Trudeau cleared in WE Charity scandal but former finance minister broke conflict law, says ethics watchdog

Former finance minister Bill Morneau breached the Conflict of Interest Act by failing to recuse himself from cabinet deliberations on the WE Charity summer student grants contract, but the prime minister did not breach the act, according to an investigation by the federal ethics watchdog.

Both men had apologized for not recusing themselves from cabinet deliberations

The federal ethics commissioner found that former finance minister Bill Morneau, right, should have recused himself while Prime Minister Justin Trudeau, left, did not have to. (Adrian Wyld, Justin Tang/The Canadian Press)

The federal ethics commissioner has cleared Prime Minister Justin Trudeau of wrongdoing in last summer's WE Charity scandal.

Ethics Commissioner Mario Dion also concluded Trudeau's finance minister at the time, Bill Morneau, did breach the Conflict of Interest Act when he failed to recuse himself from cabinet deliberations on the summer student grants contract.

In his investigation report, Dion stated that Trudeau — who apologized for not recusing himself from cabinet talks on the now-cancelled program — didn't have a close relationship with the Kielburger brothers, while Morneau — who faced similar allegations — "placed himself in a conflict of interest on several occasions."

The Conservatives were swift to denounce the commissioner's report, titled "Trudeau III" since it's the third ethics commissioner probe into the PM.

The Liberal government's decision to give WE Charity a $43 million contract to run a $900 million student grant program quickly blew up into a major scandal last summer following reports that Trudeau and Morneau's families had ties with the organization.

Reporting by CBC News and Canadaland showed the prime minister's mother Margaret and his brother Alexandre were paid in excess of $300,000 by WE and its entities for speaking engagements over the last four years.

"Although the connection between Mr. Trudeau's relatives and WE created the appearance of a conflict of interest, the appearance of conflict is insufficient to cause a contravention of the Act's substantive rules," wrote Dion.

"The duty to recuse is only required when the public office holder would be in a potential conflict of interest."

Today, Trudeau thanked the commissioner for his work.

"After his full review, the commissioner found that there was no conflict of interest. This confirms what I have been saying from the beginning," he said.

"At the heart of this initiative was getting support for youth during this pandemic as fast as possible."

WE Charity co-founders Craig Kielburger, far left, and Marc Kielburger introduce Prime Minister Justin Trudeau and his wife, Sophie Gregoire-Trudeau, at WE Day celebrations in Ottawa in November 2015. The federal ethics watchdog found Thursday that Trudeau did not breach the Conflict of Interest Act. (Adrian Wyld/The Canadian Press)

O'Toole said the report shows that Canada's "accountability laws are broken" and promised to impose higher penalties for individuals who break the Conflict of Interest Act if his party forms the next government.

"Despite Trudeau admitting he did something wrong and despite the ethics commissioner's finding that Trudeau directed his staff to explore options for providing the money to WE, Trudeau was not found guilty by the ethics commissioner," he said in a statement.

"Our accountability laws are broken, and we can't have more of the same corruption and cronyism from Justin Trudeau. It's time to clean up the mess in Ottawa with a new anti-corruption law that will ensure Liberals like Justin Trudeau can't reward their insider friends."

Morneau violated conflict act: Dion

Dion's report did find that Morneau, who stepped down from cabinet and as an MP in August, had the opportunity to "improperly further WE's private interests."

"The examination found the relationship between Mr. Morneau and WE included an unusually high degree of involvement between their representatives and afforded WE unfettered access to the office of the minister of Finance, which amounted to preferential treatment," wrote Dion.

As part of his investigation, he examined the relationship between Morneau and Craig Kielburger, one of WE's co‑founders.

His report said, for example, that Kielburger wrote to Morneau and his wife in April, 2017 to share the news that he and his spouse were expecting a baby.

"In his email, Mr. Kielburger wrote that Mr. Morneau and Ms. McCain were 'among the first to know' news and expressed his gratitude for the 'many wonderful friends and family' to impart parenting advice," the report says.

Morneau said he couldn't remember if he gave the couple a gift.

That same year, Morneau's office wrote to various provincial chiefs to staff to set up meetings on funding proposals with Kielburger, calling him a "dear friend" of the office.

"When Mr. Morneau's office was notified by their provincial counterparts that funding had been approved, Mr. Morneau called Mr. Kielburger to personally convey the news," notes Dion's report.

"On at least one occasion, the families socialized together at the Morneau residence. All these indicators point towards a friendship."

Morneau tweeted this morning that he should have recused himself from cabinet discussions on awarding WE Charity a multi-million dollar contract to administer the summer student grants program.

NDP Leader Jagmeet Singh said he wants Canadians to pay close attention to the report's findings.

"I hope Canadians look at this as another example of the Liberals on a continued pattern of behaviour where they help those at the very top and it hurts people," he told reporters minutes before the report was released. 

"They helped an org that is closely aligned with the Liberal Party, that was enriching people indirectly, people associated with the Liberal Party, and in doing so they hurt students."

The group Democracy Watch said it plans to file a challenge to Dion's report.

"Ethics Commissioner Dion has rolled over like a lapdog and again failed to enforce the federal government's ethics law properly by letting Prime Minister Trudeau off, even though he took part in the WE Charity grant approval process when he had an appearance of a conflict of interest," said co-founder Duff Conacher.