Ottawa has suspended the activities of Sustainable Development Technology Canada (SDTC), an arm’s-length foundation created by the federal government to fund new green technologies. This follows an in-depth investigation that found the agency guilty of conflict-of-interest breaches and relaxed governance.
“The fact-finding report identified a number of instances in which SDTC was not in full compliance with the contribution agreement made with Innovation, Science and Economic Development Canada (ISED),” said Industry Minister François-Philippe Champagne in an Oct. 3 statement.
“It also identified opportunities for improvement in other areas not covered by the contribution agreement, and outside of the scope of intervention for ISED, including human resources, governance, and oversight.”
Following whistleblower complaints about the organization in 2022, the federal government hired Canadian firm Raymond Chabot Grant Thorton to conduct an independent investigation of the allegations. In the report, investigators questioned $38 million in emergency “relief payments” the SDTC made during the pandemic in 2020 and 2021 to companies with which they already had previous funding agreements.
According to The Globe and Mail, the report said those payments did not appear to be consistent with the requirements of SDTC’s contribution agreement with Ottawa, as they did not require “cost eligibility or monitoring and reporting.” One of the recipients “appeared to be ineligible” to receive $280,000.
The SDTC’s conflict of interest policy was “inconsistently applied” according to the report, citing one such clerical discrepancy between SDTC’s chief executive officer and an external reviewer, backdated under the direction of the corporation’s external legal counsel.
Two streams of funding created by the SDTC valued at over $20 million also appeared to “not meet the main goal” of its agreement with the government, the report said.
The SDTC, a not-for-profit established in 2001, is halfway through a five-year agreement with Ottawa to support businesses in the clean tech sector, having provided $1.5 billion for associated startups since its founding.
In response to the report, ISED has given the SDTC a “detailed Management Response and Action plan to address the issues identified in the report,” which must be implemented by the beginning of 2024. The ISED is “exploring further options” to strengthen the governance oversight of the organization.
“As this process continues, we will continue to monitor the situation, because our government holds all organizations that receive federal funding to the highest of standards,” Mr. Champagne said.
On Oct. 4, the House of Commons ethics committee voted to summon Mr. Champagne to testify and to order the government to produce all documents related to the program, including emails, briefing notes, text messages, and funding agreements.
“Canadians need to know the public purse is being properly tended to and that every dollar is being accounted for,” said Conservative MP Michael Barrett.
“I am all for that,“ said NDP MP Matthew Green. ”I do not want to see public funds used to green-wash industries or the black hole of government money going to subsidize and line corporate pockets.”
