Public Accounts Committee on June 20th, 2024

[The Chair, Conservative, John Williamson]

Thank you very much.

Beginning our second round, Mr. Cooper, you have the floor for five minutes.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you, Mr. Chair.

Ms. Urie, can you confirm that SDTC is abiding by the order of the House of Commons and turning over all of its records to the RCMP?

[Sheryl Urie]

My understanding is that SDTC did receive an order from the House of Commons, and we're in the process of collecting the documents that have been required.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

The documents will be turned over within 30 days of that order. Is that correct?

[Sheryl Urie]

The plan is to turn over all the documents to the law clerk, as has been requested.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you.

Ms. Hogan, you found, in your damning report, that $76 million had gone out the door. Board members at SDTC sat on, deliberated on and voted on the funnelling out the door of those monies to companies that they had an interest in, in blatant conflicts of interest, blatant corruption.

You provided this committee with a list of the board members and the companies that received those monies. The companies of one board member, Andrée-Lise Méthot, who is a former colleague and long-standing friend of the Minister of Environment and Climate Change, Mr. Guilbeault, received over $50 million in funding from SDTC, which she voted on while she sat on the board. I have identified a number of other companies that Ms. Méthot has an interest in and that received monies from SDTC while Ms. Méthot served on the board.

Did you look into the funding received by MineSense Technologies Ltd., which received $4 million from SDTC, in which Ms. Méthot is an investor?

[Karen Hogan]

Mr. Chair, I'm not sure I can respond at that granular level. I'll see if the team can do some research.

I think it's important to know that we didn't target board members or their companies. We looked at the process the foundation had in place. At times there were conflicts of interest that were well managed, and we highlighted the 90 that were not.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Well, Ms. Hogan, I would note that it is a blatant conflict of interest, as you determined, to sit in a meeting and approve funding to a company that you have an interest in, and there was more than $50 million, at least, that went out the door and that you've identified with respect to Ms. Méthot.

Not only that, but it is a violation of the law for a board member to receive funding to a company that they have an interest in from SDTC, by virtue of the SDTC act. We're not talking only about conflicts of interest. We're also talking about non-compliance with the SDTC act.

For the record, I would ask you to come back to this committee and determine whether you factored in or considered, with respect to conflicts of interest and non-compliance with the law by Ms. Méthot, not only the $4 million that went to MineSense Technologies, but the $7.1 million.... In fact, maybe what I'll do is just get back to you with a list. Would you undertake to do that? When you calculated it, there were millions and millions of dollars more that went out the door.

[Karen Hogan]

Mr. Chair, the team will have to go back through lots of details in our file in order to be able to answer that question. We'll see what we can provide to the committee.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

I'll turn it over to Mr. Perkins.

[The Chair, Conservative, John Williamson]

You have about 50 seconds.

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

Thank you, Mr. Chair.

I just want to go back and ask Mr. Boothe a question on the issue of whether or not the companies that the Auditor General has determined were under a conflict of interest.... Well, actually, I'll start with the first group. There was $58 million that went to companies that, according to the Auditor General, were ineligible. They were outside the parameters of the contribution agreements. Will you commit that, going forward in this new structure, no company that is part of that group or any other group that received money outside of the existing contribution agreements—as has happened under Annette Verschuren's chairmanship and these other Liberal appointees—will get further funding?

[Paul Boothe]

Mr. Chair, I have to admit, on the 13th day on the job, I'm not familiar with the details of the companies or the—

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

I'm sorry, Mr. Boothe, but I wasn't asking about the particular companies. It's a general statement.

[Paul Boothe]

I guess what I would say is that my commitment, consistent with the Auditor General's report, is to go back and review all the companies that have received funding to make sure that it was appropriate, and in the cases where it was not appropriate, as identified by the Auditor General, to see what the appropriate steps are.

My commitment to you is that we will review all of the companies that received funding. As my colleague said, we'll start with the companies that have projects in process, so for the ones that have no problems, we can get that funding restarted. My plan is, with my fellow board members, to review all the projects that have been funded.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mrs. Shanahan, you're next for five minutes, please.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much, Chair.

I'd like to thank the witnesses for being here today.

Ms. Hogan, thank you again for an excellent report. I know that it's an unusual report in some respects, but in other respects it addresses some of the overriding themes that your office often looks at: lack of documentation, whether deliberate or not deliberate, or governance structures that are not properly put in place.

I understand this is unusual, because this is an arm's-length organization. Typically, your office would be auditing government departments and Crown corporations. Can you just talk to us about the nature of the structure of this organization? What were the challenges for your office, if any, in doing the audit? In particular, it's tied to a federal department, but what did those ties look like?

I'm also curious about what the oversight function was. What did you observe about that? Was there some kind of regular check-in? I'm trying to get a good understanding as to how SDTC operated in its early years.

[Karen Hogan]

There were many questions in there. I'll try to answer them all.

A foundation is another arm's length away from the federal government than a Crown corporation is. That, in and of itself, usually would make it ineligible for my office to audit. We are not the auditors of the foundation. The reason we could go to a foundation is that it is funded solely by federal money. It's the contribution agreement that existed between the Government of Canada and the foundation that gave me the conduit to go in and see whether public funds were spent in a prudent way.

The tie to the department was that Innovation, Science and Economic Development Canada had responsibility for monitoring compliance with that contribution agreement. That compliance structure was actually set out in the contribution agreement. It wasn't just about receiving corporate plans, which they did receive, or minutes, which they did receive, but also about how they should have been auditing compliance with the contribution agreement to make sure that public funds were being used in a prudent way.

You asked about things that were unusual. That relationship was an unusual one. It's quite unusual for a department to be so involved with an organization that is at an even further arm's length from the government than a Crown corporation is.

The corporate structure set up in the Sustainable Development Technology Act is an unusual one. There is not only a board of directors, but also a group of members that is meant to be self-sustaining and to appoint the members. That is an unusual corporate structure. We found that there were challenges in the act's being respected. In fact, one of our findings was that the board of directors of the foundation didn't ensure that the foundation continued to comply with aspects of its enabling legislation.

I hope I've covered all of the elements in your question.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

I appreciate that. One of the outcomes of the work you do is learning.

I'd like to hear from Ms. Urie.

Mr. Boothe, maybe we'll hear from you later.

Ms. Urie, in your experience, what were the internal checks and balances in the review process of the projects? What did it look like to you? Did you have eyes on that?

[Sheryl Urie]

The approval process starts at application for any company that's looking for funding. There's a screening process that essentially happens the full way through until it actually reaches the board for approval. The board approvals and the committee approvals are very much the last step. There are a whole bunch of steps that happen in between, prior to a project's even getting to that point.

Projects are screened for high-level eligibility as to whether they actually meet the goals and objectives of the fund. Companies, if they pass that, go into a video pitch session, and further eligibility criteria are applied. The companies essentially do a pitch session for their project: who their partners are, how they plan to fund it, and what the environmental benefits associated with their project are. At that point in time, a company may also be off-ramped. If they make it through that step, the company can then move to a diligence process. As we go through the diligence process, there are significant interviews with the management team, a deep-dive review of the technology, discussions with their funding partners, and discussions with their project partners, as well as expert or external reviewers who are engaged and who provide an independent view on the criteria associated with eligibility for that project.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Who provides the independent view?

[Sheryl Urie]

It's external parties. Academics are some of the individuals we engage. External consultants review the project. One reviewer opines on the technical aspects of the project, and we have another reviewer who opines on the business aspects of the project. Every project goes through that review.

As well, there are probably about 20 different folks within the SDTC organization at different points in time who are involved in that review and who touch the file prior to that project ever being presented to the project review committee.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Sinclair‑Desgagné, it's over to you for two and a half minutes.

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

Ms. Urie, you mentioned a kind of external audit of all projects in terms of their technical and financial eligibility.

Can you tell us which organization will be hired to do that?

[Sheryl Urie]

What we would like to do is RFP the process but move a little more quickly, to be able to address the pressing issue of getting funding going for some of the projects that have had their funding paused for a little while.

We have been working with Deloitte as a partner to help us with our process and process enhancements. The plan is to trial that and ensure they have the experts we need in order to be able to conduct the review. It's a matter of finding the correct resources.