By Paul Emanuelli and Bethany Pentesco
This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
Senior elected officials are held to a high level of accountability when it comes to sole-sourcing, preferential treatment, and the expenditure of public funds. After his controversial vacation to the private island of a friend who had ongoing government dealings, and in the wake of his infamous SNC-Lavalin scandal, Justin Trudeau now faces a third federal ethics investigation over allegations of favouritism in a controversial direct award to a Trudeau-connected charity. As recent newsreel reports highlight, the Trudeau government sole-sourced a $912 million grant program for pandemic youth volunteer services to the WE Charity, an organization for which Trudeau and his family members have volunteered as spokespeople, before a backlash prompted the quick cancellation of the outsourcing scheme and sparked an escalating public relations crisis for both Trudeau and the charity.
On June 26, 2020, in “Trudeau accused of cronyism over giving WE Charity a contract to run $912-million student volunteer program”, the Globe and Mail reported that Justin Trudeau was accused of cronyism because of the close ties the Trudeau family has with the WE Charity, which was directly awarded the contract. The contract, to administer a federal student volunteer grant program, came under scrutiny after the government failed to disclose how much would be given to student volunteers and how much would be paid to the charity in administrative fees. Opposition MPs quickly called on the government to release the terms of the contract. Raquel Dancho, a Conservative MP, asked of Trudeau “why he doesn’t think his own government officials can administer the program,” after “recently demonstrating the ability to administer much larger programs during the pandemic.”
On June 30, 2020, in “Records show charity closely linked to Trudeau has received multiple sole-source contracts from Liberal government”, the National Post reported that the WE Charity was awarded five contracts since the beginning of the Trudeau administration. Before that, the report states that the charity had no history of contracts with the government. The latest contract, a $900+ million sole-source was defended by Trudeau, who claimed the WE Charity was the “only one…capable of networking and organizing and delivering this program on the scale that we needed it…” It was revealed that $19.5 million of the contract value would be paid to the charity to cover administrative costs and training. Opposition critics expressed concerns about the government’s sole-sourcing practices, as well as doubts about Trudeau’s justification for the direct award. As NDP ethics critic Charlie Angus stated, “What’s really concerning about these [sole-source] contracts is that it’s the oldest game in Ottawa, the nudge-nudge, wink-wink of putting out contracts just below the threshold to have them put out to public. And those are the contracts that tend to be given to someone who ran your campaign, someone who was involved with you at the party level.” As Conservative ethics critic Michael Barrett added, “We know the Prime Minister is not afraid of influencing decisions to benefit his friends.”
Shortly thereafter, on July 3, 2020, in “WE Charity pulls out of $912-million contract with Trudeau government”, the National Post reported that the WE Charity had pulled out of the contract following the controversy. As Justin Trudeau stated, “We will continue to work hard to make sure that young people get the opportunities to serve their country, but it will no longer be with the WE organization.” Trudeau also claimed that the WE Charity was better suited for the networking aspect of the contract, and worried that the government would not be able to reach out to as many volunteers. The story featured a video obtained by the National Post that showed one of the charity’s co-founders stating that the Prime Minister had contacted him to help implement the program, a statement that was later retracted with claims that a member of the public service, and not Trudeau, had initially reached out to the charity about the program.
Also, on July 3, 2020, CTV News reported in “Trudeau to ‘collaborate’ with ethics watchdog amid probe into his involvement with WE Charity deal” that the federal ethics commissioner had launched an investigation into the contract. Michael Barrett, a Conservative MP and one of the MPs that filed the complaint with the commissioner, claimed that, “Trudeau violated a provision in the Act that ‘prohibits public office holders from making any decision or participating in the making of a decision that furthers their private interests or improperly furthers the private interests of another person.’” Barrett further alleged that Trudeau showed preferential treatment when claiming that the WE Charity was the “only organization” capable of administering the contract. Trudeau stated that the events were “unfortunate” and promised to co-operate with the investigation.
On July 8, 2020, in “Two parliamentary committees expected to dig into Trudeau government’s handling of WE Charity deal”, The National Post reported that, in addition to the federal ethics commissioner investigation, two parliamentary committees have also declared their intention to probe Trudeau’s charity sole-source decision. As the story stated, “On Tuesday, a majority of members on the federal finance committee voted to spend at least 12 hours investigating how WE Charity was chosen to administer the Canada Student Service Grant (CSSG).” The story also confirms that, “On the same day, the chair of the government operations committee agreed to host an emergency meeting Thursday to vote on a similar study, after a request by the NDP, Conservatives and Bloc Québécois.” The story quoted NDP MP Peter Julian as stating that, “We need to know whether or not this decision went to cabinet, why there was a reduction in the number of positions for Canada Summer Jobs…Why this organization was put forward instead of our civil service, and on sole-source, what was the process?”
Also on July 8 in 2020, in “Trudeau admits he did not recuse himself from WE contract vote”, Global News confirmed that Justin Trudeau admitted to not recusing himself from the final cabinet decision to directly award the contract to the WE charity. As the story states, “He said the recommendation to outsource the new Canada Student Service Grant to WE was made by the non-partisan public service, but the decision to award the organization was ratified by cabinet.” As the story explains, Trudeau defended these actions by noting that none of his family members have been paid for their speaking engagements on behalf of the charity, noting that, “Trudeau has insisted that there is no conflict of interest as neither he, nor his family are paid for their appearances.”
On July 10, 2020, in “Bill Morneau has family ties to WE Charity, did not steer clear of cabinet discussion of contract”, CBC News reported that Canada’s finance minister also failed to recuse himself from the contract vote, despite, as the story states, “the involvement of two of his immediate family members in the charity — one of them as a paid contract employee.” In fact, in addition to not recusing himself from the Cabinet vote, something that his office confirmed with CBC News, the finance minister also proceeded to make the public contract announcement on behalf of Employment and Social Development Canada.
Also on July 10, 2020 in “Justin Trudeau faces calls for criminal investigation into family’s charity links”, coverage of the scandal made international headlines when the UK paper The Guardian reported that Trudeau’s political rivals were “calling for a criminal investigation after it emerged that members of his family were paid hundreds of thousands of dollars by a charity to which his government recently awarded a substantial contract.” As the story details, Trudeau’s mother was paid around a quarter of a million dollars since Trudeau became prime minister for speaking appearances with the WE charity. Other news reports have confirmed that his brother was also paid smaller sums. As The Guardian story details, while some of Trudeau’s political rivals are calling for a criminal investigation, Bloc Québécois leader Yves-François Blanchet called on Trudeau to temporarily “step aside” in favour of the deputy prime minister until the federal ethics commissioner completes his investigation.
As these recent reports illustrate, allegations regarding preferential treatment in sole-sourcing decisions can undermine contract award decisions and adversely impact government operations that rely on the timely performance of those contracts. Those controversial decisions can also result in negative reputational impacts on the elected officials, governments, and organizations involved in those direct award dealings.
