Information & Ethics Committee on Dec. 11th, 2020

[Mark Blumberg]

On this in particular, and certainly the scope of it, I haven't seen anything like it either.

What I would say is that from a legal point of view, it may be legally appropriate that the two of them were not registered under the Lobbyists Registration Act, but what I would say is that for the WE organization, WE Charity, there's no question in my mind that they should have been.

Even in their testimony, they said that it wasn't like a substantial part of what they're doing, but that's not the test. The test is this: Is it one-fifth of an FTE, basically, even on a monthly basis, working on it? There is no question. They said it took a handful of people to basically do this $543-million proposal, and certainly for other groups it takes them six months and hundreds and hundreds of hours—thousands sometimes—to put this stuff together. I think there's no question that they should have been, whether....

Exactly who should have been registered is one issue. The other thing that's going to be a big issue for the commissioner is that if there isn't any impact and basically they just get to say, well, we filed these 65-plus reports, and then there are no other consequences, it's going to completely undercut the whole lobbyist registry system for charities. I think a lot of charities are going to say that they can pretty much meet with the government 60 times before anyone's really going to really say anything, and then if they get caught, they'll just file these things.

I mean, I've heard of—

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Blumberg, just in my final seconds, I know a lot of charities that register to lobby, and they're going pretty much for contracts that are worth peanuts compared to what the Kielburgers were going for. That Craig could write directly to Bill Morneau and say, “Hey, Bill, how's your family?”, and ask for $12 million and get it 11 days later, seems to me to be a pretty staggering inside track that I haven't seen anywhere else. Is that common in the charity circuit?

[Mark Blumberg]

Oh, definitely not. As I said, it can take years to get government money.

[The Chair, Conservative, David Sweet]

That's all I can give you, Mr. Blumberg.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you so much, Mr. Sweet. You're a wonderful man despite what everyone says about you. I will have your back every day.

[The Chair, Conservative, David Sweet]

No, no; that was with the agreement of the committee....

Mr. Gourde, you have the floor for five minutes.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Mr. Chair. I am going to share my time with my colleague, Chris Warkentin. I just have one question for Mr. Gallant and Mr. Blumberg.

The people from WE Charity proved that they had a great deal of organizational capacity among young people, as they insisted. Their database indicated that they could reach a lot of young people in Canada. That would make all political parties envious, given that it's really very difficult to reach people in that category. We would really like to be able to do it, but we can't.

Could giving the contract to WE Charity have been returning the favour for any political organization done between 2008 and 2015?

[Denis Gallant]

Who is that question for?

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

It goes to you first, Mr. Gallant. Then I will ask Mr. Blumberg to answer.

[Denis Gallant]

That may be speculation. We would not be able to prove it without a public inquiry or a police investigation. I may well have an opinion, but the lawyer in me is going to reply by saying that I don't have the standard of proof I require. It does raise suspicions, though, and they could be reasonable.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

What do you think, Mr. Blumberg?

[Mark Blumberg]

I would not know whether there was something of that sort. What I would know is this: There are many charities that have tremendous capacity and, in fact, what WE was doing was subcontracting much of the work to others anyway. There are lots of charities in Canada that could have done the job of pulling something together and subcontracting it.

Essentially, when you say to a young person who is in university, “You could get $5,000 by filling in a form”, you don't really need to have an extensive network to get 40,000 people to apply. On Twitter and a few other things, it gets out there, and before you know it, within days you'll have 40,000 people. You might have 400,000 people applying for the program.

I don't think they needed some of the skills that we did have, and they weren't doing rock concerts or anything like that. There were other skills needed that weren't there, whether it was the French language skills or some of the governance issues or things like that, but I can't comment on that. I am just concerned with the information they collected. I don't know what's happened to it. I don't know what's happened with that. They've talked about WE shutting down, but then I see other indications that they are still fundraising and doing things, so I'm really more confused than anything else.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

I am giving the rest of my time to my colleague, Chris Warkentin.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Thank you, Mr. Chair.

Thank you to my colleague.

Mr. Blumberg, I would like to ask your opinion on why a charity would create a real estate shell company and ask the government to deposit these funds into it. Is there a reason that you can ascertain as to why that was done?

[Mark Blumberg]

Yes. First of all, let's remember that they applied for charity status around 2019, long before COVID, CSSG and everything else. Why you might not want to have real estate in your operating company is for liability reasons. If there is a problem, you want to put it sometimes into a holding company. It is very commonly done with for-profit companies when you think of how they operate with holding companies, operating companies, maybe multiple operating companies and things like that.

There is nothing wrong with that, and they said to CRA that this was going to be a holding company that was going to hold about $40 million worth of assets. Then they flipped it around and switched it around, which is fine too, and they changed the objects. I don't know if they got CRA approval. I just don't know, but they changed things so that it has broader purposes to be able to do other things. This was done in June of this year, and then it was being used for that.

That, I don't think, is untoward. What is weird is how they denied that it was ever a real estate holding company when it is so clear that it was, but then it was changed. What was more, shall we say, unusual, was that the government would agree to this. It's not that we would create a shell company.

If I were going to ask someone to pay me $100 million, it would be nice to say that I was going to set up a shell company so that WE Charity doesn't have any liability, but I have never.... I wouldn't say never. I can't recall a time when I've seen a government department give any amount of significant money to a shell. There could be good reason to do it, but I'm just not seeing it here, and I don't understand why they did it.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

There are a lot of questions.

Do you see any legal impediment for this shell company to do business with ME to WE, to ask that company...? Would there be any restrictions through this government contract? Was there anything the government did to restrict whatever this shell company is that got the money to contract ME to WE to do some of this business, some of the work?

[Mark Blumberg]

I haven't looked at the contract in a few months, but my off-the-top comment would be that WE is a little bit of an integrated entity, so I don't think there was any reference to the for-profit companies, but there are references to the other charity, non-profit sort of entities there, and those entities then could have, for example, tasked the for-profits potentially to do it.

In other words, this contract itself may not have, but there is no question that there could have been huge gains potentially—

[The Chair, Conservative, David Sweet]

Mr. Blumberg, I'm sorry, but time is our enemy again.

Colleagues, just so you know, it's 3:03. We're going to allow Mr. Nathaniel Erskine-Smith his round and then Madame Gaudreau her round, and then we'll do the committee business after that. It shouldn't take us too long. There's one motion and a budget that you've all received.

Mr. Erskine-Smith, you have five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much, Mr. Chair.

It's not easy to surprise me, since I've been in politics since 2015, but here we are talking about the WE Charity scandal on the last day of Parliament in December, and I'm a little surprised.

I was maybe the first one to criticize publicly, as far as our Liberal Party goes, but there is some reason for criticism in terms of how this rolled out. The Prime Minister obviously acknowledged that there was good reason for criticism, as the program was cancelled. I personally thought the Canada summer jobs program was one way of going, but of course this was a different conception of the program. The government saw a way of engaging young people in a more serious way, whereas I took a more employer-centred view.

I first want to get some of the facts straight in my head, because I have not been part of the proceedings.

Mr. Blumberg, when you say it was a grant of $543 million, you're not in fact saying that WE Charity was to receive $543 million. You recognize, in fact, that most of that was going to go to the students, right?

[Mark Blumberg]

No. Let's start off with WE Charity, which was actually not going to get any money under this grant. The Liberal Party announced, first of all, the $912 million. I'm talking about their announcement. If you look at what they announced, it was $912 million to WE Charity, but in fact that was completely incorrect. It was actually $543 million to WE Charity Foundation, and what they could have kept was about $43.5 million.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

All right. Then in your opening testimony, when you said it was a $543-million grant to WE Charity, in fact it was a much smaller number that would have flowed specifically to WE Charity in the end—

[Mark Blumberg]

No, no , no.

First of all, I agree with you. Canada summer jobs is a great program. Let's double it. It's a fantastic program.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

You might agree with me a second time, though, in that most of the money would have flowed directly to students.

[Mark Blumberg]

No, not directly. It would have gone to WE Charity, and then WE Charity, at their discretion, would have doled it out to students, which is a position of tremendous power. If any one charity has that level of power, I'm concerned.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

However, you ultimately acknowledge that it wasn't $543 million that would have ended up in WE Charity's bank account.