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Former Sustainable Development Technology Canada CEO Leah Lawrence (L) chats with board chair Annette Verschuren before the Standing Committee on Access to Information, Privacy and Ethics on Parliament Hill in Ottawa, on Nov. 8.Dave Chan/The Globe and Mail

Ottawa’s main green technology funding agency faces a tough task of finding a new chief executive officer who has deep industry and financial expertise but can avoid potential conflicts of interest in the close-knit sector.

Controversy over perceived conflicts has dogged the organization, and it is one factor that led to the resignation of its last CEO.

A new chief at Sustainable Development Technology Canada will be forced to operate under tighter governance and a new set of controls that have been mandated by Industry Minister François-Philippe Champagne, while working to restore the agency’s reputation as a crucial funder of early-stage clean-technology companies. Mr. Champagne has frozen its ability to do that.

Leah Lawrence resigned abruptly as CEO of the federally funded non-profit late last week, saying she had been subjected to “a sustained and malicious campaign to undermine” her leadership, and that put her in an untenable position.

For the clean-tech sector, maintaining access to capital is the biggest struggle in the current environment, so a CEO should have plenty of experience in that field, said Maike Althaus, executive director of Canada Cleantech Alliance, a coalition of industry associations and accelerators. Meanwhile, they will need knowledge of government workings and also be able to make decisions quickly.

“That’s where it gets tricky. What you need is a special person, because you want that person to know the clean-tech sector and its challenges, but in order to avoid conflict of interest et cetera, you also need someone who establishes fair process without overcomplicating the process and making it lengthy,” Ms. Althaus said.

On Tuesday, SDTC said Ziyad Rahme, who is currently vice-president of investments, will lead the agency while the board of directors begins a search for a new full-time chief.

Ms. Lawrence, who had held the top job since 2015, resigned five weeks after an investigation ordered by the department in charge – Innovation, Science and Economic Development Canada – showed evidence of inappropriate funding and breaches of conflict-of-interest rules. The probe was triggered by allegations made by a whistle-blower group consisting of former and current employees of the organization.

Mr. 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.

Just two days before her departure, Ms. Lawrence and SDTC’s chair, Annette Verschuren, told the House of Commons ethics committee they disagreed with the findings, and called the whistle-blowers’ allegations false. The report, conducted by Ottawa accounting firm Raymond Chabot Grant Thornton, “contains numerous errors, and misrepresentations of our policies and procedures,” Ms. Verschuren said.

SDTC said in a statement that it is finalizing details of its CEO search process, and did not say if it favours external or internal candidates. In the statement, it praised Ms. Lawrence’s tenure at SDTC, calling her a “transformational leader” who reshaped the organization to “meet the accelerating pace of innovation in Canada and globally.”

SDTC spokeswoman Janemary Banigan said the agency remains focused on completing the measures that Mr. Champagne ordered so it can resume operations before the end of the year as planned.

SDTC is seen as key to Canada’s clean-tech ecosystem and a pillar in its aim to achieve net-zero emissions. It is the largest funding source for small and medium-size companies in the field, having granted $1.6-billion since 2001. The sector relies on its grants to attract adjacent financing from private companies and other government agencies, and entrepreneurs and venture capitalists have warned that an extended suspension would be highly detrimental.

The close-knit nature of the industry has been an advantage as entrepreneurs make use of their networks to gain funding and attract expertise. But after complaints about conflict-of-interest infractions, that closeness could prove problematic as the board searches for a new CEO.

Indeed, the RCGT report showed how some of the agency’s board members and other officials have numerous business and personal contacts throughout the industry, and at times that has put them in potential conflict positions. In addition, SDTC relies on consultants and third-party reviewers to help vet projects, and some of them are executives at companies that seek and receive the agency’s support.

Ms. Althaus said the suspension of funding has created uncertainty for companies, and the controversy surrounding an organization that invests public money could lead some Canadians to question the industry, adding to its struggles.

“There is a risk of the situation at SDTC reflecting badly on the clean-tech sector,” she said. “The faster they are able to make a change and rectify the situation the better for everyone involved.”

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