The WE Charity, Trudeau, and Morneau
Also Known As: Anything to distract me from foreign politics for a morning.
Full Disclosure at the top of this post: I am on the Board of Directors for a Community Foundation associated with the Community Foundations of Canada (CFC). This means that I had a certain amount of skin in this game, because had the contract gone public, CFC might have put a proposal in, and we might have been granted it. It also means that I knew from the start that Trudeau was lying.
Ok, So…. What happened?
On April 22, 2020, Prime Minister Justin Trudeau announced to Canada a 9 billion dollar student aid package, aimed at offsetting effects of the blooming Covid-19 pandemic, with more details to follow. Some of those details dropped on June 25th, when Trudeau announces that WE Charities would manage a volunteerism program, where students could be paid to volunteer (Volunteer Canada *hated* this idea, their position was that volunteerism shouldn’t be paid, and this might color expectations for future volunteers, but I digress). The contract was valued at a little more than 45 million dollars, and the charity would be expected to disburse up to 900 million. The exact numbers are disputed, most news organizations reported 900 million, but it could have been as little as 450 million. The exact number isn’t the problem, although even at 450 million, it was huge. This deal seemed off from the start, and basically everyone in Canada who wasn’t drinking LPC Kool-Aid immediately started asking questions. Contrary to Liberal talking points: This wasn’t a partisan conservative effort, NDP MP Charlie Angus led the charge to the Ethics Commissioner’s office, and was joined by members from every party except the Liberals. This issues developed over time, but to list them out:
-WE Charity had paid Trudeau’s mother, brother and wife about $300,000 in speaking fees and expenses over the five years preceding this contract. Trudeau’s wife Sophie was actively hosting a Podcast for WE. The Trudeaus and the WE Charity founders (Marc and Craig Kielburger) knew each other, they were friendly with each other, they’d been to each other’s homes. This seemed an obvious conflict of interest.
-Finance Minister Bill Morneau, who brought the proposal to Trudeau, also had received about $40,000 from WE in relations to travel expenses. His daughters were also connected with WE, one was employed by WE in the travel department, the other daughter has spoken at WE Day events. This also seemed like an obvious conflict of interest.
-Some people might have had issues with the scope of the contract. *I* had issues with the scope of the contract. But the fact of the matter is that if the government wanted to start up a volunteerism program, they have the mandate to do so. The problem with the contract was that it was a single source bid.
-Trudeau lied multiple times to the public on this issue. For instance on June 26th he said that only the WE Charity had the infrastructure to handle a national program like this. "As the public service dug into it, they came back with only one organization that was capable of networking and organizing and delivering this program on the scale that we needed it, and that was the WE program."
I want to expand on two items: The Single Source Contract, and the assertion that only WE Charity could have handled this program. They’re separate but related issues.
Single Source Contract?
A single source contract is usually a private agreement between the government and the contractor, like the name implies, the government did not consider multiple proposals. It’s not a hard and fast rule that single source contracts are per se unethical, but they’re generally undesirable. Not only are they more susceptible to corruption, because they’re usually the result of private meetings as opposed to a more open process, but they’re almost by definition inefficient. If you take a contract public, people bid on them, and while the cheapest bid doesn’t always get the contract, it at least provides incentive for contractors to be more competitive in their proposals.
It might not make sense for a government to submit a request for proposals on everything, particularly small items, but for a government not to request proposals on a 900 million dollar contract is outrageous to the point of political malpractice.
“Only WE Could Do It!”
In a single word: Bullshit. To expand: As I said above, I sit on a Board of Directors for a CFC affiliated Community Foundation.
Community Foundations generally operate endowment funds: We take in donations from the community, we add them to endowment funds, and we disburse grants into the community based on the interest generated by those funds. Now, generally, we like perpetual funds, funds where we don’t touch the capital, because that means that, generally, our ability to disburse in the future will increase, and we’re long-term organizations, but we do have what we call “Donor Directed Funds” which means that the donor would like to exercise control over the fund’s disbursements. We do this. All the time. And perhaps one of the most common forms for a DDF would be when a donor comes up to us and says something like “I’d like to set up a scholarship, here’s $10,000, please disburse $500 a year to a person that fits these criteria, until the money runs out.” They could require the full $10,000 to be paid out in year 1, although that doesn’t happen too often (Because if you’re going to disburse the entire amount why not just donate it yourself?), but in theory it could, and in practice, that would be what the government was looking for.
In a nutshell: This is exactly what the government was looking for, this is exactly what we do, and we would have been champing at the bit for an opportunity to do something like this. I can’t speak for the CFC, but when the government is looking to give out money, like they have multiple times over this last year, we generally administer these programs *without administration fees* because our overhead is already handled, and we’re in the business of making disbursements.
The idea that “No One” except WE could handle this is an absurd lie. And make no mistake: it was a lie. The government routinely partners with Community Foundations, and they knew better.
So What Happened?
Previously to today?
The program was scrapped. WE Charities parted ways with the government and was forced to layoff hundreds of people they had hired to manage this program (which I think puts a lie to the idea that WE had the infrastructure in place before the contract existed.)
Bill Morneau repaid the $40,000 to WE and resigned his position as Finance Minister, saying that this wasn’t related to the WE scandal, but that he had planned to resign around that time. (I don’t believe this, but it’s what he said.")
The ethics commissioner opened their third file on Trudeau in four years, the first two being inappropriate gifts, including vacations to Aga Khan’s private island, and the pressure he asserted on Justice Minister Reybold in relation to SNC Lavalin (The ethics commissioner found against Trudeau in both cases.).
What happened today?
A mixed bag. The ethics commissioner made his report, and he said that Morneau had broken ethics rules in relation to a conflict of interest, but that Trudeau had not, saying specifically that the appearance of impropriety wasn’t actual impropriety, at least in this case. Now, I haven’t combed the entire report, but Commissioner Dion is not a Liberal stooge, and he’s handled his duties admirably, I don’t have reservations about his findings. I suspect that this conclusion was probably based on how much Trudeau was involved in the decision making process… If cabinet took the program to him complete and only in need of a rubber stamp, I don’t know if further recusal would be possible.
That said… It’s still an ugly look, and political malpractice. Trudeau could have veto’d the agreement, or required an RFP. That might have rubbed his cabinet’s feathers the wrong way… But really, Trudeau is responsible to the voters, and his cabinet is responsible to him. And it doesn’t change the fact that the Liberal government is FAR too comfortable with single source contracts…. They really need to cut that out. Now. It would also be nice if their first response to scandals weren’t always facially absurd lies.
The worst part of this is that Trudeau’s supporters will take this report and pretend it completely exonerates him. Which will give him absolutely no incentive to do better the next time. Trudeau has had a really flat learning curve… Stephen Harper’s government, whether you liked him or not, did not have these types of scandals. This is not the normal function of government. It’s not the good function of government. And without pressure from his own party, he’s not going to change.