Millions in shady payments by a Crown corporation were scrutinized by the federal financial watchdog in a recent report.
The Crown corporation tasked with funding clean emission technology called Sustainable Development Technology Canada had distributed tens of millions of dollars to ineligible companies and businesses that had conflicts of interest with SDTC’s Board of Directors.
These findings come from a recently released report by the auditor general who found rampant misconduct and mismanagement at SDTC since 2017.
The report reaffirms many of the problems critics suspected SDTC would have.
True North had previously reported on a leaked report commissioned by Innovation, Science and Economic Development Canada that found SDTC had systemic problems with granting millions of dollars to unfitting companies, conflict of interests in the companies they were funding, and a toxic workplace culture in which whistleblower purges were frequent.
The auditor general’s office analyzed 58 out of the 226 projects SDTC had approved for funding since March 2017, and they found that 10 of the 58 projects approved for funding were ineligible.
SDTC had an agreement with the federal department ISED in which the clean tech fund was given specific guidelines outlining the types of companies and the conditions they must meet to be eligible for funding.
Of the several “streams” of funding the auditor general analyzed, two “ecosystem” projects were awarded money inappropriately, seven “start-up” projects, and one “scale-up” project, amounting to $59 million in ill-approved funds, $51 million of which had been distributed.
Since the auditor general’s office had only looked at 58 of the projects, they estimate that 1 in 10 start-up and scale-up projects that were awarded money were ineligible.
In the original report commissioned by ISED, it was found that in a sample of 19 companies that had been awarded multi-million dollar grants, three of them had violated SDTC’s contribution agreement. According to a whistleblower who spoke to True North, these three companies were GHGSat, Semios, and Miovision, which were awarded $20,000,000, $17,000,000, and $16,580,000 respectively.
The auditor general’s report also found 90 instances in which SDTC’s Board of Directors had violated conflict of interest policies by voting on or participating in discussions about a company they had previously declared a conflict of interest with.
25 of the instances come from the meeting minutes of the Board of Director meetings and meetings of the Project Review Committee – the committee that approves funding projects before the board does.
The other 63 instances come from two votes on portfolio-wide COVID-19 relief funding, where directors voted to approve funding that would go to companies that they had previously declared they had a conflict of interest with.
These 90 cases were connected to projects that totalled nearly $76 million in funding from taxpayers.
In general, the auditor general found that between March 2017 and December 2023, five board directors had business or personal relationships that had the appearance of an inability to perform their duties in the best interest of SDTC.
The report also noted that a spouse of one of SDTC’s senior managers was a partner at a human resources recruiting firm that SDTC uses in its process of appointing new members to the board of directors.
True North had previously reported that while sitting on SDTC’s board, several companies in which members had interests in received millions of dollars in grants
The auditor general also found that SDTC had not been breaking the law by failing to adhere to its enabling legislation.
Specifically, SDTC is required to have at least 15 Board of Directors but has failed to fill vacant seats in a reasonable time, frequently taking no action.
The auditor general not only places blame at SDTC’s feet for its misconduct but also blames ISED, the department responsible for SDTC’s administration, for overseeing a disaster with little concern.
The auditor general slammed ISED for failing to sufficiently monitor whether or not SDTC was complying with its contribution agreements, using public funds appropriately, and monitoring conflicts of interest.
Since late 2023, SDTC has been undergoing significant scrutiny, resulting in the government pausing its funding, conducting audits into their practices, and the replacement of their Board of Directors and executives including former president Leah Lawrence and former board chair Annette Verschuren.
