Auditor General to probe SDTC following ISED-commissioned investigation

Auditor General of Canada Karen Hogan.
ISED paused new SDTC funding after third-party report uncovered conflict of interest, governance issues.

The Office of the Auditor General of Canada (OAG) plans to audit embattled federal cleantech investment agency Sustainable Development Technology Canada (SDTC).

According to the OAG, the move comes in response to recent discussions with Innovation, Science, and Economic Development Canada (ISED) in addition to information the OAG received independently.

The announcement comes shortly after ISED suspended SDTC from funding new projects.

The OAG intends to take a closer look into how the federal cleantech investment agency is financing the development of sustainable technologies within the ISED portfolio and table its report in the House of Commons in 2024.

The announcement comes shortly after the Government of Canada suspended SDTC from funding new projects after a third-party investigation discovered evidence of conflict of interest and governance issues at SDTC.

Canadian investors and cleantech industry stakeholders BetaKit spoke with last month noted that even a temporary pause on new SDTC funding could have a significant impact on Canada’s early-stage cleantech firms. The suspension comes amid a more challenging fundraising landscape for startups, at a time when cleantech capital and companies are already fleeing south.

Created and financed by the Government of Canada, SDTC is an arm’s-length, not-for-profit foundation tasked with supporting the development and growth of new domestic clean technologies.

SDTC provides funding to Canadian companies across the seed, startup, and scaleup stages advancing pre-commercial cleantech with the potential for significant environmental and economic benefits. The agency, and the grants it disburses, represent an important part of the federal government’s overall cleantech strategy.

RELATED: Ecosystem fears cleantech funding gap as ISED pauses SDTC funding following mismanagement investigation

As first reported by The Globe and Mail, ISED initially commissioned a previous probe, led by Raymond Chabot Grant Thornton this spring after ex-SDTC employees alleged some entrepreneurs with ties to SDTC’s management and board received preferential treatment when seeking funding from SDTC, among other claims.

The resulting report, which BetaKit obtained and reviewed, uncovered signs of conflict of interest and government problems at SDTC involving its CEO and board members.

In response, last month, ISED temporarily halted SDTC from making new investments until it enacts a series of corrective management, governance and human resources measures, with the expectation that SDTC would comply by December 31.

In the meantime, SDTC has stopped approving new projects and will not be accepting new applications until this process is complete. In the interim, SDTC said its regular business operations will continue, including the disbursal of funds for existing projects.

Per tapes of conversations between a whistleblower and a senior ISED official that were recently shared with the CBC, ISED was considering ousting some of the board and management during summer. But SDTC’s leadership team currently remains intact.

Feature image courtesy the Office of the Auditor General of Canada.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache.

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