Opening Statement before the Standing Committee on Public Accounts
Sustainable Development Technology Canada
(Report 6—2024 Reports of the Auditor General of Canada)
13 June 2024
Karen Hogan, Fellow Chartered Professional AccountantFCPA
Auditor General of Canada
Mr. Chair, thank you for this opportunity to discuss our report on Sustainable Development Technology Canada. I want to begin by acknowledging that we are gathered on the traditional unceded territory of the Algonquin Anishinaabe people. Joining me today are Mathieu Lequain, the principal who was responsible for the audit, Ewa Jarzyna, the director who led the audit team, and Andrew Hayes, Deputy Auditor General.
This audit examined whether the foundation, Sustainable Development Technology Canada, managed public funds in accordance with the terms and conditions of contribution agreements and its legislative mandate. It also examined Innovation, Science and Economic Development Canada’s oversight and administration of public funds. Between March 2017 and December 2023, the foundation approved $856 million of funding to 420 projects.
We found that there were significant lapses in Sustainable Development Technology Canada’s governance and stewardship of public funds. Specifically, the foundation awarded $59 million to 10 projects that did not meet key requirements set out in the contribution agreements between the government and the foundation.
I am also very concerned by breakdowns in the foundation’s governance. The foundation was not always following its conflict-of-interest policies, and it failed to comply with the Canada Foundation for Sustainable Development Technology Act.
The act requires the foundation to have a group of 15 members, separate from its board of directors, to represent Canadians and appoint most of the foundation’s board. We found that the foundation did not comply with the legislation because it had only 2 such members, instead of the required 15.
With respect to conflicts of interest, the foundation did not have an effective system to maintain its conflict-of-interest disclosures and related actions. Although we found 96 cases where directors had followed the conflict‑of‑interest policy by declaring their conflicts and appropriately recusing themselves from voting, there were 90 cases where the foundation’s records show that conflict-of-interest policies were not followed. These 90 cases were connected to approval decisions that awarded projects nearly $76 million in funding.
We also found that Innovation, Science and Economic Development Canada did not sufficiently assess whether the foundation complied with contribution agreements Through its limited monitoring activities, the department could not ensure the funds were spent according to requirements in contribution agreements. In addition, the department did not carry out compliance audits of the foundation and it did not monitor conflicts of interest.
Like all organizations funded by Canadian taxpayers, Sustainable Development Technology Canada has a responsibility to conduct its business in a manner that is transparent, accountable, and compliant with legislation. Our findings show that when this doesn’t happen, it’s not always clear that funding decisions made on behalf of Canadian taxpayers were appropriate and justified.
Mr. Chair, this concludes my opening statement. We would be pleased to answer any questions the committee may have. Thank you.