The federal Lobbying Commissioner is looking into WE Charity, which finds itself the subject of a number of inquiries as it closes its Canadian operations.
Citing the impact of the COVID-19 pandemic and the fallout from the Canada Student Service Grant controversy, the charity announced Wednesday that it would close its Canadian operations and its founders would leave the organization.
The Prime Minister’s Office has not commented on WE’s decision to close and on Thursday federal ministers sought to distance themselves from the move. “What the WE Charity does is really up to them. It’s a decision that they’re making,” Families Minister Ahmed Hussen said.
WE’s planned exit isn’t bringing an end to the scrutiny connected to the group. The Lobbying Commissioner and the RCMP are examining matters related to the charity. The opposition have said they plan to restart committee investigations when Parliament returns later this month. Prior to prorogation, at least three committees were conducting reviews.
“The Office can confirm that we have opened a preliminary assessment,” Lobbying Commissioner spokesperson Manon Dion said Thursday. “Given the possibility that these matters may become police investigations, the Office is unable to comment on whether an investigation has been initiated or is ongoing.”
In the lead-up to its now-cancelled deal with the federal government to administer the $543.5-million student volunteer grant, staff at WE met with federal officials and politicians but weren’t registered to lobby the government. Its failure to register led to requests for an investigation from the NDP and Conservatives.
In August, the charity retroactively registered to lobby and listed 17 staff members as lobbyists. Dalal Al-Waheidi, WE Charity’s executive director, told the House of Commons finance committee on Aug. 13 that the organization did not previously register because it didn’t think it was necessary under lobbying rules.
The charity disclosed almost 40 meetings with government officials since March. Most of them fell in the time frame when WE was negotiating its role in the student grant program. The deal for WE to run the program was announced in June and cancelled in July amid conflict-of-interest concerns.
WE said Thursday that it did not know about the examination from the Lobbying Commissioner.
“We are not aware of any probes or examinations. Should we be approached by any agency, we would, of course, co-operate,” the charity said in a statement.
“All lobbyist registrations are examined once submitted. Our registration covered a several-month period and in the ordinary course would be reviewed. We are helping with the review,” it added.
Lobbying rules require corporations to register when the cumulative lobbying activities of all employees add up to a “significant part of duties,” which has been defined as the equivalent of 20 per cent or more of the working hours of one full-time employee, over a one-month period.
In August, the RCMP said it is examining carefully the government’s decision to award WE the contract. On Thursday it repeated its statement and said it could not be specific about the focus of its inquiries.
WE said Thursday that it “is not aware of any investigation. It would be inaccurate and extremely irresponsible to state that WE Charity is the target of any investigation by the RCMP.”
Prime Minister Justin Trudeau and his former finance minister Bill Morneau, who resigned in August, are both being investigated by the Conflict of Interest and Ethics Commissioner for their roles in awarding WE the contract. Both have family members with ties to the organization, and Mr. Morneau travelled with the charity in 2017.
WE said it is co-operating with the ethics investigations at the same time as it begins the complex process of winding down its operations. It will establish an endowment fund, through the sale of the charity’s assets, which will continue its international humanitarian programs.
WE’s 2019 financial statement showed that the charity owned $42.2-million worth of land and buildings in downtown Toronto. That consists of WE’s 43,000-square-foot Global Learning Centre and five nearby buildings in the same block. However, the $42.2-million figure represented the cost of acquiring the properties and the market value could be far higher.
The entire transition is expected to take up to a year, the charity said, and it will be overseen by the current board.
Winding down a charity is not simple and charity experts say the board will have to be careful about where the proceeds from the asset sales end up. By law, when a charity dissolves, all net proceeds must be distributed to other registered Canadian charities. The money can’t be sent to WE Charity U.S., which is expected to continue operating, or to the ME to WE Social Enterprise, which is controlled by the brothers and has paused all operations. It’s also unlikely that WE Charity could be converted into a private foundation run by the Kielburger family.
“They can’t return money back to donors, they can’t return money to founders or to members,” said Taras Kulish, a Toronto lawyer at Mills & Mills who works with charities. “It has to go to registered Canadian charities.”
The money could go to the WE organization’s other Canadian foundations, including the WE Charity Foundation, as long as the recipient is a registered Canadian charity.
WE said the endowment would support several existing projects in Latin America, Asia and Africa. Canadian charities can fund overseas projects providing the activity is directly under the charity’s control and supervision. That could become problematic if WE Charity winds down all of its operations.
“These funds come from Canadian donors. There’s a sacred trust that the government has given to a charity. They will have to be very careful in terms of sending money overseas,” Mr. Kulish said.
Mark Blumberg, a Toronto lawyer who specializes in charities, said the most likely outcome was that WE Charity simply continues on but in a different form.
“What could happen is pretty much a continuation of what they’ve been doing, which is firing people, selling the real estate and then they just basically have all the money in the charity and they call it an endowment," he said.
Mr. Blumberg added that he would rather see WE Charity dissolved and the money used to help other charities. “My hope is that they actually take the money and give it to a reputable charity that is completely arm’s-length from them, has no relationship with them, and we can get on with other things,” he said.
The chief executive of Imagine Canada, which advocates for charities and which WE is a member of, said it is incumbent that the charity remain "as transparent as possible” as it winds down its operations. Bruce MacDonald said WE should be communicating with donors to ensure that they understand what is happening with their donations.
The Canada Revenue Agency has the power to audit charities but audits are generally not publicly disclosed. In a statement, WE Charity said it is not being audited by the CRA.
The charity will also have to continue filing financial reports to the CRA so long as it continues to hold charitable status. The CRA said it was unable to respond to questions from The Globe and Mail on Thursday.
With reports from Stephanie Chambers
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