Public Accounts Committee on June 20th, 2024

[The Chair, Conservative, John Williamson]

Good afternoon, everybody. I call this meeting to order.

Welcome to meeting number 133 of the House of Commons Standing Committee on Public Accounts.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and possibly remotely using the Zoom application.

I would like to ask all members and other in-person participants to consult the cards on the table for guidelines to prevent any audio feedback incidents.

Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters.

Please use only the approved, black earpieces that are in front of you. Keep your earpiece away from all microphones at all times, and when not using your earpiece, please place it face down on the sticker on the table for this purpose. It could be just to the right of you or just to the left, in Mr. Green's case. Welcome, Mr. Green.

I remind you that all comments should be addressed through the chair.

Pursuant to Standing Order 108(3)(g), the committee is resuming its study of report 6, “Sustainable Development Technology Canada”, from the 2024 reports 5 to 7 of the Auditor General of Canada, referred to the committee on Tuesday, June 4, 2024.

I'd now like to welcome our witnesses. From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada—nice to see you and your team here today—along with Mathieu Lequain, principal, and Ewa Jarzyna, director.

From Sustainable Development Technology Canada, we have Paul Boothe, chair of the board of directors; and Sheryl Urie, vice-president of finance. Thank you for joining us today.

You'll each be given five minutes to make your opening statements. We're going to start, as we normally do, with the Auditor General, who I understand will make a brief statement, relatively speaking.

We go over to you, Ms. Hogan.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Thank you very much, Mr. Chair.

As the committee members know, I appeared last week on this report. At that time, I read an opening statement into the record. It was comprehensive. It included our findings about not only Innovation, Science and Economic Development Canada, but also the Canada Foundation for Sustainable Development Technology.

I really have nothing more to add in my opening remarks, and in order to better support the committee, I give you back the rest of my five minutes.

[The Chair, Conservative, John Williamson]

Thank you. I'm sure we'll take full advantage of that.

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

[Paul Boothe, Chair, Board of Directors, Sustainable Development Technology Canada]

Thank you, Mr. Chair.

Honourable members, ladies and gentlemen, my name is Paul Boothe. I'm a retired deputy minister and public finance professor living in Dundas, Ontario. I'm joined here by Sheryl Urie, as you heard, the vice-president of finance at SDTC. I thank you for allowing her to participate in place of our acting CEO, Mr. Ziyad Rahme, who has an important family commitment this afternoon.

Mr. Chair, on June 4, the Governor in Council appointed me as the chairman of the board of directors of the Canada Foundation for Sustainable Development Technology—it's quite a mouthful—for a term of one year. I was appointed to the board along with two other retired deputy ministers, Cassie Doyle and Marta Morgan.

On the same day, the Auditor General released her “Report 6: Sustainable Development Technology Canada”, and the Minister of Industry also released a report, by the law firm McCarthy Tétrault, on HR practices at the foundation. In addition, on June 4—it was a busy day—the Minister of Industry announced a new direction for governance of the foundation, with the foundation's programming and staff to be transferred to the National Research Council. Further, the minister announced that the foundation's funding to clean technology start-ups would recommence forthwith.

I hope that, today, in answer to your questions, I can share with you what we intend to do as the new board of the foundation—to restart funding and to plan and execute the transfer of the programming and staff to the NRC. Before I do, however, I want you to know that the new board of directors accepts the recommendations of the Auditor General. In recommencing our funding of clean technology start-ups, we will be guided by her report as we update our practices related to record-keeping and the management of conflicts of interest. Further, we will work with the Department of Innovation, Science and Economic Development to ensure that the contribution agreement fully reflects the government's intended purpose for the funding we disburse, and we will ensure that all future funding decisions are fully compliant with the terms of the contribution agreement.

Although we are only on day 13 of our new mandate as the board of directors, we are working hard to understand the foundation's work and its operations and the recommendations of the Auditor General's report. Foundation staff are working diligently to develop a concrete plan to address the concerns expressed by the Auditor General. I'm confident that we'll be able to successfully accomplish the objectives of restarting the funding in a manner consistent with the recommendations of the Auditor General and planning and implementing the transfer of the foundation's programming and staff to the National Research Council.

[The Chair, Conservative, John Williamson]

Thank you very much for that opening statement.

We now begin our first round. Each of the next four members will have six minutes.

Mr. Perkins, we begin with you for six minutes.

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

Thank you, Mr. Chair.

Thank you, witnesses.

I will begin my questioning with Ms. Urie.

I'll start with a quick summary. In 2019, the Prime Minister's hand-picked chair for the SDTC—which the public knows as the green slush fund—came in after SDTC had a clean governance audit in 2017 from, I believe, both Treasury Board and the Auditor General. It seems to me like the culture of the organization changed quite a bit, and we had testimony here that it changed too—the concept that Minister Bains and his office referred to, “to manage conflict”. There were a number of directors doing transactions that ended up.... According to the Auditor General's report, almost half of all transactions, out of the 420 from 2017 to 2023, were conflicted transactions. It is quite an amazing thing, because I don't believe those directors represented half of the green technology sector, yet somehow they managed to get almost half the funding, when you combine the 90 that were undeclared conflicts, the 96 that were declared conflicts, and the $58 million spent outside the terms of the contribution agreement.

You were, I believe, the finance person all this time. We had the deputy minister here last week, and he agreed that, in a lot of cases, or in some of these cases, the money should be paid back because it went to an inordinate number of these directors and outside, in many cases, of the limit set out by Parliament as to where it should be spent.

Has the Liberal Minister of Industry today directed you, both the current acting chair and you as finance director, to seek any of this money back?

[Sheryl Urie, Vice-President, Finance, Sustainable Development Technology Canada]

Thank you for the question.

As you know, we responded to the recommendations of the Auditor General and we accept the findings of the report, and—

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

I heard that in the statement.

I have limited time. Please answer the question directly. Have you been asked by the government to look at getting any of this money back or to start the process for that, yes or no?

[Sheryl Urie]

Consistent with what the deputy minister said last week, we are looking at the projects within the portfolio to assess whether or not they met the eligibility criteria. Should we find any instances in which projects were ineligible—

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

Well, that's a no—

[Sheryl Urie]

—we would work forward to seek recovery.

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

The government hasn't asked you to seek the money back.

[Sheryl Urie]

I believe it was sought within the response to the Auditor General's report.

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

I'm looking for you as the finance person to tell me whether the government has said that, not what the deputy said in his testimony.

Has the government, since then, asked you to get the money back?

[Sheryl Urie]

I believe the deputy minister, in giving our response to the Auditor General's report, said we would recover any funds that needed to be recovered.

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

I was here at the meeting. I wish you would answer the question. You are an officer of an organization that received a billion dollars of taxpayer money.

I will go on to my next question.

One of the things the Auditor General raised was the issue of the funds that are outside of the legal limits of these contribution agreements. While you were CFO, the seed fund, as it's called, was set up. Who directed you to open up a fund that was outside of the contribution agreements?

[Sheryl Urie]

Thank you for your question.

I would direct you again to the response to the Auditor General's report.

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

I've read the Auditor General's report and the response and it gives no clarity. It doesn't say who ordered you and the management team to set up funds that were outside of the contribution agreement.

[Sheryl Urie]

I would say that, to my knowledge, there was no direction from within the department or from the minister's office regarding setting up a seed fund.

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

So did they mythically appear from the board? Was it the board that did it, the hand-picked Liberal appointees?

I ask because you could not apply directly to the seed fund if you were a green technology fund. Is that correct? You couldn't apply to SDTC; you had to go through another body. What did SDTC call those other bodies that you had to apply through to get money from the seed fund? What were they called?

[Sheryl Urie]

To understand our funding process, there's a requirement to always have a partner to be able to participate in your project.

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

I'm not looking for an explanation of funding partners.

[Sheryl Urie]

The partners within our seed funding stream would be called accelerators, and they were distributed across the country.

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

The accelerators vetted the applications; you couldn't direct them.

The accelerators included the Verschuren Centre. Is that correct?

[Sheryl Urie]

That's correct.