Finance Committee on July 21st, 2020

[Ian Shugart]

Personally, Chair, I'd have to say for the committee that it was not during that time at all that I personally was aware of the proposal from WE Charity. Colleagues were, so I will answer the question in the context of the Privy Council Office as a whole, if that is acceptable to Mr. Julian.

My understanding is that it would have been around April 19 or 20. I can confirm this timeline for the committee. That is when the proposal would have been received by various officials in the government.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Are we talking about the first proposal or the second proposal? From Ms. Wernick's testimony the second proposal was received on April 22.

[Ian Shugart]

Okay. There was an earlier proposal, I understand, which came in early April, if I remember correctly. It related to an idea, a program, that in the end was not funded.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Yes. I'm sorry, but I'm going to have to move on.

When was the involvement of WE and all of the finances involved, including the $43 million that WE would have received, brought to cabinet, and what discussions were held around recusal?

Were you aware of the financial connection between the finance minister's family and the Prime Minister's family and WE?

[Ian Shugart]

There were two cabinet discussions, one by the COVID committee and then ratification at cabinet near the end of May.

We were not aware of any connection of the finance minister. The Prime Minister's involvement with the charity over a long period of time, of course, was in the public domain. I must say that, of course, one of the standard means of dealing with conflict of interest, or the appearance of conflict of interest, is disclosure.

In a sense, the Prime Minister's involvement was in the public domain, and I must say that it did not particularly cross my mind that there was anything that needed to be disclosed because this was a well-known fact at the time.

I would also say, Chair, that given the importance of the issue to the government's overall efforts to deal with the impacts of the pandemic, and given the scale of the contribution up to $900 million—I would emphasize for the committee, “up to”—I do not see a way that the Prime Minister or the finance minister responsible for public funds could not have had involvement in the policy development and in the approval of finances on this scale.

[The Chair, Liberal, Wayne Easter]

We'll give you a little more time. That was a long answer, but I thought it needed to be [Inaudible—Editor]

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thanks, Mr. Chair.

We've heard that there were no financial flags, and I presume no evaluation of WE's financial circumstances. I gather as well from previous questions that there was no examination of the liability issues that Volunteer Canada raised with us last week, so there are tons of questions I think that folks want to ask on this.

You'll recall, Mr. Shugart, under the SNC-Lavalin controversy, the Ethics Commissioner said that he was “unable to fully discharge the investigatory duties conferred upon me” because you refused to provide information that the Ethics Commissioner had asked for.

My question this time is: Will you fully co-operate with the Ethics Commissioner or any request that the Ethics Commissioner makes for documentation and for answers on this controversy?

[Ian Shugart]

Within the bounds of my responsibility, Chair, of course I will co-operate with the Ethics Commissioner, as I would assert I did a year ago in relation to the previous issue.

The committee will recall that the government itself had given a waiver of many of the cabinet confidences. I indicated to the Ethics Commissioner that, in my judgment, there had been no demonstration of a greater public interest to weigh the cabinet confidences and invited him to follow up with specific requirements that he might have, and the Ethics Commissioner engaged in no further follow-up.

I will absolutely co-operate with the Ethics Commissioner within the bounds of my responsibilities as the secretary to the cabinet.

[The Chair, Liberal, Wayne Easter]

This is the last question, Peter, if you have a short one.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

The short one is: Are you aware that any other organizations were contacted?

Volunteer Canada said that they repeatedly tried to speak with ministries about this. Were any other organizations even contacted to talk about this possible program and how to implement it?

Was there any discussion around the alternative, which was, of course, to invest more resources in the Canada summer jobs initiative, which has been cruelly underfunded at this time of the pandemic?

[Ian Shugart]

I do know that early in the development of policy, meetings were held with a range of non-profit organizations, voluntary organizations, and so on. WE Charity was one of those consulted. We can provide you with the full list of organizations that were consulted.

I would say, at the front end of this, it was a wide open process. It is true there was no call for proposals. It is true there was no competitive process. I mentioned earlier that PCO raised the question of the department and whether there should be or could be a competitive process. The answer was no, with reasons, and colleagues at PCO were satisfied that was the case.

Beyond that, I'm not aware of specific interactions of groups that sought the opportunity, but it was clear from my review of the file that ESDC, in co-operation with Finance, examined the parameters of the program, the features that were desirable, and the conclusion was that WE Charity had the necessary experience to meet the need.

[The Chair, Liberal, Wayne Easter]

We are going to end it there. We will certainly have time for four more questions of five minutes, maybe more.

We'll start with Mr. Barrett, and then Ms. Dzerowicz. We will have a space for another Conservative MP in slot three, and then Ms. Koutrakis.

Mr. Barrett.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Mr. Shugart, who has the authority to waive cabinet confidence? Is it just the cabinet itself?

[Ian Shugart]

The convention is that the secretary to the cabinet has the authority to waive cabinet confidences. There's jurisprudence on this. As was clear from the SNC-Lavalin case, the Prime Minister himself, of course, can opt to waive cabinet confidence, but traditionally that duty falls to the clerk and there is jurisprudence on the criteria that the clerk has to follow on this.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Okay. Thank you.

You talked about the standard in conflict of interest and one of the criteria being disclosure. Did you know that members of the Prime Minister's family had been the beneficiaries or recipients of more than a quarter of a million dollars, up to $300,000, from WE?

[Ian Shugart]

I did not.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Okay.

Would you be prepared to submit to the committee the media monitoring for the days following noted public appearances by Mrs. Margaret Trudeau and Mr. Alexandre Trudeau?

[Ian Shugart]

I see no reason we would not support the committee that way.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

Okay.

Can you confirm that Rachel Wernick is at the point in her career where her next promotion would have to be approved directly by the Prime Minister?

[Ian Shugart]

If she were promoted to a Governor in Council position, that would be the case, but I can tell you that a public servant moving to another job within the public service not involving a Governor in Council appointment is often treated as a promotion, so not necessarily.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

You've said that, of course, public servants do their due diligence of groups getting large government contributions. In fact, you've said that in spite of the fact that the Prime Minister or finance minister could have any range of involvement or their family members could have any range of involvement with an organization, this government contribution agreement was so big that they would have to be involved.

With a deal that's this big, how was it missed that there were breached bank covenants and a board responsible for the organization in shambles, in a word, and there were all kinds of real estate transactions that are now in the public domain that are questionable at best for an organization of this type? How could, in that due diligence, something like that be missed?

[Ian Shugart]

That is an entirely reasonable line of inquiry, of course. What I have said to the committee is that, to the best of my knowledge, those issues were not raised. What I have also said, and I repeat, is that the focus with respect to this contribution agreement had to do with the capacity of the organization effectively to deliver the program. That is what the due diligence related to. That is what the Prime Minister's chief of staff raised in saying this is on a scale that we should make sure that the organization can really deliver this. That is what the subsequent focus on the contribution agreement concerned itself with.

As to the other issues, I'm afraid I do not have the knowledge of the organization or recent events related to the organization. I can simply tell the committee that those issues were not on the table, to the best of my knowledge, at the time.

[The Chair, Liberal, Wayne Easter]

This is your last question, Mr. Barrett.

[Michael Barrett, Conservative, Leeds—Grenville—Thousand Islands and Rideau Lakes, ON]

It'll have to be multi-part, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Keep it short.