Evidence of meeting #147 for Public Accounts in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.)
A video is available from Parliament.
Bloc
Nathalie Sinclair-Desgagné Bloc Terrebonne, QC
Okay.
You said that those opinions and all the preparation work done before submission to the review committee were very important.
Founder and managing partner, Cycle Capital Management, As an Individual
A number of things were important actually: the expert opinions, the team's opinions and our personal opinion. Sometimes the experts say that a given project is a very good idea, but a very bad idea financially speaking.
Bloc
Nathalie Sinclair-Desgagné Bloc Terrebonne, QC
Okay.
In the case of Spark Microsystems, I understand that you were no longer a board member when it received funding later on. Nonetheless, the technical opinion on that company was not favourable, that is, the experts advised against investing in that company.
When Spark Microsystems began its representations, you were still a SDTC board member, weren't you?
Founder and managing partner, Cycle Capital Management, As an Individual
Let me clarify that. First, can you give me the date in question? I want to be sure I have the right number.
Bloc
Nathalie Sinclair-Desgagné Bloc Terrebonne, QC
The first payment was made in 2021. Another amount was paid after you had left.
Founder and managing partner, Cycle Capital Management, As an Individual
If I understand correctly, Spark Microsystems received an initial payment in 2021, and then received funding when I was no longer a board member.
Bloc
Nathalie Sinclair-Desgagné Bloc Terrebonne, QC
Yes, that's right, but it began its representations when you were still there.
Founder and managing partner, Cycle Capital Management, As an Individual
If I was a board member when it began its representations, I didn't know about it because we were not informed. What we saw was the final result of the analysis. We didn't know that people….
Bloc
Nathalie Sinclair-Desgagné Bloc Terrebonne, QC
You can probably see where I am going with this. The outside opinions recommended against awarding funding to Spark Microsystems.
Let me give you another example that you are probably aware of. New Protein Global, on the other hand, received only favourable outside opinions on the technical and financial aspects. Yet it did not receive any funding. That makes me wonder whether there might have been an arbitrary funding decision.
Founder and managing partner, Cycle Capital Management, As an Individual
May I answer?
Bloc
Founder and managing partner, Cycle Capital Management, As an Individual
When we decide to fund a project, we do of course consider various elements. Sometimes the project is not technically strong enough, but SDTC can ask the company to make technical improvements. That is in fact often the reason for that kind of financial support. The idea is to complete a project in order to demonstrate something.
Bloc
Nathalie Sinclair-Desgagné Bloc Terrebonne, QC
In the case of New Protein Global, however, it received a favourable opinion from the various experts in all respects, including the financial and technical aspects, and it did not receive any funding.
Founder and managing partner, Cycle Capital Management, As an Individual
I don't remember that specific case.
Bloc
Nathalie Sinclair-Desgagné Bloc Terrebonne, QC
And yet the company's project met all of SDTC's sustainable development criteria and was aligned with its objectives, while other projects, such as the one from Spark Microsystems, did not meet those criteria. So it is rather difficult for someone from the outside, such as myself and the members of this committee, to understand why one of those two companies received funding and the other did not, even though their projects are comparable in some respects.
To what extent do the review committee and the board influence the final approval of projects?
I know you have some expertise, but did it carry more weight than the opinions of the people paid by SDTC to provide objective opinions?
Founder and managing partner, Cycle Capital Management, As an Individual
The committee did in fact discuss the problems. That is the purpose of the committee; it raises all the issues. It is hard for me to compare those two files because we saw 250 files. You will appreciate that I have a much broader view of things.
There were in-depth discussions. On the one hand, there might be an expert from a university who says it is the best idea going, while on the other, there might be a different kind of expert or administrator who knows the problems in the sector and leads the board to a specific decision. It is really a combination of elements that determines whether or not we support a project.
The expertise around the table included engineers, accountants, lawyers, and business people. There were all kinds of people offering their opinions from different points of view, which the board vigorously debated.
I cannot speak to the specific project you are talking about. On the other hand, I can tell you that the process was very transparent, that it was discussed and was honest. The SDTC employees also offered opinions on the files, and they were very competent. We listened carefully to what they had to say. Moreover, they presented the details of each file along with their recommendations.
Conservative
The Chair Conservative John Williamson
Thank you very much.
Up next is Mr. Cannings.
You have the floor for six minutes, please.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Thank you.
Madam Méthot, I'm new on this committee, and there might be some people at home watching this who are as confused as I am about some of these allegations, some of your explanations and some of the questions through the Auditor General's report, etc., so I'm trying to sort this out.
There seems to be a lot of potential conflict of interest versus actual conflict of interest. There's the timing of your investments and the timing of decisions. I think I'll just start with one thing that keeps coming up, which is this omnibus motion. Could you take some time to describe what's in that? Help me understand what's in that motion, what you see as a board member, and what you approve or not versus any potential or actual conflict of interest.
Founder and managing partner, Cycle Capital Management, As an Individual
Thank you for the question.
You will recall that it was during the COVID‑19 pandemic and there were not yet any vaccines. Various federal and provincial organizations and various organizations around the world were trying to help business people make it through that period.
Let me give you an example to illustrate this. During the COVID‑19 pandemic, a holding company with $20 million in revenues saw its revenues drop to zero within a few hours.
There was a tremendous amount of discussion around the world about supporting businesses. SDTC was no different from other organizations around the world that were concerned about business and technology. The board members had a discussion to adopt what we call an omnibus resolution, which applied to all of the files. As a result, all companies with access to SDTC funding would receive an additional 10% to 15% in funding, depending on the company, to help them weather the tough times. That funding was intended to support businesses and business people that were at high risk as a result of collapsing supply chains. The goal was really to save those companies.
It was an omnibus resolution because we did not have a list of the companies. The board discussed that. We discussed whether or not we should adopt the omnibus resolution. I want to point out that the CEO, the president, the chair of the governance committee and the members of the governance committee attended that meeting. For my part, I was just a regular board member. We decided to get a legal opinion from Ed Vanderberg from Osler, which is one of the big law firms in Canada. Mr. Vanderberg told us that adopting that resolution would not create a conflict of interest because it was an omnibus measure.
So I followed the lawyer's advice. When serving as a member of a large board such as that one and when a legal opinion is sought, we follow the lawyer's advice, generally speaking. That's what I did.
I don't know if I have answered your question.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
No, that was fine.
Again, we hear about conflicts of data, conflicts of amounts of money. Mr. Perkins had a list of companies, which apparently came from the Auditor General, where there were conflicts of interest. Again, I'm still unclear as to where the disconnect is between that list and what you were saying. I would just like—
Founder and managing partner, Cycle Capital Management, As an Individual
Today, once the translation is completed, you will receive that audit table from SDTC. It provides a complete list of the companies audited by the Auditor General, with our comments.
You will see the start date for the review of the Cycle Capital Management, or CCM, project, not at SDTC, the date the CCM project was refused, and the date that I declared my interests in the companies, the percentage of interests held by CCM and those held by Andrée‑Lise Méthot. You will also see the board's approval date and the date of my declaration of interests related to SDTC's investment.
In the case of the MineSense project, for instance, I have an interest of 0.03%. I co-invest in our funds with our investors from all over the world. As I said in my opening remarks, at the time of the two votes on the COVID‑19 support measures for that company, my interests represented 0.03%.
Of the 23 companies on the list, there was no conflict of interest for two of them, but former potential conflicts of interests had been identified, as indicated in the Auditor General's report. Andrée‑Lise Méthot and CCM therefore have no interest in 21 out of the 23 companies.
We recorded everything for each file, so I am being completely transparent with you.
I know the list is somewhat confusing, which is why I prepared a detailed table for you that provides confidential information because we do not usually disclose our percentage of ownership in companies.
Mr. Cannings, does that answer your question?
Conservative
The Chair Conservative John Williamson
Thank you.
You have time for a very brief question, or I can come back to you.
Thank you, Mr. Cannings.
We are beginning our second round, and the times will vary.
Mr. Cooper, you have the floor for five minutes, please.
Conservative
Michael Cooper Conservative St. Albert—Edmonton, AB
Thank you very much, Mr. Chair.
Ms. Méthot, you served on the board of SDTC from 2016 to 2021. Is that correct?
Founder and managing partner, Cycle Capital Management, As an Individual
I was an SDTC board member from June 21, 2016 to September 14, 2021.
October 28th, 2024 / 12:10 p.m.
Conservative
Michael Cooper Conservative St. Albert—Edmonton, AB
The Auditor General released a report that covered much of the time that you sat on the board. You said there was nothing contained in the Auditor General's report that implicated you in any way, but you have to know, as a member of the board, that isn't true. The report of the Auditor General was a damning indictment of conflict, corruption and mismanagement of SDTC while you sat on the board. Isn't that the case?