterate how unfortunate this catastrophic situation is. The current government showed us how to kill a good idea. That's exactly what it did with Sustainable Development Technology Canada, or SDTC. I also want to reiterate our support for the businesses that, in the end, are victims of a truly unfortunate situation involving a fund that mismanaged taxpayers' money.

My goal is to help committee members better understand the situation. We've heard a lot about conflicts of interest involving the board of directors. We've also heard about serious human resources problems in terms of how employees within the organization were treated.

I'd like to know if you also noticed conflicts of interest within the organization itself, perhaps involving employees or a DG who wasn't on the board of directors.

If so, can you give us examples?

[Witness 1]

I have several.

One of the things I'd like to point out is that the current COO, Ziyad Rahme, was actually implicated in the Auditor General's report, because his wife was hired to recruit the board members. He continues to work in that position today. There are many people whose family members are benefiting. Think about the fact that his wife is hiring board members, who then make decisions on his compensation. It's an obvious conflict.

Another one, which I think is more egregious, includes the approval of new funding for the ALUS ecosystem project. It was a project that had a direct connection to the previous disgraced CEO, Leah Lawrence.

In her situation, she had a best friend named Aldyen Donnelly, which she admitted to at the ethics committee meeting. For that specific project, she was going to be provided with hundreds of thousands of dollars as a subcontractor to a project. That is a project for which we have emails that prove that executives themselves said the project was not able to meet even the most minimum levels of financial compliance that are required by the government. Even when that was there, the CEO still pushed for that project to get approved. Even to this day, that project is still getting funding.

On top of that, there are countless others. Let's say there are different ecosystem projects that might have reviewers for every project. There is a requirement for every project to have an external review on the business and technical side. In several cases, these reviewers on one side would provide a project with a positive review, knowing that the project wasn't technically sound, and within those same few months a project that they themselves had an interest in would then be approved.

Again, this isn't a board-level issue. This is endemic across the organization at the higher level.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you.

That example is someone who's still on the job. In the examples you gave us, you mentioned Leah Lawrence, who, if I understand correctly, is no longer on the job.

Are there many people in a conflict of interest situation who are now employed at National Research Council Canada or who probably will be? The Auditor General named them. Let's not forget that the government announced people would keep their jobs.

[Witness 1]

From my understanding of the report or the letter that was given to the new board chair of SDTC, they've stipulated that only non-executive employees would be getting contracts to NRC. I don't know whether that's breaking news to the public, but from the sound of it, it seems like none of the executives are going to be moving on to NRC, which potentially creates a bigger issue because that might mean that they're going to get big payoffs for mismanaging the fund into the ground.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

I'm sorry, but I may have misunderstood the last part. Could you repeat the last part of your answer, which was about how executives won't go to NRC? What are the repercussions of that?

[Witness 1]

Within the statement of work that the minister gave to the new board chair, the only stipulation that exists for SDTC employees getting contracts is that it's strictly for non-executive employees.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Right.

What are the repercussions of that?

[Witness 1]

It's a guarantee that only non-executive employees would be getting contracts at NRC.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Okay.

My question was about what's going to happen to the employees who are still there despite conflicts of interest and the fact that the Auditor General's report identified serious problems. If it had to do with non-executives, that would mean non-executive employees would be transferred.

Do you think the problem also involves the employees who are doing their job to the best of their ability? The problem really seems to be with the executives and the board of directors.

[Witness 1]

I think it really is at the executive board level. I think the non-executive people who maybe shouldn't be moving over to NRC are more related to the culture. There are a lot of people who purposely ignored the problems or helped the situation for themselves. Inevitably there might be some conflicts that I don't know about.

The only way this can truly be publicized is if the names of those people are public. Even for that situation, employees at SDTC had a monthly report that they would put in to say if they had a conflict on anything, whether direct or indirect. At the employee level, it was treated differently. They did the work to ensure that no employee below that executive level had any sort of work or any impact on those types of projects. It might be a neighbour or it might be an indirect person. Those were done pretty well, and I don't remember any situation of an employee who had a conflict that was conflated. At worst, it might have been forgotten, but I don't believe that, for employees themselves, there are any significant cases.

[The Chair, Conservative, John Williamson]

Thank you very much.

Up next we have Mr. Desjarlais.

You have the floor for six minutes, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

Thank you very much to the witness, both for being present and for the immense courage to bring forward what is a terrible instance of gross corruption, conflicts of interest, disgusting corporate culture, to be quite frank, and serious issues relative to the treatment of staff at SDTC.

The issues that I think are pertinent for my first round are related to the instances of conflict of interest that you've brought up. You've mentioned several times the severe conflict of interest pertaining to executive members.

I also appreciate your opening statement in regard to what is a very idealistic mission and one that I think many Canadians agree on, which is to support innovation and technology towards the better development of green technology, something that you yourself have contributed to in Canada. I don't want to diminish that work, but, of course, it's come at the heels of taxpayers. It's come at the heels of the trust that Canadians should have in their institutions, and now it's incumbent upon the government and members of this committee to try to pick up the pieces of what has been a really devastating blow to public confidence in this type of work. I want to thank you for mentioning those facts.

I want to see if you can describe to me one of the examples that you mentioned in earlier testimony, in response to one of my colleagues today, related to when an executive takes a project. Let's say it's one of their projects. The normal process you mentioned takes six months from the time when an original application is submitted by a regular person not connected to the executive. Six months go by, and maybe they're approved. When executives want to have a decision, when they want to get support for their project, how long does that approval take?

[Witness 1]

It might be faster.

I think, again, with regard to executives, a lot of times it was someone who was friendly with the executives. That's why I mentioned this inner circle of people who were above regular Canadians going through the regular process. When I talked about some of these fast-track processes and issues like that, in certain cases it was an executive who was purposefully helping a company connected to a board member. When it was a situation like that—even in cases where, let's say, the project was rejected to the point where it was unfeasible even to take it to the board—a lot of those projects were then kept in the background. At any point, they were suddenly reactivated, whereas if someone had a real project rejected, they were specifically told it was rejected and “Here are all the requirements you need to come back to apply.” For other projects connected to board members, it was never a case of that. It was, “Okay, let's wait six months. Then we can move it along or try to pick it back up.” Timing was one thing, but a lot of it was a little more like that.

All the rules that existed were good to ensure everything was done correctly, but everything that happened that I'm talking about was more on the obfuscation of rules. There were all these ways to manipulate but still pretend like you were meeting all of the requirements that existed. When I'm talking about executives, there would be situations, in other cases, where an employee would write a specific finding or recommendation that executives would change themselves and then send it up to the board. Again, it's not that every person at the board level was corrupt. A lot of them were just, frankly, morons who didn't see what was happening.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

To be frank, they were also complicit because they must have known about these things. They were members of a board. They would have been responsible, ultimately, for the decisions of the board, including instances where some board members were taking illicit contracts or finding ways to defer contracts to their buddies. They're still implicated.

Is that correct?

[Witness 1]

That's correct.

It's one thing to say, “I forgot” or “I didn't notice.” However, when you agree to be a board member for SDTC, any GIC-appointed organization or anything within the federal government, you sign a fiduciary obligation to meet minimum requirements.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Exactly.

[Witness 1]

As much as everyone is still pretending like it was a mistake, we don't hold anyone accountable to that level when it's taxpayer dollars. We're talking about board members. This is where there were a lot of mixed-in situations where, yes, executives would change things.

Let's say there was a certain project that got a “not recommend” from someone, which would effectively kill that project. Well, executives would supersede decisions, or go to the external reviewers, who were supposed to be independent, and have them change their reviews. In certain situations, they would actually prevent the employee from speaking about the project at the board level. They themselves would speak about it to make sure they could tell the story they wanted to tell.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

They would be motivating applications that had already been reviewed under a regulatory process. They directly intervened in the decision-making and application process of their buddies to better leverage support for their friends' projects.

[Witness 1]

It was across all stages of the process.