Information & Ethics Committee on Aug. 11th, 2020

[Ian Shugart]

I don't know the details, but I understand that there are—

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

If I told you that the WE Charity Foundation had no known assets, would you believe it's possible?

[Ian Shugart]

I have no specific information on that.

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

How often does the federal government give $43.5 million in contracts to manage $900 million to empty shells that have no assets and no known track record?

[Ian Shugart]

All I can say, Chair, is that the contribution agreement in this case was typical of relationships between a government department and an entity. They are guided by principles of audit and of due diligence with respect to the interest of the Crown. This contribution agreement will bear scrutiny as typical of the mechanisms that have been approved by the Treasury Board and that have been used in the government for a very long time.

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

I'll take your word for it, Mr. Shugart. It seems to make sense to me. I can't believe the federal government put an organization in charge of managing $900 million of our savings, or even our children's future savings, because we don't have that money and have to borrow it, without any due diligence.

I can't believe we paid an empty shell, with no assets, without checking anything. It seems absurd to me. That's why I'm asking you to reassure me, because you're still the Clerk of the Privy Council. You advise the Prime Minister on these things. You have been involved in these decisions. Yet you're telling me that there was no financial due diligence and that you simply relied on the fact that the department had already dealt with WE Charity and on the fact that they knew these people. That doesn't make me feel any better.

Can you tell me anything else to make me feel better?

[Ian Shugart]

You're absolutely right about the government's responsibility to reassure Canadians about the reliability of things. I would simply say that there was an established relationship between WE Charity and the department. As I mentioned before, I don't know the specific reasons why the vehicle was transferred between WE Charity and the WE Charity Foundation. However, I can say that the procedures and rules were followed in terms of carrying out this contribution agreement.

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

I have one last question for you, Mr. Shugart. My colleague asked you about this earlier.

On May 8, the Prime Minister backed down because he felt he might be in a conflict of interest in this matter. The decision to award the contract to WE Charity was postponed for two weeks. That is part of the story, and we now know that two weeks later, Mr. Trudeau and Mr. Morneau voted in favour of the decision.

Between May 8 and May 22, were you consulted on whether or not a conflict of interest prevented the Prime Minister from making a decision?

[The Chair, Conservative, Rachael Thomas]

You have 10 seconds for your answer.

[Ian Shugart]

I was generally aware, because the item had been removed from the cabinet agenda, that there was a desire for due diligence on the part of the Prime Minister's chief of staff and the Prime Minister, and that that would be undertaken between the two cabinet dates. I was not personally involved in that due diligence. My opinion was not sought, and I did not see anything at the time that required my giving the Prime Minister specific advice. The follow-up to his request was being undertaken by officials and it did not occur to me at the time, or indeed in retrospect, as I've thought about this, that there was anything in that circumstance that called for more than the follow-up that was being done by officials.

[Rhéal Fortin, Bloc, Rivière-du-Nord, QC]

Do you have a copy of the report?

[The Chair, Conservative, Rachael Thomas]

Mr. Green, the floor is yours for six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much.

This is a very interesting line of questioning. Through you, Madam Chair, who would have provided the due diligence in this regard?

[Ian Shugart]

Well, those who did the follow-up, Chair, which is to say ESDC officials who had carriage of the file, and the Privy Council Office would have been monitoring that as well.

[Matthew Green, NDP, Hamilton Centre, ON]

So you would have been providing advice to Ms. Telford in this regard of due diligence?

[Ian Shugart]

Well, the nature of our advice was when the item returned, the homework having been done by the officials, and the Prime Minister was again briefed prior to the cabinet meeting—

[Matthew Green, NDP, Hamilton Centre, ON]

In your opinion, was the due diligence sufficient?

[Ian Shugart]

In my opinion, it was.

[Matthew Green, NDP, Hamilton Centre, ON]

How does Ms. Telford, in her testimony before the finance committee, state that she didn't even know the contract was with the WE Charity Foundation?

[Ian Shugart]

At that time, we did not know that information.

[Matthew Green, NDP, Hamilton Centre, ON]

How is it that you—not you personally, but through you, Madam Chair.... How is it that during this due diligence process nobody read the 2019 audited financial statements that WE Charity was in breach for the second year?

[Ian Shugart]

Well, I've indicated that the focus of that due diligence was on the ability of the organization to deliver the program—

[Matthew Green, NDP, Hamilton Centre, ON]

Would due diligence—

[Ian Shugart]

—and in the interactions with the organization—

[Matthew Green, NDP, Hamilton Centre, ON]

Which one? Just for clarity, Madam Chair, which organization?