Public Accounts Committee on Sept. 23rd, 2024

[The Chair, Conservative, John Williamson]

Good morning, everyone.

I call this meeting to order.

Welcome to meeting number 140 of the House of Commons Standing Committee on Public Accounts.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and remotely using the Zoom application.

Before we begin, I'd like to ask all in-person participants to read the guidelines written on the updated cards on the table. These measures are in place to help prevent audio and feedback incidents and to protect the health and safety of all participants, including and especially the interpreters. You'll also notice a QR code on the card that links to a short awareness video.

I am told there is some audio issue that is mild at this point and is affecting all of our witnesses and two members who are joining us remotely. With respect to the witnesses, I'm going to ask that when you are making your opening statements you speak slowly and clearly. This goes, of course, for members as well when they are questioning witnesses. There's no issue that's causing any disruption now, but if it intensifies, then we might have to pause the committee hearing.

I remind you that all comments should be addressed through the chair.

Pursuant to Standing Order 108(3)(g), the committee is resuming consideration of Report 6, “Sustainable Development Technology Canada”, of the 2024 Reports 5 to 7 of the Auditor General of Canada, referred to the committee on Tuesday, June 4, 2024.

Before I begin, I just want to note some committee membership changes.

Joining us is Mr. Drouin. Welcome. It's good to see you. It's nice of you to join the committee.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you.

[The Chair, Conservative, John Williamson]

As well, a permanent member joining us online is Mr. Erskine-Smith. Welcome to the committee.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thank you very much.

[The Chair, Conservative, John Williamson]

We appreciate having you.

Of course, another member, who is not listed with us today but is an old hat, is Kelly McCauley, on the opposition side, who is back with us once again.

Of course, I'd be remiss, Mr. Long, not to say that it's always good to see a fellow New Brunswicker on the committee.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

That goes for me too, Mr. Chair.

[The Chair, Conservative, John Williamson]

It's good to see you here today. Thank you for joining us.

I'll now welcome our witnesses and we can get going here.

Joining us by video conference, as individuals, we have Stephen Kukucha and Guy Ouimet, a corporate director. It's nice to see you. Thank you for joining us.

You each have five minutes for opening remarks. I tend to just go by the order here, which would begin with Mr. Kukucha. However, if you two gentlemen have pre-arranged things, you're welcome to say so. Otherwise, Mr. Kukucha, you have the floor, please.

[Stephen Kukucha, As an Individual]

Thank you, Mr. Chair and honourable members.

I am Stephen Kukucha, and I served on the SDTC board from February 2021 to May 2024. I live in Vancouver. I'm a retired lawyer, and I'm certified by the Institute of Corporate Directors. These opening remarks will largely mirror the opening remarks I made to committee in 2023.

To start, I believed in SDTC's work and believed it was critical to the development and success of Canada's clean-tech ecosystem. While I acknowledge both the OAG report and the McCarthy report and the shortcomings they laid out, I feel compelled to state that there was a lot of good work done in critical funding support for deserving companies.

I joined the board because I believed my unique perspective and positions within the clean-tech sector could add value. My almost 25 years of experience in clean tech gave me an understanding of the challenges companies face in acquiring capital. That struggle was obviously exacerbated by the market downturn in late 2021, the dramatic increase in the U.S. government's investment in the space, and then the pause of SDTC's work.

It's good to see the government will continue funding via the NRC.

As well as my work in clean tech, I should also disclose up front that I have been involved in politics in the past, both federally and in British Columbia, and I'm proud of that involvement. I believe engagement in our country's democratic process, no matter what party one supports, is important to civil society. For example, I have a profound respect for your decisions to run for office and to seek careers in the public service. It is one of the more important things a Canadian can do.

Most importantly, I also need to disclose that I was the recipient of the whistle-blower call to the board on January 27, 2023. That call and my subsequent actions led to the board initiating a special committee, which I participated in, and then an investigation.

Unbeknownst to me, the whistle-blower call was surreptitiously recorded. However, I will reiterate that I'm comfortable tabling a transcript of that call to show the level of professionalism this individual was afforded in good faith. Alternatively, you can ask the whistle-blower to share the tape, as I understand they have testified.

It's also very important to make it clear that on multiple occasions, the whistle-blower was asked to share their dossier and all the facts they were basing their allegations upon so that the board could respond to and address them in a professional manner. Unfortunately, they did not share the dossier, and the board was left to investigate without the full possible suite of information.

During my one-hour conversation with this individual—who I believe was not the same person who testified at this committee—I took contemporaneous notes. After the call, I immediately realized that the board needed to be informed and legal counsel engaged with a proper process followed. Even the Auditor General acknowledged that the whistle-blower was handled appropriately.

An immediate investigation was commenced, without informing the individuals who were the subject of the allegations. I acted in good faith, followed proper governance and, in my opinion, undertook my duty.

The board and I took this extremely seriously. SDTC was created by an act of Parliament and funded by the government. It was a Canadian institution with a critical mandate. Because of that, it was important to investigate fully with the information we had and take whatever actions were necessary. Our national institutions are important and worth protecting.

Regarding my minor investments in clean-tech companies, any and all conflicts were disclosed prior to my appointment, and all my investments were made years prior to my appointment. Further, based on my review of the facts, the vast majority of the funds that any of these companies received were provided to them well before I was appointed, with the exception of the COVID payments, which I will address momentarily.

In fact, prior to joining the board, I was asked to resign from the board of a company that had previously received SDTC funds, and I promptly did so. Any conflicts after joining, either real or perceived, were also disclosed. Finally, I have not had access to any files related to those conflicts, and I recused myself from any decision-making.

With regard to the payments during COVID, I want to share my perspective. At my first board meeting, two weeks after being appointed, a recommendation came forward to give management discretion within an allotted pool of capital to make assistance payments if required. No individual companies were listed in the board documents, and I previously requested a copy of that document be tabled to the other committee I testified at to show you what the board received.

There was also legal advice that directors who had previously declared conflicts did not have to redeclare. I had declared two weeks prior. While I understand the OAG's position on this now, at the time I felt I was following proper legal advice.

Finally and importantly, I have not received a dollar from any company that has received SDTC funds, and no company I invested in has exited or provided any return to me. I have not been compensated in any way by these companies or other organizations I'm affiliated with. I have received no payment, no dividend and no remuneration at all. In fact, my partners and I have contributed significant personal time and financial resources to keep these companies and other non-clean-tech companies contributing to the Canadian economy over the last few challenging years.

With that, I'm happy to answer your questions.

[The Chair, Conservative, John Williamson]

Thank you very much. I am giving the witnesses a little extra time because I have asked them to speak slowly to ensure the interpretation is smooth.

Up next is Mr. Ouimet. You have the floor for approximately five minutes. Go ahead, please.

[Guy Ouimet, Corporate Director, As an Individual]

Good morning.

Mr. Chair and members of the committee, thank you for welcoming me here today.

My name is Guy Ouimet. I am originally from Montreal, where I still live. I'm an industrial engineer, hold an MBA and am certified by the Institute of Corporate Directors.

For most of my career, I have worked in venture capital, private placement, project financing and mergers and acquisitions. In this capacity I acted as a senior executive of a private equity firm for 10 years and then launched my private practice in the form of a boutique investment bank. This practice has developed over the years based on my multi-sector and technological expertise, particularly in energy, metals and minerals, chemicals and petrochemicals and the automotive industry, as well as the evolution of these sectors towards decarbonization of the economy. For 25 years, my clients have included government institutional funds as well as numerous private companies. I participated in the setting up of multiple investment projects and transactions. Since 2020, I have been a corporate director exclusively, and currently sit on four boards of directors and committees of private companies.

I joined the board of directors of Sustainable Development Technology Canada, SDTC, on November 8, 2018, following an appointment resulting from my candidacy in a year-long Governor in Council recruitment process. Having no political affiliations and having not requested any references except those required by the validation procedures during the recruitment process, I declared all my background and qualifications. At the conclusion of the Governor in Council process, I was recruited based on my expertise to contribute to SDTC's board of directors.

In addition to being a member of the board of directors, I was a member of the Project Review Committee and the Governance and Nominations Committee. I resigned from the SDTC board of directors on June 3, 2024, following an extension of my mandate.

During the Governor in Council recruitment process, I declared a conflict of interest: Prior to my appointment to the board, I was an adviser to a company that had been approved to receive SDTC funding. Once appointed to the board I discussed this conflict of interest with the chair of the Governance and Nominations Committee. He advised me and I subsequently followed his recommendations, all within the established governance framework. Since my appointment to the board, I have periodically declared all real, apparent or potential conflicts. I have not had access to the files in question and have recused myself from any decision relating thereto.

With respect to the emergency payment made to companies by SDTC during the COVID‑19 pandemic, as already indicated, the board complied with the legal opinion of Osler, Hoskin & Harcourt, which was based on the prior declaration of conflicts of interest, the urgency of the situation and the universal nature of the measure for which no company benefited from individual treatment. Like the rest of the board of directors, I acted in good faith, in accordance with this opinion.

In 2024, at the request of a member of the Standing Committee on Industry and Technology, the Conflict of Interest and Ethics Commissioner conducted an investigation into allegations of conflict of interest against me. Following a thorough investigation of SDTC's corporate emergency payments, and taking into account all of my conflict of interest declarations during my entire term as a director, the commissioner dismissed the allegations of conflict of interest against me in his report, tabled on July 24. In the spring of 2024, the Office of the Auditor General tabled Report 6, which dealt with SDTC. SDTC management accepted the Auditor General's recommendations and was given the opportunity to provide responses, which are presented in an appendix to said report.

Personally, on reading this report, I note that no wrongdoing was identified and that, of the 90 conflict of interest defects, 63 related to a difference in legal opinions on the COVID‑19 pandemic emergency payment, and 13 were due to errors in the minutes of meetings. I also note that the shortcomings in terms of project eligibility and compliance, or governance compliance with funding agreements and the enabling legislation, essentially stem from the government's delay in updating SDTC's legal framework, almost 25 years after its creation, to reflect the restructuring and business plans approved annually by the board of directors, the department and the minister responsible.

The relevance and effectiveness of Sustainable Development Technology Canada has been recognized on several occasions by periodic performance audits. In addition, decarbonization technology entrepreneurs praise its contribution, and venture capitalists regard an SDTC contribution as a preliminary validation for their own investment. These facts are well known in the industry across Canada.

Thank you for your attention. I am available to answer your questions.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Ouimet.

We'll now begin our first round. Members will each have six minutes, beginning with Mr. Perkins.

Mr. Perkins, you have the floor, please.

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

Thank you, Mr. Chair.

Thank you, witnesses.

Mr. Ouimet, in your statement to the Ethics Commissioner and in other board director testimony before this committee, we found that there was a process, I think, when you were about to consider an investment. The process was this. A few weeks beforehand, board members would get a list of investments that were being considered. Board members would let the SDTC or the secretary know they had a conflict, and then they would be sent materials without those particular investments included in them. Then at the beginning of each meeting, my understanding is that the conflicts per director would be read out before the beginning of the meeting. Is that correct?

[Guy Ouimet]

Yes.

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

Thank you. Then to start off the meeting, every director knew which investments on the agenda each board member who was conflicted had an investment in, which is what you just confirmed.

The Auditor General went over 226 board-approved transactions from over a five-year period, which was a sample of the more than 400 during that period of time, and found that 186 of those were conflicted. In other words, 82% of all transactions that were coming before the board were conflicted with board members or board members had an interest. Is that correct? Were you, the board members, recusing yourselves or abstaining 82% of the time?

[Guy Ouimet]

Mr. Chair, allegations of conflict of interest were made against me last year. A detailed and complex investigation was completed by the Conflict of Interest and Ethics Commissioner. All these issues of administrative misconduct and recusals—

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

Sorry, I have limited time, Mr. Ouimet.

That was not my question, Mr. Ouimet. I would appreciate that you stick to answering the question out of respect for members of Parliament.

[The Chair, Conservative, John Williamson]

Please wait a moment.

I'm addressing the witnesses.

Committee members have limited speaking time, so they may interrupt you. I'm doing my best to ensure that all participants, including the—

[Guy Ouimet]

Mr. Chair—

[The Chair, Conservative, John Williamson]

Just a minute, Mr. Ouimet.

[Guy Ouimet]

All right.

[The Chair, Conservative, John Williamson]

I always give the witnesses a chance to respond.

For the next three and a half minutes, it will be Mr. Perkins' turn to ask you questions. If the members feel that you're not answering their questions, they may decide to interrupt you and ask you to start again.

Mr. Perkins, I'm going to go back to you. You have about three minutes and 35 seconds, please.

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

Thank you, Mr. Chair.

I will ask my question again.

Mr. Ouimet, 82% of the time, according to the Auditor General, directors were conflicted in the transactions over the five years, and those overlap with your time on the board. So, Mr. Ouimet, when the committee is briefed that board members have a conflict, do they recuse themselves or leave the room? Your chair, Ms. Verschuren, didn't know the difference last week when she testified.

[Guy Ouimet]

Mr. Chair, during my time at the board of directors, I noted that all the directors who had declared conflicts of interest were withdrawing; they were recusing themselves by not being present. They hadn't received the information and they withdrew.

That there were shortcomings in the minutes is a well-known and well-accepted fact, and if we treat them at face value as errors on the part of the directors, we shouldn't—

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

Mr. Ouimet, you abstained on the transaction, but you didn't actually leave the room.

Let me go over this.

You were appointed. In 2019, Annette Verschuren was appointed as chair. You went to the CEO. Here, before committee, she testified that you basically said, “Direct conflicts of interest are now allowed, so I'm going to join the board, which I was asked to join, of a company that had already been doing business with SDTC.” Is that correct? Did you say, “Well, now that conflicts are allowed, it's okay for me to join that board since it's doing business here and the chair is allowing that”?

By the way, that was Lithion.

[Guy Ouimet]

I had exercised an option in this company after informing management and, having exercised an option, I—