Politics

Trudeau, Morneau had to be involved in WE Charity decision, top bureaucrat tells MPs

Canada's top bureaucrat said today that both Prime Minister Justin Trudeau and Finance Minister Bill Morneau had to be involved in their government's controversial decision to choose the WE Charity to administer a $900-million student volunteering program because of the program's size and importance.

Privy Council Clerk Ian Shugart tells committee WE Charity raised no 'financial flags'

Ian Shugart replaced Michael Wernick as clerk of the Privy Council on April 19, 2019. (Justin Tang/The Canadian Press)

Canada's top bureaucrat said today that both Prime Minister Justin Trudeau and Finance Minister Bill Morneau had to be involved in their government's controversial decision to choose the WE Charity to administer a $900-million student volunteering program because of the program's size and importance.

Testifying before the House of Commons finance committee, Clerk of the Privy Council Ian Shugart said he doesn't see a way the two could have avoided taking part in the discussion, despite their families' ties to the organization.

"Given the importance of the issue to the government's overall efforts to deal with the impacts of the pandemic and given the scale of the contribution ... I do not see a way that the prime minister or the finance minister responsible for public funds could not have had involvement in the policy development and in the approval of finances on this scale," said Shugart.

Shugart said that while Trudeau's connections to the WE organization were well known, he wasn't aware that Morneau also had ties to WE.

The committee is probing how cabinet reached its decision to hand control over the $912 million Canada Student Service Grant Program to WE, which would have been responsible for connecting tens of thousands of students with volunteer opportunities and issuing grants based on their volunteer work.

WATCH: Shugart tells MPs prime minister and finance minister had to be involved in WE Charity contract decision

Clerk of the Privy Council Ian Shugart appeared before the Commons Finance committee on Tuesday. 1:32

The deal, since terminated, could have paid the organization up to $43.5 million.

The decision to give WE sole responsibility for the program has been widely criticized since it was revealed that the organization has paid Trudeau's mother and brother hundreds of thousands of dollars in speaking fees, and that Morneau's daughter is employed by the organization.

Trudeau and Morneau are now under investigation by Conflict of Interest and Ethics Commissioner Mario Dion; both have apologized for not recusing themselves from the cabinet decision.

Shugart told the committee Trudeau was briefed about the development of the program, but suggested the prime minister had no contact with the organization in connection with the student volunteer program.

"There is absolutely no evidence, no suggestion in anything that I have reviewed that would suggest the prime minister had any interaction with the WE Charity in relation to this program," Shugart said.

Civil service didn't probe WE's financials

Shugart also told committee members that the civil service wasn't aware of any red flags when it recruited WE because officials didn't probe the organization's finances.

The due diligence conducted by civil servants, Shugart said, focused on whether the organization was capable of running a program of that size, and not the charity's financial affairs.

"No financial flags were raised through this process about the WE Charity," Shugart told MPs. "There were no detailed investigations of WE Charity's financial affairs."

WATCH: Shugart questioned about due diligence on WE Charity contract:

Ian Shugart, the clerk of the Privy Council, was questioned by MPs on the Commons Finance committee hearing on Tuesday. 2:59

Conservative MP Pierre Poilievre, who vice-chairs the finance committee, said civil servants would have found numerous problems if they had probed deeper.

Media reports in recent days have detailed some financial irregularities associated with WE and have detailed the organization's extensive real estate holdings.

"If they had read the financial statements, they would have found that WE was in breach of its bank covenants," Poilievre said. 

"It seems hard to believe that no one would have alerted the government to these facts about the organization."

Trudeau faces questions in the Commons

The Liberals have said the non-partisan public service recommended WE as the only organization capable of administering the program — an assertion disputed by the head of the public service union.

"I think the public service has proven itself very capable, accountable and certainly would have been absolutely able to administer this program," said Chris Aylward, president of the Public Service Alliance of Canada, told MPs.

WATCH | Top bureaucrat defends Trudeau's involvement in WE Charity deal amid opposition criticism:

Prime Minister Justin Trudeau returned to question period for the first time since the WE Charity controversy broke, facing more criticism from opposition parties, but the clerk of the Privy Council suggests that Trudeau may not be wholly deserving of it. 2:01

During question period in the House of Commons, Conservative Leader Andrew Scheer accused Trudeau of corruption and of using the COVID-19 pandemic to mask his mistakes.

"It is so gross and disgusting that this prime minister keeps using the pandemic as an excuse for his corruption," said Scheer.

Trudeau defended his government's handling of the program, saying that the programs the government has devised to date were intended to help those suffering from the economic effects of the COVID-19 pandemic.

"We saw an opportunity to encourage service and volunteerism and create opportunities for tens of thousands of young people who want to step up during this pandemic," Trudeau said. 

"This is something we believe in deeply and something this government will continue to work on."

WATCH: Scheer questions Trudeau about WE Charity contract:

Prime Minister Justin Trudeau returned to the Commons today to face pointed questions from the Opposition Leader Andrew Scheer. 3:50

MPs want Trudeau to appear before the finance committee, but Trudeau didn't answer a question about whether he will accept the invitation. Morneau will appear before the committee Wednesday afternoon.

The finance committee previously heard that WE sent an unsolicited proposal to Youth Minister Bardish Chagger and Small Business Minister Mary Ng in early April for a program to help youth become entrepreneurs. The proposed program carried a price tag of between $6 million and $14 million.

Federal officials were talking already about ways to help students unable to work this summer due to the COVID-19 pandemic, and were intending to announce something by mid-May. The idea that WE could get involved came up in conversations between the Finance Department and Employment and Social Development Canada (ESDC), which oversees student-related programs.

Rachel Wernick, a senior ESDC official, told the finance committee last week she called WE co-founder Craig Kielburger on April 19, at which point she — and the Privy Council Office as well, according to what Shugart said today — learned of the original proposal.

Three days later, on April 22, Trudeau announced a $9-billion package of student aid, including the outline of a volunteer program paying students up to $5,000 toward education costs, based on the number of hours they volunteer.

Kielburger emailed Wernick an updated proposal the same day, and the decision ultimately was made to have WE run the program.

The Privy Council Office asked about running a competitive process to oversee the grants, Shugart said, and ministers questioned whether WE Charity could deliver on what the government wanted. He said all were confident in the recommendation to go with the group.

In early July, the organization handed back control of the program to the government.

Shugart said a program will roll out, but will offer much less in the way of support services to students as a consequence of the public service having to deliver the program.

 

With files from the Canadian Press

Add some “good” to your morning and evening.

A variety of newsletters you'll love, delivered straight to you.

Sign up now

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

now