Public Accounts Committee on June 20th, 2024

[Matthew Green, NDP, Hamilton Centre, ON]

Who selected it?

[Sheryl Urie]

I don't know that.

[Matthew Green, NDP, Hamilton Centre, ON]

You don't know?

[Sheryl Urie]

I don't know the answer to that question.

The ecosystem stream was very much a pilot. It was an attempt to see if there were projects that could fit what SDTC was delivering in providing greater environmental benefits to the—

[Matthew Green, NDP, Hamilton Centre, ON]

But that's not the question.

I asked whether the public had an opportunity for a fair procurement process or a fair application process for public funds, or whether these were hand-selected despite clear conflicts of interest for board members and people associated in senior management.

[Sheryl Urie]

I can only tell you it was a pilot—

[Matthew Green, NDP, Hamilton Centre, ON]

Ms. Hogan, based on what you've just heard as a characterization, is it fair to say that SDTC executives were giving preferential treatment in hand-selecting companies that were not eligible and that they broke the conflict of interest rules because they were connected to management and the board while simultaneously none of these opportunities were presented to the general public?

[Karen Hogan]

Mr. Chair, what I can tell you about the ecosystem is what we wrote in paragraph 6.63 in our report, which was that we found that Innovation, Science and Economic Development had raised concerns with management that the ecosystem's projects did not meet the terms of the contribution agreement. We saw no evidence that management at the foundation had talked to the board about this. I think there was a breakdown in communication here about things that really were not eligible to be funded under the contribution agreement.

[Matthew Green, NDP, Hamilton Centre, ON]

To be clear, the board chair's name was literally on the centre that was receiving funding. Is that correct?

[Karen Hogan]

I don't believe that organization received funding. There were two organizations that received ecosystem funding.

[Matthew Green, NDP, Hamilton Centre, ON]

That's right. I apologize. They tried to find them other funding somewhere else.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Green. We will certainly come back to you.

Mr. Duncan, you have the floor for five minutes.

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

Thank you, Mr. Chair.

Ms. Urie, I want to follow up.

Earlier, in response to some of the questions lobbed from the Liberal side, you said that you deemed this seed funding program to be very successful, “a great success”, and you said that one of the frustrations about the program was the criticism it's been receiving. I find that a little tone-deaf, frankly. We're here because of the Auditor General's report about the massive amount of corruption and conflict of interest involving Liberal insiders being appointed and approving for themselves tens of millions of dollars. With respect to the criticism you've heard around this table or through the Auditor General's report, I'm going to suggest that this might be a very strong feature as to why the program is, rightfully, getting a lot of criticism.

I want to follow up on what Mr. Perkins said earlier about getting taxpayers' money returned from the projects that were deemed ineligible. You said that you hadn't done that yet and that the government hadn't reached out and you hadn't reached out to anybody to get any money back yet because you were evaluating it. There are 10 projects, for example, that the Auditor General said are worth $59 million that were ineligible. They were not eligible for this money.

What more do you need to study before asking them for the money back?

[Sheryl Urie]

I think we need to develop a process to enable us to determine how to recover those funds and what the most appropriate mechanism is. That's where we're looking at a path forward and assessing the eligibility of all the portfolio and moving with a consistent path forward so all of the companies are treated fairly.

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

Mr. Boothe, I want to ask you about this, because not only were 10 projects worth $59 million deemed ineligible, but in 90 cases or more than that—for $76 million—there were conflicts of interest that the Auditor General highlighted in the selected area of review.

In your opinion, given that your job was to come in and clean up this corruption, if there was a conflict of interest and money was approved, do you agree that this automatically makes them ineligible and that the money should be returned to taxpayers?

[Paul Boothe]

Mr. Chair, as I said before, I'm going to review all the projects with my two fellow board members. In any cases where money should be recovered—

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

My question specifically, Mr. Boothe, is whether, if there is a conflict of interest on a project for which money was granted, that project should be ineligible and the money should come back to taxpayers. On conflict of interest, the Auditor General has selected a number of them. Should the money come back, yes or no?

[Paul Boothe]

I will assess the projects and, when I believe money should be recovered and if it can be recovered, I will recover it.

[Eric Duncan, Conservative, Stormont—Dundas—South Glengarry, ON]

The cleanup that's going to be required here might be a bit more of a light dusting if you can't commit. The Auditor General said that conflict of interest rules were not followed and that it was not appropriate.... I'm just going to read right from the act. I know you're new on the job, in the last couple of weeks, but it's the seriousness and, frankly, the simplicity of it.

The act states, under “Conflict of interest”:

For the purposes of this Act, a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests or those of his or her relatives or friends or to improperly further another person’s private interests.

Under “Decision-making”, the act states the following:

No public office holder shall make a decision or participate in making a decision related to the exercise of an official power, duty or function if the public office holder knows or reasonably should know that, in the making of the decision, he or she would be in a conflict of interest.

That is in an act of the Parliament of Canada.

I'm not giving a name or a number, but if somebody was found to have violated the act and violated the conflict of interest rules—the Auditor General says there are at least 90 cases with $76 million—do you not think Canadians might be frustrated? In the work you've been asked to do to clean up, you can't even tell me that if someone is in a conflict of interest, knew the rules, broke the rules and got the money, the money needs to come back to taxpayers.

I'll ask you again: If they're in a conflict of interest and they broke the rules of the act, will that money be forced to come back to taxpayers?

[Paul Boothe]

As a deputy minister, one of the things I learned was not to give blanket assurances without a complete understanding of the facts, and I'm going to have to.... I completely accept the report of the Auditor General, and my main responsibility will be to implement her report. However, to give any assurances about any companies before I understand the facts would be ill-advised, and I will not do it.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Duncan. That is your time. We'll come back to you, I'm sure.

Mr. Weiler, it's good to see you today. You're joining us online, and you have the floor for five minutes, please.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you very much, Mr. Chair.

I also want to thank our witnesses for being here today.

I want to start with Ms. Urie.

Given some of the blatant conflicts of interest that have been revealed here through the Auditor General's report and that we've been able to dive into a little bit more today, I was hoping you could walk me through the process of how ISED was reviewing the minutes to ensure that there was an oversight mechanism. I'm just curious as to why some of these cases were not identified up until the Auditor General's report.

[Sheryl Urie]

I can tell you that, for every board meeting, the department has provided all of the documents related to that board meeting. They have access to the documents for any of the committee meetings as well. ISED has provided these in advance of the meeting so that they would have the ability to review the materials provided, as well as the minutes of the previous meeting, because those would be contained in those materials.

I don't work within the department, so I'd be unable to respond as to how they review them within the department, other than knowing that SDTC's board meetings regularly had a departmental representative observing at the meetings—not necessarily participating but generally there as an observer.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

Next, I want to ask Mr. Boothe a question.

Given the response from the Auditor General before, there was actually a concern raised about the transition from the arm's-length set-up that SDTC has had: that under the NRC there will be a challenge, potentially, in accessing some of the expertise in the clean-tech sector.

I'm hoping that you might be able to provide some information about how the NRC is going to be able to approach this challenge that's been identified to ensure that, as this transition takes place, you're not going to be losing that type of important expertise for being able to deliver these types of funding.

[Paul Boothe]

I listened carefully when the Auditor General made her remarks, and one part—given that I accept all the findings of her report—I found myself nodding my head to. That was when she talked about the legislation, which I find to be very complex. It bakes in the problem of conflicts of interest, because this is such a small sector, yet you require all these experts to opine, and then the board members, all with expertise in the sector, to decide. It strikes me that, going right back to the beginning of the legislation in 2001, this problem has been baked in. I certainly would not recommend that this kind of legislation be passed, but that's all down the river.

The other thing that caught my interest was her concern, or at least identifying a risk, that you would not, in a government department, be able to have the expertise, or at least, given the more stringent conflict of interest rules that we, as public servants, dealt with.... The reason I was maybe not as concerned about that risk is that, when I think back to my time as deputy minister for Environment Canada, I supervised the Canadian meteorological service, and I'm not a meteorologist, as well as the Canadian wildlife service, and I'm not a wildlife biologist.

The thing is that good deputy ministers are experts at managing experts. The NRC will still have to ensure that the expert opinions they access are free from conflicts, or that conflicts are managed properly, so it doesn't completely make the problem go away. However, it strikes me that the benefit will be that you're going to have a deputy minister who is very circumscribed in their own financial affairs and conflict of interest declarations, and you're going to have to rely on them to access the expertise they need to make the decisions.

It is a risk, but it's a risk, certainly, that I think deputy ministers face all the time.