Trudeau facing ethics and criminal questions over $900 million WE contract

This is the third time in less than five years in power Trudeau has been investigated for ethical violations, something no other PM has done.

Previously, Trudeau's visit to the island owned by the Aga Khan, who repeatedly lobbies the government, was a costly ethical problem for taxpayers. "Some of the money taxpayers paid as a result of Prime Minister Justin Trudeau's controversial Bahamas vacation went to a billionaire Trudeau has described as a close family friend. ... Trudeau's vacation ended up ended up costing taxpayers $127,000. ... "It stinks, the whole thing stinks," said NDP MP Nathan Cullen." (https://www.cbc.ca/news/politics/trudeau-agakhan-bahamas-spending-1.4053585)

"Conflict of Interest and Ethics Commissioner Mary Dawson found in December 2017 that Trudeau violated ethics rules by accepting the trip to the Aga Khan's island." (https://www.cbc.ca/news/politics/trudeau-aga-khan-lobbying-investigation...)

Trudeau also broke the ethics rules in the SNC Lavalin scandal according to the ethics commissioner's report. "Prime Minister Justin Trudeau violated the Conflict of Interest Act by improperly pressuring former attorney general Jody Wilson-Raybould to halt the criminal prosecution of SNC-Lavalin, Canada’s ethics watchdog declared Wednesday in a bombshell report." (https://www.macleans.ca/politics/ottawa/trudeau-breached-federal-ethics-...)

Trudeau is not the only Liberal with family links to the We charity. One of Finance Minister Bill Morneau's daughter's currently works for the charity while the other spoke at a We event and received support for her first book from We founder Marc Kielburger. Yet Trudeau and Morneau did not even bother to recuse themselves from the issue during Cabinet discussions. 

Finance Minister Bill Morneau did not recuse himself from recent discussions involving the WE organization, though, like Prime Minister Justin Trudeau, he has relatives involved with the group. ...

The revelation comes amid mounting opposition scrutiny over the Liberals’ decision to award WE Charity a contract to administer a $900-million youth grant program. A decision to halt the agreement was announced last Friday, and the ethics commissioner is investigating whether Trudeau violated conflict of interest rules in light of his family’s ties to the organization. ...

As reported by Canadaland on Friday, two of Bill Morneau’s daughters — Grace Acan and Clare Morneau — are connected to the group.

Acan is a contract employee for WE, a spokesperson for the minister’s office confirmed.

She started working for WE last year following an internship tied to her education in community development. Acan first worked as a co-ordinator for ME to WE trips, and since March Acan has been part of WE’s schools team, the organization said in a statement.  ...

NDP ethics critic Charlie Angus wrote a letter to Ethics Commissioner Mario Dion on Friday asking him to investigate whether Morneau breached his duties under conflict of interest legislation. It would seem apparent that Minister Morneau would recognize that the fact that his family member was an employee of this organization necessitated him to recuse himself regarding this extraordinary decision to outsource nearly billion-dollar commitment of public funds in a single source contract,” Angus wrote. ...

Morneau’s other daughter Clare is a speaker and advocate on refugee issues. She has spoken at three WE Day events, according to the charity.

n 2016, while still in high school, she published a book called Kakuma Girls. Marc Kielburger, who co-founded the WE organization with his brother Craig, provided a blurb praising the book.

https://globalnews.ca/news/7162866/bill-morneau-we-daughter/

The We charity told former NHL star Theo Fleury, who is Metis and who did some work for the charity, that it does not pay for celebrity speeches. We also refused to pay African-Canadian singer Jully Black for her work, and even refused to pay $100 dollars for phone calls from Africa to her very sick mother while she worked for them there. I guess things are different if you are white and named Trudeau or Morneau. 

Meanwhile, former pro hockey player Theo Fleury wonders why he wasn't paid when he was invited to speak at a WE event. ...

Canadian singer Jully Black has also pointed out on her Instagram feed that she wasn't paid for her appearance.

www.straight.com › news › we-charity-sheds-hundreds-...

NDPP wrote:

If they weren't ordered directly to do so, the top mandarins of the Canadian public service were certainly conditioned to look for charities to do this kind of work because that's the stealthy way neoliberal governments achieve their goals when voters can't be persuaded they are sound policy..."

Since the civil service regularly runs the 75,000 student summer jobs program, the notion that it could not run this program with 35,000 applicants instead of the We charity is nonsense. And of course the government is now admitting it with the scandal developing around We by using the civil service to run the program. The tragedy is the civil servants could have had the program up and running with students now doing volunteer work if the civil servants had been in charge from the beginning.

I suspect that the truth about why it took two months after the program was annoucned for the We charity to be announced as its administrator in return for $19 of the $900 million was because We had to hire the supervisors to run the program, the same supervisors who are now laid off in the midst of high unemployment. 

Also why is We allowed to get away with paying less than the minimum wage anywhere in Canada by simply saying the work is "volunteer'?

Liberal MP Nathaniel Esrkine Smith for York said on Power and Politics that he had been complaining about why this was not done by the civil service for a couple of months, to which the host of the show Vassy Kapelos agreed because he had been on the show previously. Smith said the civil service had done these kinds of service programs for years, so even a Liberal backbencher is raising questions about why We got the contract. 

There is growing evidence that the We charity was already in financial crisis when the Covid-19 crisis hit leading to layoff of much of its workforce. Since we now know that We approached the Trudeau Liberal government with the $900 million 'volunteer', it increasingly looks like the $43 million We would earn as administrators for the project was a corporate rescue mission rather than a case of We being the only organization capable of carrying out the project. 

There are questions about why the for profit sister organization was transferring debt to the charity, which is highly unusual to say the least.

The board of directors of We resigned just weeks before getting the government contract and its failure to meet bank payment obligations raise major questions about a lack of diligence by the Trudeau Liberals in checking out whether We was a solid organization. 

The idea that WE Charity was uniquely capable of executing the government’s $912m student volunteer program is challenged by an analysis of their audited financial statements by Charity Intelligence (CI), an independent charity watchdog group that helps donors “give intelligently and have impact with their generosity.” 

CI’s legitimacy as a neutral authority on the charitable sector was recognized by none other than WE Charity itself, who previously used its CI rating to challenge Canadaland’s investigation. ...

When the pandemic began, WE Charity promptly laid off the majority of its workforce. Media reportsassumed that this was a direct result of COVID-19, with its obvious impacts on donations and live events. 

But in an interview with Canadaland, CI’s Managing Director Kate Bahen shares information from WE’s own audited financial statements that tells a different story – one of an organization that appeared to already be in crisis and making strange financial transactions when COVID hit, to anyone who bothered to look. ...

You could see the real estate holdings right there on the balance sheet. You could see the properties. This wasn’t a charity that had a lot of cash…It was investing heavily in real estate. The concern was also the leverage. 

When you build a hospice, when you build a homeless shelter, you will go into debt very often and you will have a long term mortgage with regularly scheduled payments. But all of WE Charity’s debt was short-term, revolving, demand loans, at the beck and call of the banks. But it was the amount of debt on these properties. And it was always changing. So we always looked at the debt levels. 

And then in 2018, the auditor flagged for the first time that WE Charity was in breach of its bank covenants. That is a massive, massive red flag. I have never seen that on any other charity in its audited financial statements. ...

Some people live a certain lifestyle and you only ever see one side of the balance sheet. You don’t see how much debt that person has.  WE Charity had the big offices, had the Global Learning Center, had all the assets, properties on Queen Street, but these were all backed — its lending practices were getting close to the max. Kind of like your credit card. You know, if you’ve got a credit card limit of ten thousand dollars, these guys were always at nine thousand five hundred. It was always pushing, pushing the limits. 

So it was you know, [they] have to go to the bank every year and renegotiate this loan. God forbid the bank says ‘no’ this year. It’s kind of like a high wire act. It just isn’t seen in charities. So WE is different on so many fronts. ...

The Toronto SUN’s Brian Lilley reported that WE quickly acquired $38.7m in Toronto real estate. How much money were they spending each year on their actual charitable works instead of on their headquarters and things like that?

K: That’s not disclosed. So I don’t see that. Let’s say that they bought a building on Queen Street for three million dollars to help children in Ethiopia, and they declare that the property is for that overseas work. Well, we are analysts, not auditors. ...

So (the for-profit company) ME to WE is related to WE Charity by the two founders, Craig and Marc Kielburger. What ME to WE was giving to WE Charity and what WE Charity was paying ME to WE is a related [party] transaction and it needs to be reported. There’s a professional obligation by the auditors to report those. 

It wasn’t just ME to WE, it’s very convoluted between holding companies and subsidiaries. It just didn’t make any sense. In 2016, there was the WE 365 app and teachers were told that if you get kids to download this app, for every download a child will get vaccinations. But the app didn’t work and it was glitchy. ...

But, you know, it was sold to WE Charity [by WE 365] for one dollar and all the debts incurred in creating this app that doesn’t exist anymore [now belonged to WE Charity], which is just bizarre. ...

Let’s focus on the $4.9m of debt that WE Charity had to pay the banks in May 2020. And it’s got another $4.3m due at the end of October. So let’s focus on the big numbers. ...

And that’s what I’ve been sort of jumping up and down on the government’s due diligence. Before you give them an agreement to distribute $912m dollars, look at the board of directors. 

Did WE Charity inform the government that its board had resigned or was replaced just weeks before, and that there was a gap in governance and oversight at the charity?

And if you read the audited financial statements, there it is in black and white, WE Charity is in breach of its bank covenants. Oh and by the way — it has no board. 

Everything you’ve said so far might describe an organization that had a folly with an app that didn’t work out, that maybe got overambitious with its spending on properties. But that doesn’t really explain the other side of this, which is that money was flowing from charity to private company, in the opposite direction that it was supposed to. 

You have been public that in 2019,  the same year that found them in breach [with the bank], that same year when they needed money, seven percent of all WE Charity’s revenue flowed to their privately held company.

K: That had grown. Before, it was one percent, two percent. What you see is them ramp up in fiscal 2018 when eight percent of WE Charity’s total revenues are going into the private business and in 2019, seven percent. And you’re dealing with a 60 million dollar charity here, so we’re not talking chump change. ...

Some private corporations play a little hard with their charities and say, you know, ‘we want you to pay the going rate’ and all the rest of it. But it’s [typically] a few hundred thousand dollars on a six million dollar charity. It’s not like this. ...

You would think that in the year when all their debts are due, that would be the year when they need to keep that money in the charity. But instead, they’re flowing it into their private company. 

Their argument has been:  If you look at this the right way, overall, the charity comes out on top. Overall, the charity is benefiting from this relationship. Is that true?

K: The level of disclosure in their audited financial statements does not allow me to verify that claim. 

So when the WE Charity pays the Kielburgers’ private company, they pay in cash.  But when their private company pays the charity, it’s a mixture of money, time and other benefits — and we don’t know the mix. ...

 

KRP have audited the books of WE Charity since these teenagers from Thornhill began over 25 years ago. It specializes in tax and small businesses. I believe WE Charity is the only charity it audits.

J: Well, that is weird.

K: It’s unsettling. 

If a charity was to take the strategic decision to radically replace its entire governance structure, that needs to be signaled to donors and corporate sponsors well ahead. That needs to be posted on a web site. ...

So you have an unprecedented turnover in governance that was not signalled. When you have a scandal or a crisis at an organization, it’s the chairman that steps up and testifies in front of Congress. It’s the board chair who steps up and takes the mike. And now we go into a crisis with a rookie slate of directors.  ...

The new board of directors, as I understand them, have long relationships with the Kielburgers. The new chair of the board, Greg Rogers, was Marc Kielburger’s high school teacher.

K: It’s a mismatch. ...

Did something happen for this sudden turnover in the board? When I look at all of these things together — not only do they have all this debt that’s coming due. At the same time, they’re flowing money out of the charity, into their private company. And then the board leaves. Do those all seem to you like discrete and unrelated events?

https://www.canadalandshow.com/we-charity-was-in-financial-trouble-befor...

Karl Nerenberg points out how: the blurring of the line between non-profit charities and for-profit enterprises has been involved in two of the three ethical problems Trudeau has faced that have been referred to the ethics commissioner; its focus on entreprenurialism attracts the wealthy and powerful donor class that is often also tied to the Liberal party;  how its cheerleading rather than critical examination approach does not leave any bad taste or bitter feelings in the elites' mouths. 

Two of the three times Prime Minister Justin Trudeau has gotten into trouble for ethical lapses were because of his relationships with supposedly not-for-profit NGOs (non-governmental organizations). 

In both cases, the NGOs have significant financial resources. More important, both NGOs blur the line between doing good for humanity and making a profit for themselves.

The Aga Khan empire includes for-profit businesses, a not-for-profit development agency, a centre for pluralism, and an organized religious denomination. It is vast, wealthy, and global in its reach. 

The Aga Khan's development arm does business with many governments, including Canada's. Because of that relationship, the parliamentary ethics commissioner rapped the prime minister's knuckles for a 2016-2017 winter vacation he, his family, and close friend, Liberal MP Seamus O'Regan, took at the Aga Khan's luxurious quarters on a private island in the Bahamas. ...

WE owns significant real estate, valued at nearly $40 million, which allows it to borrow heavily. For the most recent reported period, the organization was in a deficit position, to the tune of somewhat over $2 million. This put it in breach of what Charity Intelligence calls the "financial covenants" on its bank debt. But because the loans were secured against WE's properties, its bank waived the restrictive conditions. ...

Given WE's record of running deficits for some years, Charity Intelligence is not impressed with the organization's overall management of funds. ...

In the developing world the organization works with local partners on education, water, health, and food security. In that regard, WE's focus does not differ from many other less-favoured and less flashy NGOs.  It is WE's final area of focus -- entrepreneurialism -- that sets it apart. The organization's emphasis on promoting private enterprise and the profit motive as valid goals for development work is what most likely endears it to so many well-heeled donors. Some donors would likely consider other, more grassroots NGOs to be too anti-corporate for their taste. ...

In Canada, as opposed to the developing world, WE's activities are focused to a surprising degree on cheerleading and mass rallies. That emphasis puts it far out of step with the hundreds of low-profile Canadian NGOs, which focus on tangible work at the community level. It is the preoccupation with rallies and other large public events that brought people such as the prime minister's mother, Margaret Trudeau, into WE's orbit. When your goal is to attract attention to yourself it is helpful to have celebrities on the stage. And when you want famous people to help you out, sometimes you have to pay them. ...

What really bugs Charity Intelligence is the way WE deliberately blurs the lines between its for-profit business and its charitable activities. ... 

Charitable Intelligence believes the intertwined structures of the charity, WE, and the business, ME to WE, create what it calls "donor confusion." Officially, the two distinct organizations are referred to, collectively, as "WE," or "WE organization" or "WE movement." There is often little distinction made between the for-profit business and the not-for-profit to which people donate money. ...

On an operational level, WE Charity, buys stuff, such as promotional goods and travel services, from ME to WE the business, which then turns around and makes charitable contributions back to WE. It is a classic story of the left hand washing the right. In an interview on CBC Radio's The Current, Charity Intelligence's managing director Kate Bahen explained that the business ME to WE does not have any disclosure requirements. We do know, she said, that since it was founded, ME to WE says it has donated $20 million to WE. At the same time, however, over the past 10 years the WE charity has paid the business $11 million.

https://rabble.ca/news/2020/07/wes-mixing-profit-charity-should-have-rai...