Finance Committee on July 28th, 2020

[Craig Kielburger]

I appreciate the question, sir. Thank you.

Fundamentally, there are two overarching structures: WE Charity and ME to WE Social Enterprises. As I mentioned in my opening remarks, as per CRA and the Income Tax Act, section 149 to be precise, charities cannot operate like businesses to solve social issues. They cannot literally operate a business structure. It's because of this unfortunate reality of the CRA structure in Canada that things like Grameen Bank, an extraordinary social enterprise that won the Nobel Peace Prize for microcredit, lifting people out of poverty, frankly, never could have been created in Canada. Social enterprise is a growing and powerful force to better the world.

So WE had to engage the best lawyers and accountants and systems to build what was a labyrinth to adhere to the proper Canadian laws and regulations, and it's a shame because we get called by so many people who are seeking how they can do it themselves in this way. So these fundamental structures exist to fulfill the social mission mandate. Each country you listed adheres to its respective country laws. Canada's has its own incorporation, the U.S., the U.K. In fact, other countries in the developing world have their own incorporation. Fundamentally, it is WE Charity and WE to ME Social Enterprises.

[The Chair, Liberal, Wayne Easter]

Mr. Fragiskatos, go ahead.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Mr. Kielburger.

Are you then saying that this complex structure was absolutely necessary to the functioning of the charity? If you are saying that, are you also saying that other charity organizations in this country are forced to organize themselves in that way?

I suppose the question is, how unique of a structure is this? Is this something that we see with the majority of charities in Canada, or is WE one of only a few that operate in this way? Because, I'll tell you.... Admittedly, I don't have a background in the organizing of charities and all the complexities surrounding that, but it comes off as a bit strange. Could you, again, tell us? Was this kind of structure absolutely vital, and is it the case that most charities adopt it?

[The Chair, Liberal, Wayne Easter]

That will be the final question in that round.

Mr. Kielburger.

[Craig Kielburger]

If I may, I'll answer your question by saying that in Canada, to do what we seek to do, this is the legal way to adhere to the CRA rules. I wish it were different and I hope they streamline it in Canada.

Nonetheless, I have just two quick points. Number one, you listed entities around the world; it's because legally we have to incorporate in each country where we operate. Number two, allow me to add that we have actually engaged Korn Ferry, a global expert on organizational structure and design, because, frankly, over 25 years of creating entities and creating organizations, we probably could find a streamlined system to do this; we acknowledge that. It has to be streamlined, so they'll be stepping in to help us in that matter.

What we do here is not unusual in our system of social enterprise, but we know that social enterprise is unusual.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We have Mr. Cooper for five minutes, followed by Mr. Fraser.

Mr. Cooper.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you, Mr. Chair.

Thank you, Marc and Craig, for being here and for your testimony.

Your organization provided Bill Morneau with over $41,000 in trips to Ecuador and Kenya. Exactly what did the $41,000 pay for?

[Craig Kielburger]

I'm happy to answer that question, sir.

We extended an invitation, actually to Ms. McCain, to be candid, where she first came with her teenage daughter to Kenya—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

I understand the chronology, but my question is quite specific. What did the $41,000 pay for?

[The Chair, Liberal, Wayne Easter]

I believe that's the answer they're getting to, Mr. Cooper. Let's allow time for answers; it will be shorter.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

I don't need background. I know the trips. I just need to know what the $41,000 represents.

[Craig Kielburger]

Understood. To answer your question, specifically, the first set of expenses was for Ms. McCain and daughter to travel to.... They were already in Kenya and they were looking at other charities they had already funded, so we hosted them at our sites—so the accommodations. They stayed with us; there are no other options. They drove around as they built the schools. They had a development, humanitarian site visit with us.

There was a second trip that took place approximately six months later. That was the one, to answer your question, with Mr. Morneau, and Ms. McCain and other children. In that case, it was to the Amazon. They also, again, paid for their flights and whatnot, but our accommodations, the food and the build site supervision as they were building their schools and working on a service trip....

I mentioned this earlier because it does seem unusual that the price was so high—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Okay, that's fine. That's another subject matter. You'll provide a detailed breakdown, I understand. Will you undertake to do that?

[Craig Kielburger]

We will provide it.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Okay, thank you for that. I appreciate that.

When your organization booked the Kenya and Ecuador trips, were they booked specifically as an accounts receivable?

[Craig Kielburger]

WE Charity, similar to many other humanitarian organizations, invites prospective donors, people who head companies and foundations, to witness development projects and what they do—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

So the answer to that is no?

[Craig Kielburger]

Correct.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

It was not an accounts receivable.

[Craig Kielburger]

They are a—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

It was a complimentary trip, right? That's what your statement said. Is that correct?

[Craig Kielburger]

Sir, could I just finish the statement?

It is to host individuals who have an interest to witness our development work on the ground. To answer your question, it was seen, in our mind, as a complimentary hosting, given that they were already in the country, in Kenya, and were coming in to simply stay with us, and in Ecuador to look at this for the development plans.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you, so no accounts receivable.

Did you hide, to Mr. Morneau, the fact that the trip would be complimentary?

[Craig Kielburger]

The arrangements for the trip were entirely done through an invitation to Ms. McCain and entirely arranged with her and her team, so I don't know whether there was any clarity or conversations that followed. In our mind, it was an invitation to a very prominent Canadian family, Ms. McCain, who is very philanthropic and very beneficial, and that was why—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Okay. Thank you.

Now, you mentioned Ecuador and Kenya—Morneau in Ecuador and Ms. McCain and daughter in Kenya. They get to an airport. They travel by commercial aircraft.

How did they get to the site? Did they travel by private aircraft at any time?