Ottawa has frozen the activities of a federal foundation that finances the development of green technologies after receiving a report that criticized its management of public funds.

Sustainable Development Technologies Canada (SDTC) is in the middle of a five-year agreement with the federal government to distribute $1 billion to small and medium businesses in the clean tech sector.

The decision to stop the organization from approving new funding was announced on Tuesday by Innovation Minister François-Philippe Champagne.

The move came after a group of whistleblowers brought a complaint against SDTC to the government earlier this year over concerns about the foundation’s management of its federal funding and human resources.

The government hired an external firm, Raymond Chabot Grant Thornton, to conduct an investigation of the allegations.

In their report just released by the government, investigators raised questions about SDTC’s decision to distribute $38 million in emergency “relief payments” in 2020 and 2021, during the COVID-19 pandemic, to companies with which it had previous funding agreements.

According to the report, these contributions “did not appear to be consistent with the requirements” of SDTC’s contribution agreement with the government, pointing out “the payments do not require project cost eligibility or monitoring and reporting.”

One of the funding recipients also “appeared to be ineligible” to receive an amount of $280,000, said the report.

The report also raises questions about the conflict of interest policy within SDTC, stating it was “inconsistently applied.”

The report cited a declaration of a conflict of interest between SDTC’s chief executive officer and an external reviewer that was “backdated […] under the direction of the corporation’s external legal counsel.”

In another portion of the report, investigators found that two streams of funding created by SDTC, worth over $20 million, appear to “contravene” or “not meet the main goal” of its agreement with the government.

The minister reacts

In a press release on Tuesday, Champagne said he takes the findings contained in the report “seriously.”

“The fact-finding report identified a number of instances in which SDTC was not in full compliance with the contribution agreement made with ISED,” said the minister. “It also identified opportunities for improvement in other areas not covered by the contribution agreement, and outside of the scope of intervention for ISED, including human resources, governance, and oversight.”

Champagne is calling on SDTC to implement a “management response and action plan” designed by his department by the end of 2023, adding he is “exploring further options to strengthen the governance oversight of SDTC.”

SDTC said in a statement on Tuesday that it is reviewing the report and is “taking action to implement the recommendations as quickly as possible.”


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