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In a report released on Thursday, the House of Commons ethics committee said it was 'deeply troubling' that the government signed a contract with the WE Charity Foundation.Fred Lum/The Globe and Mail

WE Charity was poorly equipped to run a volunteer student grant program that the federal government handed to it last year, the House of Commons ethics committee says.

In a report released on Thursday, the committee said it was “deeply troubling” that the government signed a contract with the WE Charity Foundation, and that it was unable to get a clear picture of WE’s financial structure despite 10 months of study.

“This group had never undertaken a project close to this magnitude and it remains unclear whether they had the means to ensure that students across the country could be put to work with credible results.

“The committee is of the view that it is unacceptable that bureaucrats and ministers pushed the project forward based on the claims of this group.”

The committee said it was unable to determine the division between how monies flowed through the charitable wing and WE’s for-profit operations.

Also, the report said the committee was denied information on the ownership structure of WE’s “multitude of side companies.”

Liberals seek to run out the clock on parliamentary disclosure

The report, approved by the three main opposition parties, follows months of tempestuous hearings marked by the unavailability of ministerial staff, an interruption of the committee’s work when Prime Minister Justin Trudeau prorogued Parliament last August and allegations that Liberal members filibustered the proceedings.

Last June, Mr. Trudeau announced WE Charity would administer a $912-million program to pay young adults for volunteer work after pandemic restrictions limited their summer job prospects. Officials said the money was to be released in increments and that the contract awarded to WE was valued at $543.5-million. WE was to receive about $43.5 million to administer the program.

The contract was scrapped in July amid conflict-of-interest allegations against Mr. Trudeau over payments made to members of his family to speak at WE events. Family ties between the charity and then-finance minister Bill Morneau emerged later. Mr. Trudeau and Mr. Morneau apologized for failing to recuse themselves from the cabinet discussions on the contract.

The ethics committee later in the summer began its study to determine what safeguards are needed to prevent conflicts of interest in federal expenditure policies.

In a dissenting report to the study, Liberal committee members said they recognized the need to ensure the integrity of emergency spending decisions, but denounced many opposition recommendations as unhelpful or outside the scope of the study.

The committee suggested greater efforts to screen out conflict issues affecting cabinet members, that cabinet ministers immediately recuse themselves from discussions that place them in a conflict of interest and that the government review the Conflict of Interest Act to make it more specific on what is a conflict.

“While Canada’s accountability laws may be broken now, the report shines a light on Liberal corruption and it shows a clear path for us to clean up the mess and end the abuse by insiders,” Conservative MP Michael Barrett said at a news conference.

New Democrat Charlie Angus, at the same news conference, raised concerns about filibusters by Liberal members, and challenges securing witnesses.

“This report is about what happens when friends of the Liberal government, insiders, get access when they shouldn’t have access,” he said.

The committee also said the federal government should refrain from further contracts with WE until a forensic audit can be done to determine how finances flow between its charitable operations and side companies and real estate holdings.

WE said in a statement that its operations have been the subject of independent audits for the past 25 years, most recently last fall, when a review found no impropriety. WE also said many of the committee’s recommendations would create a robust mechanism for additional oversight of government procurement.

“We only wish these had been in place last summer, as we are confident that WE Charity would have been approved under these conditions and the [Canada Student Service Grant] program would have gone forward.”

Ethics Commissioner Mario Dion released separate reports in May on Mr. Trudeau and Mr. Morneau. The latter 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.

Mr. Dion 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.

With a report from Marieke Walsh

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