Canada’s top public servant says federal officials did not probe WE Charity’s financial situation or governance structure when doing homework on a deal with the charity to administer a pandemic student grant program.
Ian Shugart, clerk of the Privy Council, says the due diligence on WE Charity focused on its ability to deliver the program.
Speaking to the House of Commons ethics committee this afternoon, Shugart said senior officials at Employment and Social Development Canada – the department that ultimately signed the contract with WE – told him they had a track record with the organization, which reassured him about the charity.
When Prime Minister Justin Trudeau initially pushed back on the proposal to award the Canada Student Service Grant contract to WE, knowing his family’s connections with the organization would lead to significant scrutiny, Trudeau asked for further evaluation of the deal, Shugart confirmed.
Officials went back and examined whether WE Charity had the ability to administer a Canada-wide student volunteer program and whether it could deliver these services in both official languages.
Other issues relating to WE Charity’s organization, board of directors, financial state and governance structure were not considered at that time, Shugart said.
When it came back to cabinet two weeks later, Shugart says, he believed the due diligence undertaken was sufficient.
Shugart is among a number of high profile witnesses who will be grilled today about how the WE Charity, which has close ties to Trudeau, wound up being chosen.
The committee is also scheduled to hear from Youth Minister Bardish Chagger, Employment Minister Carla Qualtrough and former ethics commissioner Mary Dawson.
The committee is ostensibly conducting a review of the existing safeguards in place to prevent conflicts of interest when the federal government is deciding how to spend taxpayers’ dollars.
But opposition MPs are sure to focus more pointedly on the government’s agreement with WE Charity.
Chagger was the minister responsible for the program, now abandoned after becoming mired in controversy.
Qualtrough is in charge of the department whose public servants concluded they were not capable of delivering the program and who, according to the government, recommended that WE Charity was the only group capable of delivering it.
Trudeau and Finance Minister Bill Morneau, who also has close family ties to WE Charity, are both under investigation by the federal ethics commissioner. Both have apologized for failing to recuse themselves when cabinet approved the recommended agreement with the charity.
The controversy has dogged the government since late June, when it announced an agreement to pay WE Charity up to $43.5 million to administer the grant program. The agreement stipulated that the charity could not make money on the deal. Ottawa budgeted $912 million for the program, but the deal with WE was for $543 million.
Trudeau has been a featured speaker at six WE Day events and his wife hosts a podcast for the group, for which they have not been paid. However, the charity has covered some of Sophie Gregoire Trudeau’s travel expenses and has paid Trudeau’s mother and brother almost $300,000 for speaking at numerous WE events over the years and reimbursed them for some $200,000 in expenses.
One of Morneau’s daughters works for the organization, another has spoken at its events and his wife has donated $100,000 to it. Morneau also revealed that WE Charity covered $41,000 in expenses for him and his family in 2107 for trips to view two of its humanitarian projects in Ecuador and Kenya.
Morneau wrote a cheque to reimburse the organization for those expenses shortly before testifying two weeks ago at the Commons finance committee, which is also attempting to get to the bottom of the affair.
Members of the finance committee are waiting to see some 5,000 pages of documents turned over by the government Saturday on the WE controversy. The documents are being vetted by committee lawyers to ensure they don’t disclose personal information or cabinet secrets.
In the meantime, opposition parties are attempting to expand the ethical cloud to include the delivery of another emergency program – this one to provide rent relief for small businesses during the pandemic.
The government handed responsibility for the program to the Canada Mortgage and Housing Corp. but the Crown corporation decided to contract it out to MCAP, a mortgage lender that employs the husband of Trudeau’s chief of staff, Katie Telford. The contract was initially worth $56 million when the rent-relief program was launched in May and later expanded to $84 million in July.
The Prime Minister’s Office says CMHC independently chose to outsource the program.
The PMO also says Telford alerted the ethics commissioner in January, when her husband became a senior executive at MCAP, and was advised she didn’t need to set up an ethics screen. She nevertheless voluntarily set up a screen to ensure she would not be involved in anything that might benefit the company.
Conservative leader Andrew Scheer said today there are still more questions about Telford’s knowledge of the program and how it was going to work.
“We’re just starting to dig into this one,” he said.
The Conservatives want the Commons finance committee to review the issue, and for the lobbying commissioner to look at how the contract was awarded, as they say none of the participants were registered to lobby the government.
But taken together, Scheer said, both the WE and rent-relief program raise a bigger issue.
“We know that billions of dollars of taxpayers’ money were handed out in a very short time-frame,” he said.
“So how many other Liberal insiders got sweetheart deals?”