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Craig Kielburger (left) and his brother Marc work up the crowd at a WE Day event at the Air Canada Centre, now Scotiabank Arena, in Toronto on Sept. 28, 2017.Fred Lum/the Globe and Mail

The federal Conflict of Interest and Ethics Commissioner will investigate Prime Minister Justin Trudeau in connection with the Liberal government’s now-cancelled contract with WE Charity.

News of the ethics investigation, the third into the conduct of Mr. Trudeau since he came to power in 2015, came hours after the Liberals announced that the deal to outsource a $900-million student-volunteer program to WE Charity had been cancelled.

“We can confirm this matter will be proceeding,” a statement from Commissioner Mario Dion’s office said. The NDP and Conservative Party had asked Mr. Dion to investigate the contract.

The government announced last week that WE would administer the new Canada Student Service Grant. The international charity has education and development programs around the world. One of its most visible initiatives in Canada is WE Days, concert-style events for students who have participated in its service-learning program WE Schools.

Internal shakeup saw most of the WE Charity board replaced earlier this year

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Mr. Trudeau and his wife, Sophie Grégoire Trudeau, are frequent keynote speakers at the charity’s events. Ms. Grégoire Trudeau was in London for WE in March. She is an official ambassador for the organization and hosts a podcast for the charity.

“We will, of course, collaborate with the commissioner and answer any questions he may have,” the Prime Minister’s spokesperson, Ann-Clara Vaillancourt said in a brief statement.

Mr. Trudeau has been investigated over the SNC-Lavalin affair and for accepting a free family vacation from the Aga Khan – in both cases he was found in breach of the Conflict of Interest Act.

“This is not to question the work of WE or their dedication to young people,” New Democrat MP Charlie Angus wrote in his letter to the commissioner. “It is a question of whether or not the Prime Minister’s decision was influenced by his close family connections to this organization.”

WE Charity co-founder Craig Kielburger donated $1,200 to Mr. Trudeau’s leadership bid in 2012. His brother and fellow co-founder Marc Kielburger donated $350 to the Liberal Party in 2008. According to Elections Canada filings, neither has donated to any other federal political party.

In an interview with The Globe and Mail, Conservative MP Michael Barrett said instead of waiting for investigations to run their course, the government should immediately disclose all of the details and communications related to the contract.

The Globe and Mail is a media partner of WE Charity.

Early on Friday morning, separate statements from the federal government and WE said the decision to cancel the contract was mutual, but Mr. Trudeau told reporters the charity made the call.

“Obviously, the way this situation has unfolded has been unfortunate,” Mr. Trudeau said on Friday in Gatineau before the ethics investigation was announced. “The decision taken by WE this morning to withdraw from this work with the government is one that we support.”

Opposition parties sharply criticized the deal, and questions were raised about how the charity would manage the program, its plans to hire hundreds of volunteers for itself, and to pay teachers to recruit students.

It was not immediately clear how the program will continue. Mr. Trudeau said public servants will work on an alternative, and he urged students to stick with plans to volunteer over the summer.

Mr. Trudeau did not directly address accusations of conflicts of interest between his family and the charity, but said his government will study how the process unfolded.

“We need to reflect carefully on what exactly went wrong,” he said. “It’s clear that there are lessons to be learned on how we can deliver better programs for youth without attracting controversies like this,” he added in French.

Until Friday, the government had defended the organization, and its decision to award the massive contract to the charity. Last week, Mr. Trudeau said it was the “only one” capable of running the $900-million program.

Bardish Chagger, the Minister for Diversity, Inclusion and Youth, said on Friday in a statement that the government and the charity agreed on the cancellation. “The government of Canada and WE Charity will work together to ensure that the volunteers who have applied and been placed won’t be adversely affected,” the statement said. “WE Charity has also decided to return any funds that had already been received.”

In a separate statement, the charity acknowledged the criticisms against it and the volunteer program.

“These are all valid questions and the government has provided explanations for each. However, controversy has not abated,” a statement from the Kielburgers said.

“Having achieved a successful launch and with systems in place for operation, WE Charity and [Employment and Social Development Canada] have mutually agreed that the operational responsibility will be passed to the government of Canada.”

The statement from the Kielburgers also said: “WE Charity waives all costs associated with the creation and administration of the program. To be clear, any funds earmarked for WE Charity staff or WE Charity administration will be returned in full to the government.”

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Co-founders of WE Craig and Marc Kielburger are seen on stage during WE Day California in Inglewood, California, U.S. April 25, 2019. The Liberal government is being investigated for how it handled a contract with WE Charity.MARIO ANZUONI/Reuters

Adding to the questions about how the charity got the contract is a video obtained by the National Post and posted to its website on Tuesday. In a June 12 conference call with youth organizations, Marc Kielburger states that the Prime Minister’s Office contacted WE after announcing plans for the program in April and asked it to help implement the program. The Post says WE Charity later told the newspaper Mr. Kielburger “misspoke,” and that he was contacted by a senior public servant at ESDC.

Asked on Friday whether he or anyone else in his office had contacted the Kielburgers about the program, Mr. Trudeau did not answer.

Instead, he said: “We knew from the beginning that because of work that has been ongoing between this government and WE that this was a decision that needed to be made by our professional public service.”

On Wednesday, The Globe reported that the charity was offering 450 online student-volunteer placements at its own organization as part of the program, raising questions about who decides which organizations would receive taxpayer-funded help this summer.

In its statement on Friday, WE said the federal government asked it to provide a certain number of volunteer positions “to anchor the program at launch.” WE said that step was not needed.

“As no WE Charity service positions have been currently filled, and with over 24,000 available service placements with not-for-profit partners, in order to avoid any perceived undue benefit, the WE Charity service position will no longer be offered,” the organization said in a statement.

In WE Charity’s original plan to administer the program, it had offered to pay teachers $12,000 each to recruit a minimum of 75 students and to oversee their participation. This raised concerns with Leslie Wolfe, president of the Toronto branch of the Ontario Secondary School Teachers’ Federation.

“I think that an organization paying teachers to recruit students – who obviously they only know through their employment as teachers for a particular school board – would have placed teachers in a position of conflict of interest under at least the Toronto District School Board’s conflict of interest policy,” Ms. Wolfe said on Friday.

A conflict of interest could lead to discipline from a teacher’s employer, as well as possible discipline by the Ontario College of Teachers, she added.

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