Trudeau says his family’s financial ties to WE Charity did not pose a conflict of interest

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Prime Minister Justin Trudeau says his family’s financial ties to WE Charity did not put him in a conflict of interest when he took part in the cabinet decision to award the group a contract to pay students for volunteer work, but acknowledges that he still should have recused himself because of the perception of a conflict.

“I was not in a position of conflict of interest. I am not in a position of conflict of interest,” Mr. Trudeau told the House of Commons finance committee Thursday.

“Sometimes recusing oneself can be the right thing to do even if it’s not required,” he said.

In a rare committee appearance for a prime minister, Mr. Trudeau spoke to the committee for 90 minutes as he sought to reassure MPs and Canadians that his family’s financial ties to the WE Charity had no influence on his government’s decision to award the group a government contract. The contract was announced on June 25 and cancelled on July 3.

Mr. Trudeau said he had no role in recommending WE Charity administer the new Canada Student Service Grant, and had expected it would be run by the Canada Service Corps. Despite discussions that his staff and several cabinet ministers had with WE Charity dating back to April and the talks that senior civil servants were having with the charity regarding the program, he said he first heard about the group’s role on May 8.

He said he “pushed back” when he heard the idea and asked for more due diligence so that the deal would stand up to scrutiny, given his connections to WE Charity. That meant the final decision was delayed until the May 22 cabinet meeting.

“I wanted to make sure that all the i’s were dotted. All the t’s were crossed. [That] the public service was ready to fully justify that choice of WE charity as the only organization” to handle the program, Mr. Trudeau said.

The controversy has landed the Prime Minister in his third ethics investigation since taking office. In the first two probes, the Conflict of Interest and Ethics Commissioner found he broke the law.

“WE Charity received no preferential treatment, not from me, not from anyone else,” he said. “The public service recommended WE Charity and I did absolutely nothing to influence that recommendation.”

The Prime Minister and his Finance Minister, Bill Morneau, have each apologized for failing to recuse themselves from the cabinet decision to award WE the contract.

“My concern around recusing myself is a question around perceptions. Because I knew full well that this [Canada Student Service Grant] program was not going to directly benefit my mother or my brother,” Mr. Trudeau said.

Mr. Morneau’s daughter works for the charity and, last week, he told the finance committee that he had just paid the WE Charity for $41,366 in travel expenses incurred by him and his family in 2017. On Wednesday, Conflict of Interest and Ethics Commissioner Mario Dion said due to recent developments, he was expanding his investigation into the Finance Minister.

The Prime Minister said he did not know that Mr. Morneau had travelled with WE Charity and he did not know that Mr. Morneau’s daughter works for WE. But he said that he did know that the Finance Minister’s other daughter volunteered with the organization.

“I didn’t know he had taken a trip with WE specifically,” Mr. Trudeau said.

Because WE is not administering the program, Mr. Trudeau said it’s “unlikely” the program will move ahead this summer.

Despite taking two extra weeks to study the program, Mr. Trudeau said key issues with the charity were not presented to him in his May 8 briefing or at the May 22 cabinet meeting. He told MPs that he did not know WE Charity’s board chair, Michelle Douglas, had recently resigned, did not know most of the board had turned over, did not know that hundreds of staff had been laid off, and did not know that WE was in breach of its bank covenants.

The questions about the WE organization’s financial structure and activities “weren’t public knowledge and weren’t flagged to me at any point,” Mr. Trudeau said.

“You should have had some basic facts,” Conservative MP Pierre Poilievre told Mr. Trudeau. “You had a fiduciary responsibility.”

WE Charity’s last two annual financial reports show it failed to meet the financial covenants – or the terms of its loans – with its bank lender. WE says the bank, which it did not name, waived the requirements. WE’s disclosures in its financial statements did not identify what terms it had violated.

The charity has said the violations came when it changed its fiscal year end from December 31 to August 31, and published financial statements that covered just eight months, rather than a full year, in 2018.

“I want the Prime Minister to tell us what due diligence looks like,” Conservative MP Michael Barrett said. “The government of Canada handed over a $500-million contract for them to administer.” The government has allocated $912-million for the program but the contribution agreement signed with WE allowed for half a billion dollars in grant money for student volunteers and up to $43.5-million for program costs.

Mr. Trudeau said the public service ensures that any third party that the government works with is capable of delivering a program, adding it has a “rigorous and strong process.”

The Ethics Commissioner is investigating whether Mr. Trudeau broke three sections of the ethics laws, that bar decisions that would put them in a conflict of interest, prevent them from giving preferential treatment, and the duty to recuse themselves from possible conflicts of interest.

Mr. Trudeau’s wife, mother and brother have all been paid for their work with WE and the charity also covers their expenses when they participate in events. Sophie Grégoire Trudeau is also an ambassador and ally with the charity and plays host to a podcast for the organization, which launched in May.

At their Tuesday testimony, WE Charity’s co-founders said Mr. Trudeau’s mother, Margaret Trudeau, and brother, Alexandre Trudeau, were paid to attend fundraisers, cocktail events and galas, which helped to “bring partners and sponsors to the table.”

The two have only been paid since the Liberals took office in 2015, Craig and Marc Kielburger said at Tuesday’s finance committee. Marc said that this coincided with an expansion of the charity’s popular arena-sized student events.

Since 2016, the charity said, Ms. Trudeau has been paid about $312,000 in speaking fees and Alexandre received about $40,000. The charity said those amounts include a 20-per-cent commission paid to their speaking agency. On top of those fees, the charity paid $167,944 in expenses over 28 events for Ms. Trudeau and $19,576 over eight events for Alexandre.

WE Charity hearings: Chief of staff Telford speaks after Trudeau denies ‘preferential treatment’ in contract

How WE got here: A timeline of the charity, the contract and the controversy

He said he knew his mother and brother worked with WE Charity, but not how much they were paid. ”These were things that I would only learn after the program launched publicly.”

Ms. Grégoire Trudeau was paid $1,400 for one appearance at an event in 2012, the charity said. The Kielburgers said Tuesday that the charity covered $25,326 in expenses over seven events for her.

“The Ethics Commissioner had approved this role, including WE Charity covering her expenses,” Mr. Trudeau said.

“The fact is that the Kielburger brothers carefully cultivated their relationship with you and your brand,” NDP MP Charlie Angus said. “After you became Prime Minister, they put you on the stadium circuit, they hired your family members to the tune of half a million dollars, they hired the Finance Minister’s daughter. They flew him around the world. Do you think that that’s not conflict of interest?”

“Mr. Angus you are unfortunately misleading people,” Mr. Trudeau said in response, adding that Mr. Angus was “impugning the very fine public servants who have done extraordinary work across this pandemic.”

He said the public service recommended that, given the scale of the program and the timelines needed, WE was the only group that could deliver the program. It was either accept WE or don’t do the program, Mr. Trudeau said.

“That was the binary choice.”

In separate testimony Thursday, the Prime Minister’s Chief of Staff, Katie Telford said there were a handful of staff in the Prime Minister’s Office who spoke to the WE organization. She made the comment in response to a question about how many times staff were in touch with the charity around the launch of the program. The Conservatives asked for her to provide those names.

“I will need to go consult with individuals involved,” Ms. Telford said. “I would really ask the members that I am here on the staff’s behalf and happy to take any questions that they have for them.”

A majority of MPs on the committee passed a motion for the release of the names of all staff inside the Prime Minister’s Office that were in contact with the WE Charity, its founders and affiliate entities since March 1.

Ms. Telford also said Thursday that the Prime Minister has never received any payment or income of any kind from the WE organization, both before and since becoming Prime Minister.

Ms. Telford said that the Prime Minister’s Office had previously received the ethic commissioner’s approval for Sophie Grégoire Trudeau’s work engagement with the WE Charity.

“So I wasn’t aware of any conflict,” she said. “You have heard the Prime Minister say that he has regrets about not recusing himself. I have regrets about that too. Obviously this didn’t happen as we intended to, and this is not what we had envisioned, and I share in that responsibility.”

The Conflict of Interest Act says that a public office holder is in a conflict of interest if they make a decision that furthers “his or her private interests or those of his or her relatives or friends.” It describes relatives as “persons who are related to a public office holder by birth, marriage, common-law partnership, adoption or affinity.”

“I have read the act a number of times,” Mr. Trudeau told the committee.

The Globe has a sponsorship partnership with WE Charity. The agreement expires on Aug. 31 and will not be renewed.

With reports from David Milstead

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