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Senior public servants repeatedly questioned key parts of WE Charity deal: documents

Click to play video 'Documents shed new light into WE Charity affair; Conservatives accuse Liberals of coverup' Documents shed new light into WE Charity affair; Conservatives accuse Liberals of coverup
WATCH: The federal government has released thousands of pages of internal records, linked to the cancelled WE Charity contract. Abigail Bimman explains why the Conservatives are accusing Prime Minister Justin Trudeau of a coverup, what the heavily redacted documents reveal, and what questions remain unanswered. – Aug 19, 2020

This story has been updated to include a response received from Treasury Board Secretariat following publication.

Some federal public servants appear to have raised questions about core details of a plan to have WE Charity administer a student service grant program even as other top officials were working to finalize the proposal.

According to some of the thousands of documents released to members of the House of Commons finance committee studying the WE Charity scandal, Treasury Board Secretariat (TBS) officials appear to have repeatedly asked questions about a lack of key financial and structural details about the proposal.

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RCMP ‘examining’ Ottawa’s WE Charity contract – Aug 19, 2020

“Finally, TBS notes that ESD has not provided evidence to suggest that WE Charities possess the capacity to undertake this work, especially under accelerated timelines,” read one part of a memo sent by the department on May 4, which also cited “integrity concerns.”

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That’s one day prior to a May 5 meeting of the cabinet committee on the coronavirus response, after which the proposal was — at the time — scheduled to move on to a full cabinet review just days later.

ESD refers to Employment and Social Development Canada, the department that led the development of the student service program.

Another memo expressed similar concerns.

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The timeline of Trudeau’s WE Charity controversy – Jul 30, 2020

“Overall, the Secretariat continues to question how this proposal would interact with other student/youth funding recently announced by the government, how the integrity of the program would be maintained and what impact it would have that would be incremental to other recent investments.”

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Global News has requested more details from Treasury Board Secretariat officials about what led them to note the lack of evidence suggesting WE Charity could do the work.

“In their initial examination of the proposed Canada Student Service Grant Program, TBS officials engaged with their ESD colleagues on a variety of questions, namely on ministerial authorities and asking about the relationship between the proposed program and other measures,” said Alain Belle-Isle, a spokesperson for the Secretariat.

“In this case, they were following up on an early proposal from ESD. These are the kinds of questions and challenge role that are part of regular Secretariat business activities. As the proposal for the CSSG initiative evolved, so did TBS’ advice.”

The Treasury Board Secretariat is the administrative arm of the Treasury Board, which acts as the government’s management board.

Read more: Documents suggest bureaucrats urged to look at WE charity for student aid program

Roughly 5,000 pages of documents were submitted by the government to the finance committee as part of that committee’s probe into accusations of conflicts of interest in the WE Charity controversy.

Many of the documents released are out of order, not clearly attributed and lack details such as who prepared them and when they were created, while others are clearer.

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The WE organization was selected to administer a student service grant program and despite having  family financial ties to the group, neither Prime Minister Justin Trudeau nor former finance minister Bill Morneau recused themselves from discussions on the proposal.

Both are now under investigation by the ethics commissioner.

Morneau also resigned on Monday following reports of purported frustrations in the Prime Minister’s Office about his handling of questions about his role in the scandal and rifts between the two men on coronavirus recovery plans.

Read more: NDP wants ‘full investigation’ into whether WE Charity engaged in improper lobbying

Trudeau and his officials have insisted repeatedly that the recommendation to use WE Charity to administer the program came from the public service.

However, the documents raise questions about how that recommendation came to be and what work was being done behind the scenes to do due diligence.

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One email sent on April 20 from a high-level bureaucrat at the Privy Council Office to counterparts at several other departments referenced “youth proposals (WE)” and said that she understood WE Charity had been in touch with their teams about a social innovation program pitch, as well as one on service.

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“I am told they met with Minister (Mary) Ng, (Bardish) Chagger and others to discuss this (and) a revised version of the service program. They reached out today as they are also working with DPMO and PMO.”

DPMO refers to the office of Deputy Prime Minister Chrystia Freeland.

A spokesperson for Freeland, who on Tuesday replaced Morneau as finance minister, said there has been no contact between Freeland’s office and WE Charity staff.

“No, the WE organization was not in contact with any staff in the Deputy Prime Minister’s Office,” press secretary Katherine Cuplinskas said in an email to Global News.

Read more: Tories accuse Trudeau of engaging in massive ‘cover-up’ with WE Charity scandal

Officials at the Treasury Board Secretariat also requested more details about the breakdown of the roughly $900-million value of the program that had been announced in April by Trudeau.

Alexandrea Howard, director-general for Finance Canada, wrote back.

“There is no breakdown. It was a set aside that we argued should not be announced, but lost,” she wrote in an email dated May 15 to several Treasury Board Secretariat staff asking for clarification.

“It was unbelievably preliminary based on youth volunteer rates. With actually no model of how it would be administered … I think people mistakenly think it was a firm proposal when it was announced. It was not.”

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Trudeau had publicly announced the program one month earlier.

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Trudeau’s testimony on the WE Charity controversy – Jul 31, 2020

Michelle Kovacevic, assistant deputy minister at Finance Canada, responded to one emailed question from Treasury Board Secretariat officials asking for costing details and offered to share what she called the “loosey goosey logic” used to establish the roughly $900-million valuation.

Others public servants raised questions about whether WE as a third-party contractor could safely disburse that amount of government funds and guard against fraud.

Kovacevic sent an email on May 7 to Rachel Wernick, senior assistant deputy minister at Employment and Social Development Canada, saying questions had been raised about whether WE Charity could deliver on the program in Quebec.

She said several questions arose at a recent cabinet committee meeting about why WE had developed an English-only website for the student service program.

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The unredacted portions of the documents don’t indicate whether public servants or politicians were aware that WE had struck a deal with National, a public relations firm, to subcontract the delivery of the program in Quebec and French-language communities in the rest of Canada.

But the email said someone had provided an “explanation” for the unilingual website, without sharing further details.

On May 4, one Treasury Board Secretariat bureaucrat had also emailed another to “flag … major integrity concerns with students documenting their own hours.”

WE Charity began incurring expenses under the program on May 5, the day of a cabinet committee meeting where the proposal appears to have been put forward by Chagger, the youth minister.

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WE Charity controversy: Telford asked why Trudeau not told earlier Canada Service Corps not delivering student grant program – Jul 30, 2020

There are also several references throughout the documents submitted by Treasury Board Secretariat officials to assessments or discussions about the “financials” of the WE Charity.

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One email on May 8 includes an attachment described as “WE Charities financial breakdown,” while another email from Brian Hickey, executive director of the Treasury Board Secretariat, on the same date sent to Erin O’Gorman, associate secretary of the Treasury Board, includes the phrase: “I was able to obtain more detailed financials for WE Charities and can speak to it, if you wish.”

The results of that conversation are not clear in the documents but the financial and organizational structure of WE Charity — and why it used a shell company created to hold real estate for the group as its contracting body for the program — have come under intense scrutiny.

WE Charity has said the WE Charity Foundation was not a real estate holding company and that it used the entity to protect the broader organization from legal liability.

WE Charity Foundation’s stated purpose is to “hold real estate.”

Read more: Trudeau gov. contract for $912M student program was with WE Charity’s real estate holding foundation

Government officials, including Employment Minister Carla Qualtrough, have testified that they did not realize that WE Charity Foundation was distinct from the WE Charity and other branches of the organization.

Trudeau said in testimony before the finance committee that he only learned about plans to involve WE Charity in the program on May 8 and had until that time been under the impression the program could be delivered via the Canada Service Corps.

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Read more: 5 takeaways from Trudeau’s testimony in WE Charity scandal investigation

He said he hit pause on the proposal before it was set to go to cabinet discussion because he needed more time to evaluate the proposal for WE Charity to administer the program.

Wernick said in an email on May 8, the day cabinet had been scheduled to meet to discuss the proposal, that the discussion “got bumped.”

“The item just got bumped to next week. Ran out of time. Delays launch,” she wrote.

Jamie Kippen, Chagger’s chief of staff, wrote back, saying: “Are we worried about WE?”

“WE will adapt,” Wernick wrote back. “I am worried about unrealistic expectations on how fast we can get this launched now that we lost another week before approval.”

The program has now been cancelled.

WE Charity says it has reimbursed $22 million of the $30 million it received in startup costs to run the program and is in the process of returning the rest of the funds.

With files from Global’s Andrew Russell, Mike De Souza, Sam Cooper and Abigail Bimman.

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