The federal auditor general has found 90 conflict of interest rule breaches and money going to dozens of ineligible projects in her review of the embattled federal green fund.
The Office of the Auditor General (OAG) says it found “significant lapses” in the governance and stewardship of public funds at SDTC.
“The takeaway from these reports is that when good governance is lacking, the remedy isn’t necessarily new processes, or more people or money,” Ms. Hogan told the House of Commons public accounts committee. “It’s about applying the rules that exist.”
Whistleblower allegations were levelled against SDTC management in early 2023. In response, the overseeing department—Innovation, Science and Economic Development Canada (ISED)—hired a third-party to conduct a review and announced the suspension of new funding in the fall of 2023.
The report by the OAG has identified 10 projects that received funding but were ineligible out of 58 projects projects examined.
The 10 projects were awarded $59 million, “even though they did not meet key requirements set out in the contribution agreements between the government and the foundation.”
The OAG estimated that 16 of the remaining 168 start-up and scale-up projects approved during the audit period were ineligible. The review also found the board approved $20 million for seed projects without completing the screening and assessments required.
The auditor general examined the meeting minutes of the foundation’s board of directors and found 90 breaches of conflict of interest rules. Directors on the board did not recuse themselves to approve $76 million in funding for projects they had links to.
“The foundation really poorly manages conflicts of interest,” said Ms. Hogan, who told MPs on the committee that an assistant deputy minister from ISED was present during the board meetings.
Two former directors of SDTC, Guy Ouimet and Annette Verschuren, are under investigation by the ethics commissioner over the matter.
Ms. Hogan said that 63 of the 90 conflicts of interest were related to the two COVID relief payments. She said those payments violated not only conflict of interest rules, but also the government contribution agreement, since it doesn’t allow blanket payments and instead “requires that each individual contract and payment be looked at on a merit basis and awarded to a specific project.”
The OAG report says SDTC approved $836 million in funding for companies between 2017 and 2023. Recommendations of the report include that SDTC reassess the projects that received funding and to ensure conflict of interest rules are followed.
SDTC did not return a request for comment by publication time.
In response to the OAG report, Industry Minister François-Philippe Champagne said he welcomed its recommendations and said SDTC programs would be transferred to the National Research Council to help increase oversight and transparency.
Mr. Champagne said SDTC was established by Parliament 20 years ago and that “it is now clear that this model is not suitable for today’s expectation of stewardship of government funds.” The minister added his department will increase oversight of funding, which will be resumed, during the transition period.
