Former SDTC CEO says she warned of chair’s potential conflicts of interest

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The recently resigned chief executive at Sustainable Development Technology Canada raised concerns with government officials about conflicts of interest as the agency’s incoming board chair was being vetted, but those concerns went unheeded, the former CEO testified on Wednesday.

Leah Lawrence, who stepped down from her position in November after an investigation into the federal green technology fund’s governance practices, said she and her team had alerted senior officials at the department in charge, including the minister, about potential fallout as Annette Verschuren was being considered for the chair position in 2019.

Ms. Verschuren was and remains chair and CEO of energy storage developer NRStor Inc., which at the time was receiving funding from SDTC. She has said that she consulted the then-ethics commissioner before taking on the role and was advised that she could accept the position if she recused herself from boardroom discussions about her company.

“I expressed concern SDTC was funding a project for her company,” Ms. Lawrence told a House of Commons industry committee Wednesday. “I expressed concern there was a potential for both conflict of interest and the perception of conflict of interest. I expressed concern that Ms. Verschuren and SDTC could potentially be damaged by the appointment.”

In June of 2019, SDTC staff reiterated the concerns with the staff of Innovation, Science and Economic Development Canada (ISED) and the minister at the time, Navdeep Bains, she said. No previous chair at the agency had direct conflicts of interest, she added. Ms. Verschuren, a former CEO of Home Depot Canada, had been recommended by the government to replace Jim Balsillie, the former co-CEO of BlackBerry.

Ms. Lawrence said the assistant deputy minister, Andrew Noseworthy, had informed her that without a specific written policy barring a recipient of SDTC funds from sitting on the board, the appointment would proceed.

“I fear that my ongoing efforts to strengthen the governance regime at the board level were largely stymied from that point on. Henceforth, it became largely an exercise in managed conflict rather than precluding or eliminating conflict,” she said.

Now, the interim ethics commissioner is probing Ms. Verschuren’s role in approving nearly $40-million of pandemic-related payments to SDTC’s portfolio of companies in 2020 and 2021, including NRStor. Another SDTC director, Guy Ouimet, is also being investigated by the ethics commissioner under the Conflict of Interest Act.

Ms. Verschuren resigned from the SDTC board in November, more than a month after the report of the investigation produced evidence of conflict breaches and inappropriate funding. She has denied any wrongdoing and has disputed the findings. A spokeswoman for Ms. Verschuren did not immediately respond to a request for comment.

Ms. Lawrence was named CEO of the federally funded non-profit in 2015. She also resigned in November, saying that she had been targeted by “a sustained and malicious campaign to undermine” her leadership. ISED had ordered the probe into SDTC after whistle-blower complaints alleging conflicts of interest and financial mismanagement.

In October, Industry Minister François-Philippe Champagne suspended SDTC’s ability to grant money to clean-tech startups until its board completes a series of corrective management, governance and human-resources measures. Four months on, its ability to provide funding remains frozen.

On Wednesday, Ms. Lawrence said she was leading efforts to implement the measures when she “listened in disbelief” to ISED assistant deputy minister Doug McConnachie telling an ethics committee hearing in November that he had spent more than 30 hours of meetings discussing the investigation with the whistle-blower.

In recordings of those meetings, taped secretly before the report was completed and later leaked to media outlets, Mr. McConnachie, is captured saying it appeared unlikely that the top executives, and some members of the board, could continue, because they had “lost the confidence” of the ministry. In the end, the government did not terminate anyone.

“As the ISED overseer of the investigation, Mr. McConnachie’s actions were unethical and compromised the investigation,” she said.

“Yet despite his actions, the investigation still found no wrongdoing or misconduct, and made several administrative recommendations that the team and I were implementing when I decided to resign,” she said.