Public Accounts Committee on Nov. 18th, 2024

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

We'll now begin our second round of various times.

Mr. Nater, you're kicking us off. You have five minutes, please.

[John Nater, Conservative, Perth—Wellington, ON]

Thank you, Mr. Chair.

Thank you to our witness for joining us this morning.

Mr. Knubley, I want to go back to your testimony before this committee on a different matter. It was in June 2023 and it was on the Trudeau Foundation. You were asked at that time to explain why you had joined and why you had left McKinsey & Company back in September 2022. You didn't have time to actually complete your answer to that question. I want to start off by asking you that question.

Could you tell us exactly when you joined and when you left McKinsey, and the reasons you left that company?

[John Knubley]

I worked for two years with McKinsey as a senior adviser. I began in September 2021 and left in 2023. In taking that role, I did follow all the procedures required with the Ethics Commissioner.

The reason for leaving was that I was very busy as a consultant with other organizations, but I was not busy with McKinsey.

Perhaps one more point, just to clarify, is that in no circumstance, with McKinsey, did I play the role of lobbyist. I did not engage with my former colleagues when I was at McKinsey. My role was as a senior adviser. I basically provided advice to McKinsey about the work it was doing.

[John Nater, Conservative, Perth—Wellington, ON]

To confirm, then, you didn't have any dealings with the government in your time at McKinsey?

[John Knubley]

I did not.

[John Nater, Conservative, Perth—Wellington, ON]

Thank you. I appreciate that clarification.

I want to talk a little more about SDTC and its move from its previous home to the umbrella of ISED in 2015.

Former minister Bains appeared at the industry committee in November 2017. You were with him at that time. I just find it interesting that Minister Bains notes that SDTC was at arm's length and independent when it's convenient for the narrative, but not when it's not convenient. At that time, he was taking credit for the move to ISED and taking credit for its clean bill of health. Then, all of a sudden, when things went wrong, it was no longer his responsibility.

I want to start out with this: Was moving SDTC to the umbrella of ISED the appropriate move at the time or, with the benefit of hindsight, should it have been left where it was?

[John Knubley]

That's a good question.

Here's my answer. What was really transferred to the minister was a mandate for clean technology. As I mentioned, part of that involved leading the pillar on clean technology in the pan-Canadian framework for climate change, which was led by the Minister of Environment.

We were very active, and what we were trying to do as minister and deputy minister was promote a strong clean-tech sector that would actually be a leading part of global activity on clean technology. The sector would also contribute significantly to growth in Canada. Clean technology was definitely a very important part of our innovation and skills agenda. The role of SDTC, though, was but one tool among many in that regard. There was funding, as well, from the regional development agencies. There was funding from BDC and EDC.

One of the challenges was—and this is what we actually focused on—how we bring all these players together so that it's easy for companies to come forward and find out where they should go to in government, as well as what to do about the different requirements, which were quite onerous from time to time, from the different agencies, which were all using different data and data frameworks.

[John Nater, Conservative, Perth—Wellington, ON]

I'm going to move on to a different point because I'm running out of time.

The Auditor General noted that there were 90 cases where conflict of interest policies were not followed. In your seven years as a deputy minister, were there other appointments, outside of SDTC, where it would have been acceptable...? Would you have seen it as acceptable to appoint people to boards or agencies within the purview of ISED, when you were deputy minister, if there were clear conflicts of interest upon their appointment? Would that have been acceptable outside of SDTC, at other organizations within the ISED portfolio?

[John Knubley]

I should say that there are conflicts of interest, in my experience, in many places in departments, agencies and appointments. I would have seen that there were appointments where there were conflicts of interest. The issue is whether they are being addressed and mitigated.

In the case of Ms. Verschuren, what I understood was that she had reached out to the Ethics Commissioner and had guidance. I expected that the work between her and the Ethics Commissioner would have continued. I think that kind of process is the same for any appointment.

[The Chair, Conservative, John Williamson]

Than you very much.

We'll come back to that, I'm sure. The time is up.

Now we will go to Mr. Erskine-Smith.

Mr. Erskine-Smith, did a chicken roaster open up outside your home over the weekend? You are coming off as orange-red. I don't know if anyone gets the Seinfeld reference.

You're welcome to proceed. I'm sure we'll hear you clearly.

It's over to you for five minutes, please.

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

No, it did not. I don't know, perhaps it's a new camera. I'm not sure.

My first question is in relation to your relationship with Ms. Verschuren. You mentioned at the outset of your testimony that you had met her via some work, I think, where she had been appointed under the Harper government.

How often did you see her? Would you consider yourself friends outside of that work context?

[John Knubley]

No, it was an entirely professional relationship. I did have a long history, as well as a long history with Jim Balsillie.

The first time I met her, I was vice-president of Atlantic Canada Opportunities Agency. She came to see the executive of ACOA to talk about how she was a leading Atlantic global business leader who had worked with Home Depot and with Michaels. I think I did work with her again when she was on the advisory committee for Jim Flaherty. There were several panels that I was on where we were both probably panellists. As I said, this organization created by former prime minister Harper was called STIC—the Science, Technology and Innovation Council. It met three or four times a year. For a three-year period, we would be at these same meetings. Subsequently, she was on this CEO-led sector table, which had six to eight meetings on the clean-tech sector and on making recommendations there.

That was the basis of my relationship with her.

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

Just so I'm clear, how many years did you say you worked in the civil service before your retirement?

[John Knubley]

I've been trying to avoid that answer. It was close to 40 years.

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

You have 40 years in the civil service. Ms. Verschuren is one of many people you worked with in a professional context over those 40 years.

You were answering Mr. Nater's question, and I think a more fulsome answer would be helpful because some confusion exists at this committee as to whether all conflicts are fatal or whether some conflicts can be managed. Obviously, there are some conflicts that are fatal and that are impossible to appropriately manage and to mitigate. This was a case, though, where Ms. Verschuren engaged with the Ethics Commissioner. We've obviously realized, unfortunately, in the end, that the conflict was mismanaged by Ms. Verschuren, pretty apparently.

At the outset of the appointment, did you think this was a conflict that could be managed, or did you think that it was fatal to the appointment?

[John Knubley]

I think I thought that it was a conflict that could be managed, but again, it's not for me to decide that as a deputy minister. What I was told, I think by Ms. Verschuren, was that she was engaging with and working with the Ethics Commissioner. She had received advice and was on track, and I would have expected that it would have continued.

The one thing I would say, because I noticed it in the testimony, is that there's reference to a clause in the act. It suggests that you cannot hire someone who has a conflict. I'm not a lawyer, but that's a pretty standard clause. My interpretation of that—but perhaps you should get legal advice—is that appointments can happen when there are conflicts, as long as they are being managed.

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

With respect to the concerns raised at the time around the standing conflict with NRStor, were you part of discussions around the comfort level of yourself, of former minister Bains or of others, in terms of how this conflict could be managed?

[John Knubley]

Absolutely not.

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

When did you retire?

[John Knubley]

It was June 28, 2019.

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

Obviously, you weren't there when the specific instances of approvals were made at SDTC, which have been subject to the conflicts with respect to Ms. Verschuren in particular. However, did the mismanagement of conflicts of interest that has marked the board at SDTC never come to your attention?

[John Knubley]

No, as I said, there were these two reports that gave them a clean bill of health, and governance was part of the evaluation. They said there were some issues to be addressed, which included the note-taking and the reporting to ISED. There was a suggestion that they should streamline their committee structure. There was a suggestion in there, I think, that the skills and capacities of the board directors in all areas be examined and [Technical Difficulty—Editor].

[The Chair, Conservative, John Williamson]

Thank you. That is the time.

Ms. Sinclair-Desgagné now has the floor for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Knubley, when Ms. Lawrence appeared before the committee, she said that she repeatedly expressed reservations about Ms. Verschuren's appointment due to potential conflicts of interest.

When were you made aware of the SDTC CEO's reservations?

[John Knubley]

As far as I can recall, I was not informed of her reservations. What I was informed of by Andrew Noseworthy was that.... Sorry, I should be careful on this one because I'm not sure who said what. We discussed that she had gone to the Ethics Commissioner on this issue and that we both understood that the Ethics Commissioner had provided guidance. The only time this happened was at the time of appointment in late June, as far as I can remember. The call I had with her was in that late June period.