Top executives at a federal cleantech funding agency facing allegations of impropriety pushed back on the claims Wednesday afternoon in an appearance before Parliament’s ethics committee. 

Annette Verschuren, the chair of Sustainable Development Technology Canada (SDTC), and Leah Lawrence, its CEO, said claims of mismanagement and failures of governance levelled against it by some former employees—who said the agency gave preferential treatment to entrepreneurs close to its board—are “false” and omit key facts. 

Their testimony Wednesday echoed a rebuttal SDTC sent last week to the federal Innovation Department, which last month suspended the agency’s funding powers, preventing it from distributing millions in public funding to the country’s nascent clean technology sector. 

First reported by The Logic, SDTC’s response to its government overseers, and Wednesday’s testimony, mark the beginning of a public effort to shake off the controversy. 

The background: The Globe and Mail reported in April that a group of former employees had levelled complaints of impropriety against SDTC. Among the allegations, the group claimed entrepreneurs had at times received public funding from SDTC despite internal recommendations suggesting those companies were already generating revenues and did not actually need the funding. 

The allegations prompted the government ministry responsible for SDTC, Innovation, Science and Economic Development (ISED), to launch an internal investigation. Raymond Chabot Grant Thornton (RCGT), an external consulting firm, carried out a nearly six-month probe, and delivered its report to ISED in September. 

In an Oct. 1 letter, ISED deputy minister Simon Kennedy told Verschuren he was freezing funding to SDTC, even though he said the investigation “did not reveal any clear evidence of wrongdoing or misconduct.” Still, it did uncover “inconsistencies” in how SDTC applies its conflict-of-interest policies that could be seen as “potential breaches” of the agency’s agreement with the department. 

Verschuren is also the CEO of NRStor, an energy storage company, and a former president of Home Depot Canada. She replaced former BlackBerry co-CEO Jim Balsillie as chair of SDTC in 2019. Lawrence was the former chair of the Calgary Chamber of Commerce and a board member of the Innovation Asset Collective, a non-profit organization ISED appointed to help startups with IP-related issues. 

The testimony: “The allegations made by this small group of former employees are false, and we are here today to set the record straight,” Verschuren said in her opening statement to the committee, made up of members of Parliament from assorted political parties. 

In their answers, the SDTC executives rejected claims of impropriety, and said they had hired the law firm Osler, Hoskin & Harcourt to carry out a “thorough” investigation, which uncovered no wrongdoing.

“Let’s compare this to the RCGT process,” Verschuren said, referring to the consulting firm’s investigation of the allegations. “Whereas Osler conducted 23 hours of interviews, board director interviews with RCGT were as short as 15 minutes. What’s more, important documentation that was provided to RCGT was not reflected in the report.” 

Committee members questioned the SDTC executives about their personal conflicts of interest and why they didn’t recuse themselves from specific agency meetings. NDP MP Matthew Green said there were “significant gaps” in SDTC’s conflict-of-interest reporting policies. 

Verschuren told the committee that as SDTC board chair she had never voted on or had to recuse herself from proceedings that involved NRStor, the company she has served as CEO of since 2012. 

SDTC gave NRStor $2.1 million in 2017. In a 2019 press release, SDTC CEO Lawrence celebrated the completion of an air compression storage project in Ontario, which NRStor built alongside its partner Hydrostor.

“We look forward to watching Hydrostor and NRStor take the world by storm!” she said.

In 2021, SDTC provided $4 million to Hydrostor alongside Natural Resources Canada.

In separate questioning, Green asked Lawrence why she did not recuse herself from meetings between SDTC and ALUS, a non-profit organization to which the agency gave $5 million in 2022. Lawrence admitted she is a friend of Aldyen Donnelly, an established figure in the clean energy space who she said was acting as a subcontractor with ALUS at time. (The ALUS website says Donnelly joined ALUS’s New Acre Project in 2022, but she is not listed as a member of ALUS’s board or working team).

Lawrence said she discussed her friendship with Donnelly with the SDTC’s project review committee, but that they decided she didn’t have to recuse herself from meetings on the ALUS project because she wasn’t a voting member of the committee. 

Lawrence said the legislation that lays out the rules for SDTC requires that appointees to the agency’s board have industry experience, and said “it’s difficult to have a board of directors that is completely conflict free.” 

What’s next: Innovation Minister François-Philippe Champagne, who suspended SDTC until it puts measures in place to address the issues the investigator’s report found with its governance, had set a Dec. 31 deadline for the agency to make the changes. 

Champagne appeared before the ethics committee Monday, where he faced queries about why he hadn’t done more in response to the allegations. Asked by Conservative MP Michael Barrett why he hadn’t fired anybody, Champagne said he would “caution members of this committee to apply due process when you’re looking at allegations.”

However, auditor general Karen Hogan has now launched a probe of her own into the allegations against SDTC. That report isn’t expected until sometime next year.

Meanwhile, SDTC’s suspension has fed broader concerns that the cleantech industry could suffer. The agency’s funding was set to double from $157 million last year to $318 million in fiscal 2025-26.