Feds axe 'green slush fund' following scathing audit into 'misused' public funds

Sustainable Development Technology Canada committed 186 conflict of interest violations, with its board of directors voting to benefit friends and associates financially to the tune of $76 million.

Feds axe 'green slush fund' following scathing audit into 'misused' public funds
THE CANADIAN PRESS/Sean Kilpatrick (right)
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The Trudeau government axed its flailing green fund Tuesday after Auditor General Karen Hogan uncovered blatant misappropriation of taxpayer dues.

Established in 2021, the $1.6 billion Sustainable Development Technology Canada (SDTC) committed 186 conflict of interest violations. In 90 cases, the SDTC board of directors voted for subsidies benefiting friends and associates for nearly $76 million in funding.

Conservative MP Rick Perkins noted those cases were separate from 96 instances where directors acknowledged conflicts but did not directly participate in votes. “In every single case, when that came to the board, there was a senior Department of Industry official present,” he said.

“So here’s 186 cases where there is a conflict of interest?” asked MP Perkins. “Overall,” replied Auditor Hogan.

“They didn’t follow conflicts of interest rules?” he asked. “I would say the Foundation really poorly manages conflicts of interest in general,” replied Hogan.

Venture capitalist Andrée-Lise Méthot, a former board member and managing partner for the firm Cycle Capital, funded several firms with ties to her enterprise through the agency. From May 2, 2017, to September 15, 2021, the board reportedly approved $23,065,853 to MineSense Technologies, Spark Microsystems, GreenMantra Technologies, Concentric Agriculture, Polystyvert and VueReal.

Guy Ouimet, an ongoing member since 2018, served on the Project Review Committee and the Lithion Technologies board simultaneously. The former allegedly approved $3,842,000 in funding for Lithion on August 29, 2018 — less than two months after its incorporation. 

Ellen McGregor, an SDTC board member since 2015, approved funding for a clean tech company in cahoots with her business, Fielding Environmental. Li-Cycle allegedly received a $2,708,488 grant on August 29, 2018, and another $4,000,000 on August 17, 2020.

Over the past six years, SDTC approved 226 projects worth $836 million, reported Blacklock’s Reporter. Federal funding ceased for the fund last September 26.

“The Foundation is entirely funded through public money,” reads Hogan’s audit, Sustainable Development Technology Canada. “With that comes an expectation that it holds the highest standard for ethical practices. Conflicts of interest that are not disclosed or managed call into question the objectivity and impartiality of the Foundation and its decisions.”

The Department of Innovation, Science, and Economic Development (ISED) allocated funding to reduce emissions through 2026. The fund distributed taxpayer subsidies to clean tech enterprises, whose projects frequently overstated its environmental benefits.

Hogan reported that eight projects worth $51 million “did not support the development or demonstration of a new technology, or the projected environmental benefits were unreasonable.”

Roughly $59 million allocated to 10 projects were not eligible for funding, reported CBC News

Twelve of 18 completed projects sampled in the scathing report found only half of emission reduction targets were achieved.

"Not managing conflicts of interest — whether real, perceived, or potential — increases the risk that an individual's duty to act in the best interests of the foundation is affected, particularly when making decisions to award funding," the audit concludes.

Israr Ahmad, a federal whistleblower, earlier alleged breaches of conflict of interest and human resource deficiencies from the board.

“We all declared conflicts of interest — well, not everyone,” Ouimet told the industry committee last December 6.

Annette Verschuren, a Liberal donor who contributed $10,750 to the party, was appointed board chair and subsidized her private business with a $217,000 pandemic grant through the agency. She abruptly resigned last November 20.

The fund CEO also resigned last November amid an ongoing ethics probe. 

“I am very concerned,” Auditor Hogan testified Tuesday. There were “significant lapses” at the agency, she said.

Hogan largely blamed the Innovation Department for not sufficiently monitoring the SDTC contribution agreements — a claim the fund rejects.

The SDTC purported a series of measures to ensure compliance with conflict-of-interest policies and better management of public funds, with “every dollar accounted for and… correctly disbursed,” said spokesperson Janemary Banigan.

Nonetheless, Innovation Minister François-Philippe Champagne complied with the Auditor General’s report, transferring SDTC funds to the National Research Council of Canada.

While SDTC operates at arm's length, the NRC reports directly to the minister.

“As a Government of Canada organization, the NRC is subject to rigorous and stringent oversight of its personnel and finances. This structure will help rebuild public trust while increasing accountability, transparency and integrity,” Champagne said.

He added that SDTC employees can seek employment with the research council despite the funds closure.

A separate conflict-of-interest report revealed shortcomings with the funds management, but Minister Champagne kept its senior management in place.

Bloc Québécois MP Nathalie Sinclair-Desgagné said laws were broken and the audit proved worrisome. “We are beyond the level of a performance audit here, simple audits of programs,” she said. “The federal government is unable to follow its own laws.”

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