The Liberals ignored conflict warning, and now green-tech agency is in limbo

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If you were a government trying to pick someone to head the board for an agency whose job it is to hand out other people’s money, one criterion would have to come first: They must have nothing to do with the folks receiving the money.

That’s obvious. Yet somehow, the Liberal government didn’t take that into account when they appointed Annette Verschuren as chair of Sustainable Development Technology Canada in 2019.

That’s blowing up in their faces now. It could blow up the SDTC, too.

The Liberal government didn’t just fail to notice the problem. They ignored direct warnings.

The SDTC has provided more than $1.7-billion in start-up and scale-up funding to Canadian green-tech companies. It has been around 23 years and had developed a good reputation.

But for a year, it has been mired in controversy after a former employee alleged a variety of abuses. And because SDTC provided funding for Ms. Verschuren’s company, NRStor Inc.

What’s mind-boggling is that SDTC was already funding an NRStor project in 2019, when Ms. Verschuren was appointed as chair. The Liberal government chose her to oversee an agency that had a funding contract with the company she ran.

Last week, SDTC’s former chief executive officer, Leah Lawrence, told a parliamentary committee that she warned an assistant deputy minister at Innovation Science and Economic Development, Andrew Noseworthy.

“I expressed concern there was a potential for both conflict of interest and the perception of conflict of interest,” Ms. Lawrence said. “I expressed concern that Ms. Verschuren and SDTC could potentially be damaged by the appointment.”

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In 2019, she testified, the Liberal government wanted to dump the then-chair of SDTC, Jim Balsillie, the former Blackberry CEO. He had been critical of a number of Liberal tech policies. They suddenly told him he would be replaced in three days by Ms. Verschuren, the former head of Home Depot Canada.

In an interview, Mr. Balsillie said that when he got that call from Gianluca Cairo, the chief of staff to the then-minister of innovation, Navdeep Bains, he warned Mr. Cairo that Ms. Verschuren was in a position of conflict of interest, but was told the decision had been made.

Getting rid of Mr. Balsillie was one thing. But the rush to put Ms. Verschuren in the post had consequences for the SDTC.

“It’s a shame that a bunch of amateur power-trippers decided to undermine it,” Mr. Balsillie said.

Once appointed, a screen was to be applied so Ms. Verschuren would not make decisions about her company. But a chair heads the board which decided funding and oversees management. A screen was not good enough. The events that followed show why.

When the COVID-19 pandemic hit in 2020, SDTC’s board decided to give all the companies in the portfolio additional money to weather the crisis. NRStor, the company that Ms. Verschuren ran, received some. So did other companies with links to board members.

Ms. Verschuren apparently didn’t feel she needed to step aside from that decision because it was about all companies in the SDTC portfolio, not just NRStor. But that doesn’t make it look right to the public.

But even if Ms. Verschuren had recused herself, and other directors on the board had voted to send funds to the chair’s company, there would still be a perception that the SDTC board might be assisting their chair’s interests.

The board also voted to fund non-COVID projects for companies linked to at least two of its other directors. It’s hard for the public to be confident the board’s decisions were completely unaffected by the interests of its members. The perception matters.

After Ms. Verschuren’s appointment, the SDTC had to manage conflict, rather than try to eliminate conflict, according to Ms. Lawrence. She testified that one board member, Guy Ouimet, decided that the appointment meant it was now acceptable for him to join the board of a company that was receiving SDTC money.

Such questions, and others, have damaged the SDTC. Now it is in limbo.

An accounting firm conducted one review. The current Innovation Minister, François-Philippe Champagne, suspended SDTC’s power to issue new funding. The chair and CEO resigned, and haven’t yet been replaced. The Conservatives now call the SDTC a “green slush fund,” and promise to kill it. The Auditor-General will report this spring.

At the very least, the Liberals should have known five years ago that appointing Ms. Verschuren was the wrong thing to do. They did it anyway.