Public Accounts Committee on Nov. 4th, 2024

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

In your opening statement, you acknowledged, as everyone does, the 400-plus-year right of Parliament to ask for documents. If they're unredacted, they're unredacted. That's a long-standing parliamentary right.

Is it not true this whole thing that has frozen the House is related to the fact the Liberal government has chosen to ignore the order of the House, which was voted on by a majority of MPs representing a majority of Canadians? Three parties, not just one party, voted for these documents.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Perkins.

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

Is it not true the government could avoid it by just releasing the documents?

[The Chair, Conservative, John Williamson]

I'll allow an answer, and then move on.

[Andrew Hayes]

What you're bringing up is the nature of the dispute between the government and Parliament. We've characterized it as a dispute. Quite frankly, for us, we feel like we're in the middle of this. It's really the government that should be accountable for the decisions to redact or refuse to provide documents.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Drouin, please, you have the floor for five minutes.

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

Thank you very much, Mr. Chair.

For your information, we agree with the chair's decision. We'll send it to the Standing Committee on Procedure and House Affairs. We can deal with this and get on with the business of Parliament.

Thank you very much, Auditor General, for joining us.

I often hear the expression “recovery of funding”. When I talk to my constituents, I want to know how realistic that is.

Here's what I'm getting at.

In one of your recommendations, you suggested reviewing the eligibility criteria to determine whether or not a business truly met the requirements to receive funding. Regardless of what happened before, I see that Sustainable Development Technology Canada, or SDTC, still decided to sign a contribution agreement with the companies in question.

If this matter were to end up in court, I don't see how the judge could tell people at SDTC that they did indeed err by signing a contribution agreement with the company. If the company falsified documents or its purpose, and so on, then it could be said that the company did not properly portray themselves to Sustainable Development Technology Canada.

How do you think the government will recoup those funds? Have you seen what means SDTC has at its disposal?

[Karen Hogan]

There are legislative means by which the federal government can recover funds. The recovery of funds is enshrined in federal legislation. The fact that it's a foundation does create a different situation, I think.

First of all, we have to determine who was ineligible. Then we can decide what measures to take.

You are right that there is an agreement, and that is a problem that the foundation should resolve. However, according to the agreement between the government and the foundation, if the foundation provided funds to a company that was ineligible, the government could recover those funds from the foundation. That mechanism still exists. The foundation will have to decide how to proceed with those businesses.

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

The foundation did not live up to its contribution agreement with the Department of Innovation, Science and Economic Development. We have to make sure that the foundation does indeed have funds that were not—I mean, if the government recovers the money with its own funds, we are starting all over from scratch.

I understand that the businesses' eligibility or lack thereof has to be determined, but the fact remains that decisions were made. Despite the fact that some companies were not eligible, Sustainable Development Technology Canada still decided to enter into a contribution agreement with them. If a company did not comply with the contribution agreement it entered into with the foundation, that's another matter. We often hear that funds were recovered. I agree, but I think if you hired a lawyer, they'd establish within two minutes that SDTC's mistake was to enter into a contribution agreement before determining whether or not a company was eligible. So it's not the company's fault. It's SDTC's fault. If the company lived up to its agreement with SDTC, why should they have to pay back the funds?

[Karen Hogan]

I think it comes back to the fact that the provisions of the agreement between the company and the foundation should be reviewed. It is indeed very likely that this issue will be settled by lawyers, who will decide on the best approach.

In our opinion, if a business received money when it was not eligible, the government should identify it and then decide what to do—that is, whether or not to recover funds. It must then be transparent about the decision that is made.

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

In principle, we deal with a third party that itself deals with another third party. The authority was delegated. The money was allocated. They're supposed to live up to that agreement.

Based on your audit, do you think the foundation has other means besides the government funding?

[Karen Hogan]

We haven't done a legal review of each agreement, but I don't think there's a mechanism. However, there is a mechanism to recover funds between the government and the foundation.

For example, every year, a request would be made for more money, but a portion of the amount would be withheld. That would be a type of recovery. It's up to the foundation to decide what goes to the company.

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

This is money we are supposed to have, but it hasn't been received yet. I'm not sure how the average person is going to perceive this. I don't know if they would call it a recovery of funds. Rather, it would be a budget cut because the expected objectives weren't achieved or because there would have been abuse in this matter.

I'd like to come back to the recommendation you made to the foundation, which was to review the eligibility criteria. As part of your audit, you established samples on the recovery of funds. That's why you recommended reviewing all possible contracts signed with the companies, because it was suspected that if a certain number of recoveries had taken place, there would most likely be others.

Did the foundation accept that recommendation, at least partially? I know that other witnesses subsequently said they agreed with the recommendation and that they were in the process of conducting this review.

[Karen Hogan]

In the report, the foundation said that it partly agreed with our recommendation. However, the three new members appointed to the board of directors for the transition made the decision to review all the files.

I just want to go back to the fact that our sample has a 90% confidence level. It is therefore very likely that about 16 other businesses are not eligible.

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

It's not a political sample. We trust you.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Drouin.

Next, we have Ms. Sinclair‑Desgagné.

Ms. Sinclair‑Desgagné, you have two and a half minutes. Go ahead.

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

I'd like to thank Mr. Drouin for his questions because he just showed what I've already said: At a minimum, tens of millions of dollars were spent that we may never recover. I thank him very much.

Let's talk about the projects under the ecosystem stream, which was practically a secret. It wasn't even listed on the website. You said in your report that the department and Sustainable Development Technology Canada, SDTC, had been in contact about it and that the department had communicated concerns and risks around non-compliance to the board.

Did you confirm all that, Ms. Hogan?

[Karen Hogan]

Yes, that was indeed in the report.

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

Great. Thank you.

Mr. Rahme, you were vice-president of investments at that time. What did you do about the department's concerns? Did you take them seriously? I'm asking because they don't seem to have been taken seriously.

[Ziyad Rahme]

Mr. Chair, I believe this question is in reference to the ecosystem stream. Is that correct?

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

Yes, Mr. Rahme.

[Ziyad Rahme]

Thank you.

Yes, we funded two projects under the ecosystem stream. It was a pilot stream. It was primarily directed from the CEO's office. Personally, I had almost no involvement in the diligence we ran for those.

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

Just a moment. Pardon me.

[Ziyad Rahme]

We certainly accept the Auditor General's conclusions that they were out of compliance with the contribution agreement and—

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

Okay. Thank you.

You were the vice-president of investments and you had no say in the investment process.