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Annette Verschuren says she will devote her last two weeks as chair of Sustainable Development Technology Canada to delivering the results of a management action plan that Industry Minister François-Philippe Champagne ordered.Galit Rodan/The Globe and Mail

The chair of Sustainable Development Technology Canada is resigning her post, the second senior leader to depart the embattled federal agency since an investigation showed evidence of conflict-of-interest breaches and inappropriate funding.

Annette Verschuren said in a letter to Industry Minister François-Philippe Champagne on Sunday that she would depart the organization on Dec. 1. Ms. Verschuren is leaving days after the federal ethics commissioner said he would launch a probe into her role in providing $38-million in relief funding for SDTC’s stable of companies during the pandemic, including one she leads as chief executive.

“While I have faithfully and fully committed myself and my decision-making to serve the organization’s best interests, it is time for me to step aside,” Ms. Verschuren said in the letter, forwarded to The Globe and Mail by her representative. The prominent businesswoman who was previously CEO of Home Depot Canada has led SDTC’s board of directors since 2019, when she was appointed by the government. She declined to comment further.

She said in her letter she will devote her last two weeks at the agency to delivering the results of a management action plan that Mr. Champagne ordered in response to the findings of the investigation into SDTC, which has led to growing controversy. He has suspended its ability to grant money to companies until the series of measures in that plan is completed.

SDTC is a federal non-profit that is seen as key to Canada’s early-stage clean-tech sector, having granted $1.6-billion to the industry since 2001. Entrepreneurs and venture capitalists have said its suspension has been detrimental to companies that were in the process of lining up adjacent financing.

Ms. Verschuren’s departure follows that of former SDTC CEO Leah Lawrence, who resigned more than a week ago. At the time, Ms. Lawrence said she had been subjected to “a sustained and malicious campaign to undermine” her leadership, and that had put her in an untenable position.

Another director, Jessica McDonald, resigned from the agency’s board last week.

In early October, an investigation into SDTC ordered by Innovation, Science and Economic Development (ISED) Canada produced a report that showed evidence of inappropriate funding and breaches of conflict-of-interest rules. The probe was triggered by allegations made by a whistle-blower group that consisted of current and former employees of the organization. The Globe first reported on the complaints in April.

Both Ms. Verschuren and Ms. Lawrence disputed the findings of the investigation, which was conducted for the federal department by Ottawa accounting firm Raymond Chabot Grant Thornton. Ms. Verschuren told a House of Commons ethics committee hearing early this month that the report “contains numerous errors, and misrepresentations of our policies and procedures.”

Mr. Champagne will start the process shortly of finding a new candidate to chair the agency’s board, his spokeswoman, Audrey Champoux, said in an e-mail.

“The minister is committed to ensuring that organizations which receive federal funding adhere to the highest of standards of governance. That’s why he’s determined to get to the bottom of allegations related to SDTC,” Ms. Champoux said.

Ms. Verschuren pointed out in her resignation letter that she has sat on a number of high-profile government panels over 36 years, including then-prime minister Brian Mulroney’s National Advisory Board of Science and Technology; then-finance minister Jim Flaherty’s Economic Advisory Council; and Deputy Prime Minister Chrystia Freeland’s council that negotiated the U.S.-Mexico-Canada trade agreement.

She wrote that the board took the allegations “very seriously” and dedicated resources to making sure that it was objective in the decisions it made on behalf of Canadians. She said that the ISED-ordered investigation and another completed by the agency’s law firm “found no clear evidence of wrongdoing or misconduct by SDTC.”

“Continuous improvement is the foundation of any successful organization, and these assessments provided helpful recommendations for procedural improvements, which we wholeheartedly accept. We can always do better,” she wrote.

She did not address a decision announced last week by Interim Conflict of Interest and Ethics Commissioner Konrad von Finckenstein to examine her role in a vote in favour of pandemic-relief payments to all of SDTC companies in 2020 and 2021. Among those was energy-storage developer NRStor Inc., which received $217,000. Although Ms. Verschuren is chair and CEO of NRStor, she did not recuse herself from voting, she has acknowledged.

Mr. von Finckenstein said he had looked into the matter in response to a request from Ontario Conservative MP Michael Barrett, a member of the House ethics committee, who alleged Ms. Verschuren had “used her position as chair of the board to influence her fellow directors in reaching a decision with respect to the motion she had moved, which furthered her private interests.”

When questioned by ethics committee members about voting in favour of funding, Ms. Verschuren said the directors “took the position that these COVID-19 payments were broad. It was an operational issue.” She also said she had acted on advice of legal counsel, which had led her to believe there was no conflict-of-interest issue because no company received preferential treatment.

SDTC said in a statement on Sunday its board would meet this week to review the management action plan, aiming to submit it to the minister on Dec. 1. Directors will also discuss what they will do until the government appoints a new chair.

The agency thanked Ms. Verschuren for her “passion, keen insights and thoughtful counsel” over the last four years, calling her “a tireless advocate for entrepreneurs across Canada’s clean-tech ecosystem.”

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