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Canada's former finance minister Bill Morneau attends a news conference with Prime Minister Justin Trudeau in Ottawa, March 11, 2020.

Blair Gable/Reuters

Prime Minister Justin Trudeau did not breach the Conflict of Interest Act in the WE Charity controversy, but former finance minister Bill Morneau did, the federal Ethics Commissioner has ruled. Commissioner Mario Dion found that Mr. Trudeau was in an apparent conflict of interest, but that perception did not amount to a violation of the federal law.

Mr. Dion released two reports Thursday, almost a year after the eruption of the controversy that led to multiple probes by House of Commons committees and officers of Parliament, Mr. Morneau’s resignation and the downfall of one of Canada’s most prominent charities.

The Morneau report chronicles international trips, private meals, donations and personal e-mails about parenting that link the Morneau family to Craig and Marc Kielburger, the WE co-founders. The commissioner found that the relationship between the minister and Craig Kielburger amounted to a friendship that Mr. Morneau should have recognized as a conflict of interest as his political staffers worked on government matters related to the charity.

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The Trudeau report outlines the myriad connections over more than a decade between the Prime Minister, his family members and WE Charity, but found there was no personal friendship between Mr. Trudeau and the Kielburger brothers.

Federal elections watchdog looking into WE Charity, researcher says

Bloc Québécois calls on Liberals to avoid pandemic election, despite voting non-confidence

Mr. Trudeau announced on June 25 that WE Charity would administer a new, $912-million program called the Canada Student Service Grant, devised to pay young adults for their volunteer work. Officials said the money was to be released in increments and that the contract awarded to WE was valued at $543.5-million.

The contract was scrapped in July amid conflict-of-interest allegations against Mr. Trudeau, whose family members had been paid to speak at WE events. The full extent of the connections between WE Charity and the government only became clear later. Both Mr. Trudeau and Mr. Morneau apologized for failing to recuse themselves from the cabinet discussion.

Mr. Dion’s report on the Prime Minister found that Mr. Trudeau’s involvement in awarding the contract to WE Charity gave “rise to a strong appearance of conflict between the Trudeau family’s relationship with WE and Mr. Trudeau’s duty to make decisions that best serve the public interest.”

But he ruled that is not covered by the law. He said that while the ethics code governing members of Parliament says they must avoid real or apparent conflicts of interest in their duties, the Conflict of Interest Act for public office holders has a narrower definition that doesn’t include appearance of conflict. Mr. Dion’s report notes that MPs voted against broadening the definition in 2006 and left it unchanged in a 2014 review.

“I determined that without an actual conflict of interest or a clear legislative prohibition against apparent conflicts of interest, I could not conclude that a contravention occurred,” Mr. Dion wrote in the report.

The Ethics Commissioner studied whether the Prime Minister broke three sections of the act, covering conflict of interest in decision-making, a ban against giving preferential treatment and the duty to recuse in order to avoid a conflict of interest. In all three cases he found he did not.

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Mr. Dion’s report notes that government funding to WE Charity quintupled under the Liberal government, from $1.1-million under the Conservatives to $5.5-million under Mr. Trudeau.

Documents provided to Mr. Dion showed the Finance Minister’s office described WE in an internal briefing as a “like-minded external partner.”

In the Morneau report, Mr. Dion said his determination that Mr. Morneau and WE co-founder Craig Kielburger were friends represents an expansion of his office’s definition of the term.

“I believe it is necessary to broaden the scope of the term to capture relationships where personal and professional interactions become intertwined to such an extent that it becomes difficult to draw the line between the two,” he wrote.

He said he found no evidence that Mr. Morneau was directly involved in the government’s decision to propose WE as the administrator of the program, but his ministerial office “had an unusually high degree of involvement in past files relating to WE” and there were “frequent communications” between WE and his political staff.

“I am of the view that Mr. Morneau gave WE preferential treatment by permitting his ministerial staff to disproportionately assist it when it sought federal funding. I believe this unfettered access to the Office of the Minister of Finance was based on the identity of WE’s representative, Mr. Craig Kielburger,” Mr. Dion wrote.

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The investigation concludes that Mr. Morneau contravened three sections of the federal Conflict of Interest Act.

The findings do not carry any financial or legal consequences. While the Ethics Commissioner does have the power to issue monetary penalties for administrative issues such as failing to submit required reports, the act’s financial penalties do not apply to the breaches identified in the Morneau report.

Mr. Trudeau has twice been found in breach of conflict of interest laws – in 2017 and 2019.

Mr. Morneau has been cleared in two previous ethics investigations.

In a statement Thursday, Mr. Trudeau said the report “confirms what I have been saying from the beginning.

“At the heart of this initiative was getting support for youth during this pandemic as fast as possible,” he said.

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Mr. Morneau also released a statement Thursday that said the government’s goal was to help students gain meaningful work experience during the pandemic.

“As the report confirms, the decision to have WE Charity administer the program was entirely based on the advice of the public service. As I have already stated, in retrospect, I should have recused myself from the discussion,” he said.

WE Charity said in a statement that the report confirms the decision to award the contract to WE Charity was subject to extensive scrutiny. It said the controversy has left a global children’s charity irreparably harmed.

“After all the efforts to advance partisan agendas, I hope we can focus on Canadian youth who a year later still do not have summer service opportunities and who have lost so much,” Craig Kielburger said.

Conservative Leader Erin O'Toole says the findings of the ethics commissioner on the WE Charity controversy shows Canada needs stronger accountability laws. The federal ethics watchdog has found that Prime Minister Justin Trudeau did not break the rules when he did not recuse himself from a cabinet decision on WE Charity, but former finance minister Bill Morneau did. The Canadian Press

Conservative Leader Erin O’Toole responded to the Ethics Commissioner’s ruling on Mr. Trudeau by saying Canada’s accountability laws need reform.

“The system is broken,” he told reporters. “We need to close the loopholes and we need to send a signal that the Prime Minister should lead by example, with ethical and moral clarity [and] not constantly be under investigation.”

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NDP MP and ethics critic Charlie Angus said the findings regarding Mr. Morneau and his political staff show the Liberals offer preferential treatment to their friends when it comes to access to decision-makers.

“I think the Ethics Commissioner has given a damning indictment of how the Liberals do business,” he said in an interview. “This is the picture as clear as can be of how friends of the government get absolute, unfettered, insider access in ways that are completely inappropriate. It’s a damning indictment of how this program went way off the rails so quickly.”

NDP ethics critic Charlie Angus blasted the federal Liberals on May 13 over the findings released by Canada’s ethics czar on the WE Charity controversy. Angus says Mario Dion’s report shows the Liberals gave 'blatant insider access for their cronies and their friends.' The Canadian Press

The Commissioner’s finding on Mr. Trudeau surprised experts in conflict of interest, one of whom said Mr. Dion’s conclusion is only reached by hair-splitting.

“Any impartial person reading the Commissioner’s Report would recognize that Prime Minister Trudeau was guilty of a clear-cut conflict of interest in the WE affair. His conflict of interest was a real and not simply an ‘apparent’ conflict,’ " said Arthur Schafer, the founding director of the Centre for Professional and Applied Ethics at the University of Manitoba.

Mr. Trudeau’s mother, Margaret, and brother Alexandre both made regular paid appearances for WE, and the Prime Minister’s wife, Sophie Grégoire Trudeau, was paid once for her work prior to the Liberals winning government. She was also a volunteer ambassador for the charity at the time it was awarded the contract.

In March, brothers and WE co-founders Craig and Marc Kielburger told the House of Commons ethics committee that the charity paid Trudeau family members a total of $217,500 in fees and $209,620 to cover their expenses, including flights and hotels.

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The opposition has said federal funding to WE Charity indirectly served to benefit Mr. Trudeau’s relatives, who did paid work for the group, but Mr. Dion called such argument “too remote and speculative to merit further consideration.”

The Morneau report notes that the former minister and his family have several personal connections to the WE organization through his daughters, Clare Morneau and Grace Acan. Mr. Morneau and Ms. Acan took a WE-related trip to Ecuador in 2017, and Ms. Acan took a contract job with WE Charity in 2019.

The report notes that Marc Kielburger wrote an endorsement on the front cover of a 2016 book by Clare Morneau about refugee girls in Kenya.

In September, the charity announced it was shuttering its Canadian operations and that the Kielburgers would be leaving the organization.

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