Federal probe of employee complaints about billion-dollar green fund now complete

The federal government now has the results of a probe it launched into a federal agency tasked with funding early-stage green technology — an agency that has been the target of employee complaints about hundreds of millions of dollars paid to the green tech sector.

Radio-Canada has learned the final report, drafted by an outside firm, will be presented soon to Industry Minister François-Philippe Champagne, who is responsible for funding and overseeing Sustainable Development Technology Canada (SDTC).

Before presenting the report to Champagne, officials at Innovation, Science and Economic Development Canada will prepare an "action plan" to respond to the investigation's findings, sources said.

"If there are decisions to make, we will make them," said a federal official.

Little known to the general public, SDTC is at the heart of Ottawa's efforts to foster a technological transition toward a greener economy. It focuses its efforts on small and medium-sized businesses.

According to its current agreement with Ottawa, SDTC has $1 billion to spend between 2021 and 2026. SDTC is managing a budget of $170 million this year. The amount of available funding rises every year to reach $320 million in 2025-2026.

In a written statement, Innovation, Science and Economic Development Canada said it received "allegations of wrongdoing" last February in relation to SDTC funding decisions and human resources management.

Sustainable Development Technology Canada is part of Ottawa's efforts to foster a technological transition toward a greener economy. (Dave Rae/CBC)

The department called on an external firm, Raymond Chabot Grant Thornton, "to examine the situation and validate the alleged facts." Its report is expected to be made public in coming weeks.

The department said it "will not hesitate to take all necessary measures in response to the findings of the report to remedy any deficiencies or problems identified."

A SDTC spokesperson said the foundation is continuing its activities in the meantime.

"SDTC is fully cooperating with the fact-finding exercise undertaken by Innovation, Science and Economic Development Canada in response to allegations made by a small group of former employees," said Janemary Banigan. "We eagerly await the findings, so that we can put this matter behind us and focus on serving Canadian entrepreneurs."

She said SDTC hired external counsel to look into the allegations and they "found no evidence to substantiate any of the allegations made."

The foundation has provided $1.6 billion in funding to more than 500 businesses since its inception in 2001.

Whistleblower complaints

A group of former and current SDTC employees has filed a formal complaint about the agency's management with the federal government.

The group initially took its allegations to the Office of the Auditor General last year but was told to direct its complaint to the Privy Council Office before ending up at Champagne's department. A spokesperson for the Office of the Auditor General said that while it is not conducting an audit, it continues to follow the matter.

Sources said Raymond Chabot Grant Thornton examined several elements of SDTC's operations, such as its management of internal policies and expenditure approval process.

External investigators analyzed contribution agreements with more than a dozen companies that received $100 million from SDTC from 2017 to 2022.

One of the issues raised by the whistleblowers was SDTC's decision to offer a 5 per cent boost in funding to all previous funding recipients at the end of the 2020 and 2021 fiscal years. The additional payments — which SDTC said were necessary to help firms deal with the COVID-19 pandemic — cost the organization nearly $40 million.

"The government granted SDTC additional financial flexibility during the pandemic to support the Canadian small businesses in our portfolio through an uncertain time," said Banigan.

Minister praised SDTC's 'crucial' work

In a video message last year, Champagne praised SDTC's "substantive contribution" to Canada's economic development.

"As the country's leading source of funding for small and medium-sized clean technology companies, you truly play a crucial role in ensuring a low-carbon future," he said.

SDTC has been led since 2015 by CEO Leah Lawrence, an expert in the clean technology field. She is an engineer by training and has a master's degree in economics from the University of Calgary.

Annette Verschuren, a well-known figure in the Canadian business world, has been SDTC's board chair since 2019. She joined several businesspeople on a 2017 visit by Prime Minister Justin Trudeau to Washington, D.C., where the Canadian delegation met with then-U.S. president Donald Trump.

President of Home Depot's Asian and Canadian operations Annette Verschuren, left, looks at U.S. Commerce Secretary Carlos Gutierrez being fitted with an apron at a Home Depot, GE Aviation and VeriSign event announcing deals with Chinese companies during a ceremony at the Grand Hyatt hotel in Beijing on Dec. 13, 2006. (Elizabeth Dalziel/AP)

She previously led operations at Home Depot and Michael's in Canada. Since 2012, she has been president of NRStor, which works in the field of energy storage.

The foundation was created by the Liberal government of Jean Chrétien to provide funding for clean technology projects in Canada.

Projects funded by SDTC — usually at the initial stage of development of new technologies — receive an average of $4 million.

In all cases, the funding is linked to the development of technologies that are expected to have a positive impact on the environment.