Evidence of meeting #43 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was charity.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Paulette Senior  President and Chief Executive Officer, Canadian Women's Foundation
Rahul O. Singh  Executive Director, GlobalMedic
Vivian Krause  Researcher and Writer, As an Individual
Jesse Brown  Publisher, CANADALAND, As an Individual
Michelle Kovacevic  Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Clerk of the Committee  Ms. Evelyn Lukyniuk

12:50 p.m.

Bloc

Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC

That's right.

12:50 p.m.

Executive Director, GlobalMedic

Rahul O. Singh

I was saying about the summer jobs program that when we were in discussions and asking for additional jobs, we had a response from Service Canada that said we could only apply for jobs in Etobicoke—Lakeshore because that's where our riding base was, even though we were saying we could put people in positions in Scarborough, Rexdale, Brampton. There's a significant disconnect between the 80 positions that we're asking for with the intent to benefit students so they would make money to be able to go back to school, and then the government saying they could only give us positions for Etobicoke—Lakeshore. That program is probably just too rigid to be able to work in and respond to a crisis like this.

The other thing I was saying with it is that in the way it's funded, it's not funded well. When they announced 100% funding for the specific jobs, it decreased the number of jobs. You can ask many charities. They put in for x number of jobs, and they got much less than x, which doesn't go in line with what the government was saying. It was using these programs specifically to boost and help charities, but unfortunately it hasn't gone as well as it can go.

12:50 p.m.

Bloc

Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC

Thank you, Mr. Singh.

Given your expertise, can you tell us the difference between a call for tenders and a contribution agreement by the federal government?

12:50 p.m.

Executive Director, GlobalMedic

Rahul O. Singh

One would actually have competition, where different groups would be submitting their ideas and you could actually evaluate value for money. You may have noticed in my testimony, when I was talking about programming large amounts of money through single groups, that you do that because you want them to be fast, efficient, quick, and you want money distributed. When that doesn't happen, you have to ask yourself why you're paying these double administrative fees and where the money is going. The other thing is that a contribution agreement doesn't really allow for competition. It's just going into a single group and there's less transparency, you could say.

12:50 p.m.

Bloc

Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC

Do I still have time for one last question, Mr. Chair?

12:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Yes.

12:50 p.m.

Bloc

Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC

Mr. Singh, in your opinion, does the public service have everything it needs to manage this program?

12:50 p.m.

Executive Director, GlobalMedic

Rahul O. Singh

I think, respectfully, that the federal public service is excellent at this work, and if they were just given more opportunity to actually program directly, charities could just deal with them directly and lose that middle layer. What would happen is that more funds would go into the system, more funds could go to the hard parts of aid and get charities the money and the support they need.

Ms. Senior is talking about core funding. One great way of establishing core funding is having charities deal directly with the public service. Some of these other programs that are created may be well-intentioned but they're not fully effective if they're presented on their own. The document I've submitted to you gives a lot of specific examples on how a more holistic approach could be done that would produce better results for Canadians and help more people. I apologize that it's not in French. We've sent you a translated version.

12:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, both.

We will turn to Mr. Angus, followed by Mr. Poilievre.

Charlie, you have six minutes.

12:55 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Thank you so much, Mr. Chair.

The question of why we are here is really about the decision to take $900 million and transfer it to a third party organization that has very close connections to the Trudeau family and Mr. Morneau. We learn this morning that the money was transferred to a real estate holding company of WE. In all my years in Parliament, I never heard of anything...that that's how we do business in this country.

Mr. Brown, I want to ask you a bit about the real estate holdings of WE Charity. My daughters were involved with Free the Children when they were young. It seemed like a really great grassroots organization. I can't keep track of the multiple corporate entities that have grown up around the Kielburgers—some transparent, some very murky.

Can you place the real estate holdings in the context of where they are as an organization?

12:55 p.m.

Publisher, CANADALAND, As an Individual

Jesse Brown

Mr. Angus, I'm going to try to limit myself to what we've reported already.

As you have pointed out, many different entities hold real estate, both for WE's private companies and for their various charities—holding companies, the Kielburger family themselves and relatives of the Kielburger family. It's incredibly complicated.

Some colleagues of Canadaland and other news organizations have been doing a terrific job beginning the work of untangling all of that, and Canadaland will have some information on that soon, but I hope you'll respect the practice of journalism as such that before we have things completely nailed down I hesitate to comment here on what I wouldn't report through our news organization.

12:55 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Thank you. I really appreciate that.

I'm going to refer to one of your articles—your interview with Charity Intelligence—where they said the fact that the WE group was holding so much real estate debt in terms of short-term, on-demand loans was a huge red flag. Is that unusual for a charity, and do you think that put a lot of financial pressure on the Kielburgers, in terms of these short-term real estate debts they were holding?

12:55 p.m.

Publisher, CANADALAND, As an Individual

Jesse Brown

I can speak to that, having interviewed Kate Bahen of Charity Intelligence. She told Canadaland she'd never seen anything like this and she likened the way WE Charity was leveraging itself to somebody with a credit card with a $10,000 limit who was constantly at $9,500. This was short-term, on-demand loans and revolving debt. Given that WE Charity was investing so heavily and so rapidly in Toronto real estate, to her eye as an independent auditor “a massive, massive red flag”—I believe that was the phrase—was raised as a result of what she saw in their audited financials.

In the audited financials, something popped out at me. The auditor brought up the responsibility of management for assessing the organization's ability to continue as a going concern in light of the breach of these bank covenants two years running. The auditor WE Charity chose to audit their financials said that unless management either intends to liquidate the organization or cease operations, or has no realistic alternative but to do so, they must maintain this responsibility to keep this going. This is a very sober warning that was not routine. There was nothing like it in their previous financial statements.

One thing we did point out in our reporting is that when WE Charity was in this seemingly very precarious financial situation, that's when the amount of money flowing out of the charity into Marc and Craig Kielburger's private company increased sharply, in the last two years, up to, I think, 8% and then 7%. Prior to that, WE Charity was moving money to the private company, but at a rate of about 2% of revenues. When you consider that this is in the neighbourhood of a $60-million charity, 7% or 8% of charitable revenues is a significant amount of money.

1 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

That's very interesting. So we know they were having to pull money out of the charity into their private corporation, and we know there were defaults on the bank covenants. These red flags were being raised. Then COVID hits, and their business model, which is mass rallies backed by corporate sponsors, is wiped out. I'm wondering if this would have created a financial crisis that precipitated their attempt to go to the government to get a program. That's the first question.

Then there is the fact that the government agreed to funnel the money through the real estate holding company. Would that have been done to stabilize the debts so they didn't have to liquidate their real estate assets?

1 p.m.

Publisher, CANADALAND, As an Individual

Jesse Brown

To your first question, I think that's a terrific line of inquiry that we are pursuing as well. It's not something I'd speculate on.

To your second question, I know what you know from the terrific Global News report today, which is that, by WE's own description, they set up this other entity, this new entity, for exactly that reason—to limit their liability.

I would just add for the committee that WE has brought up the impact of the pandemic on its charitable operations. I do not doubt that it was significant. Canadaland has not been able to independently verify that the financial trouble at WE is solely based on the pandemic, and the breach of the bank covenants precedes the pandemic.

1 p.m.

Liberal

The Chair Liberal Wayne Easter

We will have to move on. I'm sorry. We're out of time there, Charlie. We're slightly over.

We're turning to Mr. Poilievre, who will be followed by Ms. Dzerowicz.

Pierre, the floor is yours.

1 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Thank you very much.

My question is for Mr. Brown.

Mr. Brown, you've just cited the Global News report today that the government signed a contribution agreement not with WE Charity, as the Prime Minister first claimed, but with the WE foundation, whose sole purpose is real estate holdings. Do you not find this to be spectacularly bizarre?

July 22nd, 2020 / 1 p.m.

Publisher, CANADALAND, As an Individual

Jesse Brown

My opinion of how strange that is is not something that I want to offer for the purpose of this committee. I hope you'll appreciate that I prefer to keep my punditry elsewhere and limit myself to my reporting. I think people can come to their own conclusions about whether that is in fact really bizarre.

1 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

All right. Well, I've come to mine, so my next question is whether or not you have any speculation as to why the government would direct this kind of contract to a real estate foundation instead of to the charity itself, and why the Kielburgers would prefer that arrangement.

1 p.m.

Publisher, CANADALAND, As an Individual

Jesse Brown

Again, I'm going to refrain from speculating, Mr. Poilievre.

I will note that keeping track of the labyrinthine structure of this organization makes reporting incredibly challenging, not merely because we take accuracy so seriously, but because the WE organization has responded aggressively when any critics or journalists have—I think in good faith—confused or conflated ME to WE, WE Charity, Free the Children and entities by the same name in different countries that are very different in their makeup.

I can understand that referring to a charity as a private company could have an impact on that charity, but the stated internal mission of WE to create one brand that encompasses everything I think absolutely leads to confusion, not only among children, whom the organization engages with as both fundraisers and customers, but also among journalists who are attempting to scrutinize and hold accountable this organization.

1 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

How many different entities are part of the Kielburger empire?

1 p.m.

Publisher, CANADALAND, As an Individual

Jesse Brown

We are aware of 12 in North America. Some of this is completely doing NGO work and international development. You must set up separate entities in these countries; some of this is really understandable. But in Kenya, I believe, there are four different companies. The same issue of assets moving from charities to for-profit companies is something that Canadaland is looking at very closely throughout this global empire of entities.

1:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Do you have any comments or observations on the rapid change of hands of numerous expensive properties in Toronto among the Kielburgers and other members of the WE network?

1:05 p.m.

Publisher, CANADALAND, As an Individual

Jesse Brown

I won't speculate. My only comment is that when Canadaland inquired about the real estate holdings, the extensive real estate holdings, of the Kielburger family, we were told both by attorneys representing Fred and Theresa Kielburger and by the WE organization that these are completely separate affairs and to conflate the two would be a terrible defamation.

The WE organization has now itself brought up the Kielburger parents' holdings in its real estate philosophy statement on its website. The more we learn about the private holdings of the family, the more we discover that they are very much intertwined with the extensive real estate holdings of the charity and of the private for-profit companies of WE itself.

1:05 p.m.

Liberal

The Chair Liberal Wayne Easter

This is your last question, Pierre.