SDTC, the country’s largest funder of green technology, has been forced by the government to suspend new grants for projects since early October, on orders from Industry Minister François-Philippe Champagne.Spencer Colby/Canadian Press
Cleantech companies approved for funding from Sustainable Development Technology Canada are facing delays in payments due to increased reporting requirements, including ensuring there are no conflicts of interest involving federal agencies.
Some startups say they have been waiting weeks for scheduled payments, even though they have met the milestones specified in their approvals. For small technology developers with few other sources of funding, the ability to plan around spending needs is complicated.
SDTC, the country’s largest funder of green technology, has been stopped by the government from receiving new grants for projects since early October after an investigation report found evidence of conflict policy violations and inappropriate funding. It is imposed. The freeze was scheduled to be lifted by the end of last year, but remains in place due to a protracted review of SDTC’s human resources practices in the wake of employee complaints.
The suspension, ordered by Industry Minister François-Philippe Champagne following a whistleblower complaint, has caused major disruption to Canada’s subsidy-dependent cleantech industry. The startup, which was close to final approval, was left in limbo. Last year, SDTC assured businesses that had already received payments that it would be business as usual, but now those businesses are also affected.
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SDTC spokesperson Jemery Bunnigan said companies will now need to meet additional requirements to ensure compliance with the Contributions Agreement, the document that sets out how SDTC distributes public funds.
An initial investigation conducted by an accounting firm on behalf of Innovation, Science and Economic Development Canada’s department found that some of the funding appears to be inconsistent with the agreement, and that some board members are providing benefits to companies. It turned out that he had approved the payment that would bring about. They were interested.
Mr. Bannigan said the new requirements include additional checks that conflict of interest policies have not been violated and that companies remain eligible for funding, and these are part of the series ordered by Mr. Champagne. He pointed out that this is one of the corrective measures for governance.
“All expenditures will continue to be paid based on the company’s ability to achieve project milestones, as is our standard practice,” Banigan said in a statement. “However, the implementation of these new requirements has resulted in some delays in payment processing. We expect these delays to be temporary as we work on implementation across our portfolio. I am.”
A chief executive whose company received SDTC funding said the delay had raised questions about the credibility of the funding among other investors, putting the company’s reputation at risk. Ta. The Globe and Mail is not naming the executives, fearing that discussing the issue publicly could jeopardize future funding.
To take advantage of the agency’s grants, SDTC requires applicants to arrange other support from state programs or privately-funded companies. Once approved, the subsidy will be distributed in installments once the company achieves set milestones in project development.
The delays and continued freeze in new funding come in a challenging cleantech market where investors are hesitant to make long-term bets, especially on pre-commercial technologies. Brian Watson, senior vice president at Bembridge Capital and managing director of Cleantech North, which supports startups, said this was a popular topic of discussion at a startup conference in Toronto last week. He said it happened.
Watson said the new reporting burden is not surprising given SDTC’s sensitivity to issues, but it should not cause further disruption to the ecosystem.
“If that’s what’s written in the contribution agreement, or if it’s in the spirit of the contract with the company, it’s not wrong for them to ask for that detail,” he said. “But if a company has been operating in good faith, taking six months or a year to withdraw funds with a certain level of expectation, it would be unfortunate to penalize them with an additional timeline.”
The development follows a high-profile investigation at SDTC and resignations in late 2023, including of its CEO and chair. These positions remain vacant.
The federal Auditor General has launched an investigation into the agency, and the Ethics Commission has accused former commissioner Annette Verschulen of approving nearly $40 million in pandemic-related payments to SDTC portfolio companies in 2020 and 2021. We are currently considering his role. I’m the CEO.
Vershulen said she and other board members “take the position that these COVID-19 payments are extensive.” It was an operational issue. ” She also said she acted on the advice of her attorney.
Audrey Champeau, a spokeswoman for Mr. Champagne, would not comment on the new funding requirements and said she could not provide a timeline for when the moratorium on new funding would be lifted. That depends on whether the minister receives a report on human resources practices, she said.
