OTTAWA, October 13, 2024 – A scathing report released by the Auditor General of Canada has revealed significant lapses in governance and stewardship of public funds at Sustainable Development Technology Canada (SDTC), a foundation responsible for funding clean technology projects. The report highlights a pattern of mismanagement and conflicts of interest, raising serious questions about the foundation’s ability to effectively support Canada’s transition to a more sustainable future.
Ineligible Projects Awarded Millions:
The audit, covering the period from March 1, 2017 to December 31, 2023, found that SDTC awarded funding to at least 10 ineligible projects, totaling $59 million. These projects failed to meet key requirements set out in contribution agreements between the foundation and the government, such as supporting the development of new technologies or demonstrating reasonable environmental benefits. The auditors estimated that as many as 16 additional projects, representing 1 in 10 of the remaining Start-up and Scale-up projects approved during the audit period, may also have been ineligible.
Conflicts of Interest Plague Decision-Making:
Further compounding these issues, the audit uncovered 90 instances where SDTC’s conflict-of-interest policies were not followed, involving nearly $76 million in funding decisions. The report cites cases where board members participated in discussions and voted on projects despite having declared conflicts of interest. This included decisions related to COVID-19 relief payments, where board members with potential conflicts voted to approve funding that benefited companies they were affiliated with.
Governance Failures and Lack of Oversight:
The audit also points to broader governance failures within SDTC. The foundation’s board of directors failed to ensure compliance with its enabling legislation, including the requirement to maintain a member council of 15 members. By 2020, only 2 members remained, and the board continued to operate without the legally required quorum. Additionally, the board approved new funding streams, such as the Seed program, without receiving adequate information about their compliance with contribution agreements.
Innovation, Science and Economic Development Canada (ISED), the government department responsible for overseeing SDTC, also came under fire for its inadequate monitoring and oversight. The audit found that ISED relied heavily on SDTC’s self-reported information, which was often incomplete or inaccurate. The department failed to conduct audits or take sufficient action to address concerns about potential non-compliance with contribution agreements.
The revelations in the Auditor General’s report have significant implications for the public. SDTC plays a crucial role in fostering clean technology innovation and supporting Canada’s efforts to combat climate change. The mismanagement of public funds and prevalence of conflicts of interest undermine the foundation’s credibility and raise concerns about the effectiveness of government programs aimed at promoting sustainable development. The lack of transparency and accountability in funding decisions also erodes public trust in the foundation and its ability to act in the best interests of Canadians.
The audit’s findings come on the heels of a separate report by Canada’s Conflict of Interest and Ethics Commissioner, which found that Annette Verschuren, former Chairperson of SDTC, had violated the Conflict of Interest Act. These reports, taken together, paint a troubling picture of an organization struggling with fundamental governance and ethical challenges. They underscore the urgent need for reform and increased oversight to ensure that public funds are used responsibly and effectively to support a sustainable future for Canada.
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