Public Accounts Committee on June 13th, 2024

[Karen Hogan]

As I mentioned, I'm concerned about the unintended consequences the motion might have on my free and unfettered access to public servants, Crown corporations, departments, and agencies going forward. If there's a belief that everything might need to get handed over, there might be a hesitancy to provide us with information, or we might have to deal with redactions. Then there's the time that it takes to challenge departments and have those appropriately removed or not removed.

There might be some unintended consequences, which I hope will not impact us going forward, but those cause delays such that I might not be able to provide all reports in a timely fashion to Parliament, as I have committed to doing.

[The Chair, Conservative, John Williamson]

Thank you. I'm afraid that is your time, unfortunately, Mrs. Shanahan.

Ms. Sinclair‑Desgagné, the floor is yours for six minutes.

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

Thank you, Mr. Chair.

Thanks to the witnesses for being here and to the Auditor General and her team for a very interesting report.

Sustainable Development Technology Canada is an example of how to take a good idea based on noble objectives that have lasted for 23 years and transform it into a management disaster and a source of anxiety for thousands of entrepreneurs who are now dependent on these funds for technologies that are the future of Quebec and Canada.

Ms. Hogan, I will begin by asking you a brief question, just to understand the chronology. In November 2022, a group of whistle-blowers contacted your office, is that correct?

[Karen Hogan]

Yes, they contacted my office in November.

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

Good. You then advised the group of whistle-blowers to submit their evidence to the Privy Council Office, is that right?

[Karen Hogan]

We contacted the Privy Council Office ourselves and put them in touch.

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

At what point did you contact the Privy Council Office?

[Karen Hogan]

It was in February 2023.

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

Right. So in February 2023, you contacted the Privy Council Office.

Mr. Kennedy, in your case, what happened between November and June, when you retained Raymond Chabot? In fact, seven months passed between those two events. Why did you wait so long?

[Simon Kennedy]

As I understand it, the people who were concerned about the problems went around to various organizations, including the Office of the Auditor General and the Privy Council Office.

We received the complaints on February 16. We became involved in this matter in February, not November. Since it was an organization that had received funds from our department, and it was part of our portfolio, it was our responsibility to follow up. We therefore decided to do that, and that was why we undertook the study with Raymond Chabot.

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

In fact, your department was responsible for doing the necessary follow-up. I understand that the study was assigned to Raymond Chabot, but there was a series of events after that.

You told my colleague that you had informed the minister. On what date, exactly, was the minister made aware of these problems for the first time?

[Simon Kennedy]

We informed the minister officially on March 5. We sent him a memorandum stating that we had received a complaint and we were in the process of discussing the possibility of doing an audit. We awarded the contract about ten days later. We then presented the minister with the results on September 27.

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

Okay.

Between 2001 and 2022, there seem to have been a lot of failures when it comes to follow-up. In fact, according to the Auditor General's report, you received the minutes relating to conflicts of interest. Sustainable Development Technology Canada, or SDTC, was supposed to let you know when the funding was to be recovered. The department was to have been kept informed of a lot of things, but there was no follow-up on them.

As you said, SDTC is part of the department's portfolio. Can you simply answer this question: Who at Innovation, Science and Economic Development Canada was supposed to follow up with SDTC?

[Simon Kennedy]

There is a sector of the department that is responsible for clean technology programs. The department participates in these initiatives with organizations like SDTC. Our own office is responsible for finances. So these two groups, together, follow up with the organizations working in the field of the environment.

It is up to the department to follow up with those organizations, but both offices are—

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

Okay. So there are two different offices, two opportunities rather than one, that did not do the necessary follow-up to make sure that SDTC was using public funds wisely. Access to the minutes was not verified, obviously.

I have another point of information, and I think it is important that taxpayers know about it. As early as 2018, there was an internal audit that recommended a review of the conflict of interest policies and assurance that they were being properly overseen by the department. This means that recommendations for an internal audit were referring to these problems as early as 2018.

Now, you are telling me that not one, but two teams at the department did not do the necessary follow-up with SDTC. That is problematic.

When was it decided to abolish Sustainable Development Technology Canada? We know that the announcement was made on the same day as the Auditor General's report was submitted. However, the decision had to have been made well before that. When was it made, please?

[Simon Kennedy]

I can tell you that we obviously worked on the various options, because we were aware that the Auditor General was doing an audit and was going to present the results. We had already done a study with Raymond Chabot that showed there were problems. We were considering the options. Did the board of governors need to be strengthened? Did there need to be a change of governance? That discussion took place over several months.

I do not have the exact date in front of me when the decision was made, but the minister announced the decision—

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

—on the same day as the report was submitted. The minister did not pull it out of his hat, and that decision had to have been made earlier.

[Simon Kennedy]

Yes, certainly, that is obvious. There was a lot of work to do before we—

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

Can you give me a specific date, or at least a week, or, at worst, a month?

[Simon Kennedy]

I do not have a date in front of me. However, I just want to say that we did a lot of work to get to the announcement, that is for sure.

[The Chair, Conservative, John Williamson]

Thank you.

Up next is Mr. Desjarlais for six minutes, who is joining us online.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to thank the Auditor General and her team for a very important audit related to Sustainable Development Technology Canada.

Auditor General, you highlighted in your opening remarks some of the key issues that pertain to the very troubling concerns that Canadians are now faced with. If I may, I will summarize part of them and editorialize a bit, but I'll give you an opportunity to speak about them afterwards.

My summary of this issue is, first, related to non-compliance of the act. You were pretty clear that there was non-compliance with the establishing act, which would provide some level of oversight to at least try to prevent some of the egregious issues we're seeing today.

Conflict of interest was mentioned by my colleagues just now. Several times there's been criticism of the conflict of interest issues related to this fund.

Regarding the abuse of workers, it's my understanding that non-unionized workers were forced to report this as whistle-blowers, ultimately facing some of the most severe setbacks in their lives, like losing their jobs, and issues that pertain to their personal lives. I thank those whistle-blowers for their immense courage in bringing forward a very serious issue. Unfortunately, they were non-unionized, and many of them suffered the penalties of such. This would be a good example of why unions are important.

Ultimately, Canadians, and particularly young Canadians, are hoping for a government that takes seriously the concerns of climate change. What they find here is a classic example of greenwashing. It breaks my heart, and I think the hearts of many Canadians, to know the very difficult circumstance that we find ourselves in. There's a promise to help challenge the climate crisis we're all in today, yet one of the major tools of the government to help with sustainable development and technology has largely been hijacked by large-scale issues of conflict of interest, which leads to corruption. It's disappointing.

Deputy Minister, I hope this is something you take full breadth of, not just in today's hearing but as the report continues, to understand that this is not only an abuse of taxpayer dollars and the important funds that people work hard to contribute to our government, but also a massive breach of trust—a basic level of trust in our institutions and in the programs that are said to be adhered to by government. When they see reports like this, it does dramatic, direct damage to public confidence, and that cannot be understated. That's something you have to take forward in your responsibility as our deputy minister, and I hope you take it seriously.

I want to turn to one of the issues that I highlighted in my opening remarks related to the very serious issues of governance and the non-compliance of the act. The Auditor General makes special note of the appointment process for the board of directors. There was a requirement under the act to have 15 members on the board of directors, and we found ourselves in a situation where there were only two.

Auditor General, how is that possible? How did that happen?

[Karen Hogan]

I have a point of clarification. The board of directors had 15 members. A group of members—I'll call them a member council, but that's not their official title—was put in place to name half of the board, but also to do things like name the external auditors. It was that group of members that dwindled down to two, and this is where I believe the board of directors of the foundation failed in ensuring that the foundation would continue to comply with its enabling legislation, which required not only the board to have 15 members, but the member council to have 15 members.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Who's responsible for monitoring compliance of the act?

[Karen Hogan]

In my view, it is the responsibility of the board of directors of the foundation to ensure they comply with the act. Innovation, Science and Economic Development Canada were to ensure that the foundation complied with the contribution agreements between the government and the foundation, but their oversight could have also included ensuring that the foundation was complying with legislation.