Feds say taxpayers ‘deserve refund’ over conflict-riddled corporate handouts

‘There are going to be cases where, potentially, funding was provided and it needs to be recovered,’ said Deputy Industry Minister Simon Kennedy. His testimony followed an investigation tying $319 million in subsidies to 186 conflicts of interest at Sustainable Development Technology Canada.

Feds say taxpayers ‘deserve refund’ over conflict-riddled corporate handouts
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Taxpayers deserve their money back from the failed ‘green slush fund,’ a senior government official told MPs.

On Thursday, Deputy Industry Minister Simon Kennedy testified before the Commons public accounts committee. He claimed Canadians want their money back, reported Blacklock’s Reporter.

“The Foundation is entirely funded through public money,” reads the June 4 report Sustainable Development Technology Canada.

Since 2017, SDTC approved 226 projects worth $836 million. Federal funding ceased for the fund last September 26.

“It is important to keep in mind what we are talking about here,” testified Kennedy. “There are multiple levels of issues that have surfaced by the various reviews and audits that have been undertaken.

“There are going to be cases where potentially funding was provided and it needs to be recovered,” he said.

Kennedy’s testimony followed an investigation that counted 186 conflicts at the SDTC's board of directors.

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

The Trudeau government axed the green fund on June 4 after Auditor General Karen Hogan uncovered blatant misappropriation of taxpayer dues. She pinpointed $319 million in subsidies to those conflicts.

Established in 2021, the $1.6 billion agency committed 90 conflicts where board directors voted for subsidies benefiting friends and associates. Those cases are separate from 96 instances where directors acknowledged conflicts but did not directly participate in votes.

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

A spokesperson for the fund earlier purported a series of measures to ensure compliance with conflict-of-interest policies and better management of public funds to no avail.

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

“A hundred-eighty-six transactions approved by the board were approved by directors who had a conflict of some type: declared, undeclared, maybe didn’t follow the conflict-of-interest guidelines, correct?” asked MP Perkins. “I wouldn’t say it was 186 transactions,” replied Auditor Hogan.

“Sometimes there may have been many conflicts for one transaction,” said Hogan. There “could be many conflicts of interest with one project,” she said.

“I can see why Canadians, and everyone is confused about this,” replied MP Perkins. “It appears even the Department of Industry and the government that had an assistant deputy minister in the meetings every time didn’t clearly understand.”

“That totals $319 million out of $856 million, somewhere around 40% of the money allocated in the period you audited, was conflicted in some way?” asked MP Perkins. “Yes,” replied Auditor Hogan.

The June 4 report prompted its immediate closure, with transfer of its work to the National Research Council (NRC). While the 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 fund’s closure.

Auditor Hogan clarified on Thursday that no members should have personally benefited from funding arrangements. “It is a concern which is why we flagged it in our report, about failures the board had,” she said.

Conflicted board members included the chair, Annette Verschuren, who voted her company a $217,661 subsidy. “I am sure that I didn’t break any ethics laws,” Verschuren testified last December 14 at the Commons industry committee.

Verschuren abruptly resigned last November 20 following disclosure of her vote. She remains under investigation by the Ethics Commissioner.

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

Evidence showed Verschuren’s company NRStor Inc., a Toronto battery storage firm, had five employees and was losing money despite $1.4 million in federal contracts. The company paid Verschuren a $120,000 salary as CEO.

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

“I am very concerned,” Auditor Hogan testified on June 5. There were “significant lapses” at the agency.

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