When Canada’s finance ministry earmarked hundreds of millions for a pandemic aid program to be run by WE Charity last year, scrutiny immediately fell on the cozy ties between the philanthropic juggernaut and one of the country’s most powerful politicians.

As a political firestorm ensued, WE’s telegenic founders, Craig and Marc Kielburger, denied leveraging influence to win the no-bid $544 million (US$449 million) contract. They testified to lawmakers that their organization wasn’t set to benefit financially from the program. And they certainly didn’t have a personal relationship with then-Finance Minister Bill Morneau, they said.

The findings of the parliamentary ethics watchdog this week paint a vastly different picture.

Ethics Commissioner Mario Dion found that Morneau violated Canada’s conflict-of-interest laws and that his staff gave WE preferential treatment in its efforts to win public funding. He said WE was set to receive “a significant financial interest” from the government contract and that what benefited WE, benefited the Kielburgers in light of their prevalent role in its operations.

To Dion, it was clear why WE enjoyed “unfettered access” to the finance minister’s office: Craig and Morneau were friends.

WE said in an email Friday that the charity would not have profited and would have been reimbursed for eligible expenses only under the contract. Its for-profit arm, called ME to WE, was not involved, it added. “To be clear -- ME to WE nor the Kielburgers would not have profited in any way.”

Prime Minister Cleared

WE did issue a statement Thursday referring to Dion’s findings that Prime Minister Justin Trudeau, while appearing to have a conflict of interest in his own involvement with the Kielburgers, didn’t formally cross a line.

Previously, the Kielburgers and Morneau had insisted to Dion their acquaintance was professional and that no personal friendship existed. Yet the watchdog’s findings retrace how the brothers’ ties with Morneau, particularly those of Craig, gave them a position of influence and privilege that few in Canada could dream of.

According to Dion’s report, Morneau and his wife, frozen food heiress Nancy McCain, hosted Craig at their home for Sunday brunch. Their younger daughter worked for WE; their elder daughter’s book as a teenager was endorsed on its cover by Marc. As part of the book tour, she spoke at three WE Days -- stadium-sized rallies filled with school children and corporate sponsors.

To Craig, Morneau and McCain were simply Bill and Nancy. He had Morneau’s private email address. When he and his wife found out they were expecting a baby in 2017, he told Morneau and McCain that they were among the first to know.

“The evidence makes clear that Mr. Morneau and Mr. Kielburger were more than passing professional acquaintances or simply members of the same broad social circle,” Dion said in his report, noting a “kinship and affection” between Craig and the Morneau family.

The line between the personal and the professional often blurred, Dion noted.

WE hosted Morneau family members at its luxury voluntourism camps in Kenya and Ecuador. It didn’t bill them $41,366 in trip fees -- a detail that went unnoticed by the well-heeled family -- “in good faith that the trip would result in future financial support from the McCain family,” WE said last year. McCain later came through with$100,000.

WE’s staff and Morneau’s were chummy, addressing each other as “hey girl” and “hey friend.” The brothers sought Morneau’s help in WE’s attempts to secure public funding for at least three different proposals; one was funded by the Ontario government after his ministerial staff urged their provincial counterparts to make time for Craig. When Morneau’s parliamentary secretary asked why a meeting between her and Craig was being arranged, one of the minister’s staffers said: “He has been really good to us so I want to keep him happy.”

In the past year, what began as a conflict-of-interest scandal widened to a closer inspection of the WE organization and the Kielburger brothers. Questions arose about a complex corporate structure comprised of for-proft and nonprofit entities and how funds were allocated among its philanthropic activities, prompting two separate parliamentary committee inquiries. WE has said that its organization’s complexity was dictated by Canada’s and other nations’ laws and regulations. Amid the scrutiny, the brothers announced last September that they were shutting down their main philanthropic entity in Canada.

Neither Morneau nor WE addressed Dion’s concerns about the relationship on Thursday. Morneau apologized again for failing to recuse himself from the awarding of the contract and said the findings confirm that the public service chose WE as sole administrator of the program. (Morneau abruptly resigned last August, amid a broader rift with Trudeau, and reimbursed the charity for his family’s trips.)

If the clearing of Trudeau of an ethics breach had come a year ago, tens of thousands of students would have benefited from the program, WE said. “Instead, a global children’s charity focused on making the world a better place has been irreparably harmed.”

The Kielburgers have referred to themselves as “political roadkill” after trying to help the government get aid quickly to students in the middle of a pandemic. “There was no financial benefit for the charity,” only reimbursements for costs, Craig testified under oath to lawmakers last July.

That drew skepticism. In March, Charlie Angus, an opposition New Democratic Party member, grilled the brothers about why a budget presented to Trudeau’s cabinet had line items for $600,000 in rent, phone and internet costs -- for three months -- plus a 15 per cent administration fee.

WE said Friday the rent figure was from a placeholder budget; the final submission had an amount for “occupancy costs” that could have gone to a non-WE property, it said, without disclosing the amount.

We also denied there was a 15 per cent administration fee. Across thousands of pages of documents released publicly last year, there are multiple references to “15 per cent administrative costs” that WE was set to receive.

Amid the uproar, Trudeau’s government and the charity had hastily dropped the agreement, known as the Canada Student Service Grant. But Dion left no doubt who was set to benefit.

“WE was the lone administrator of the CSSG and would have acquired a significant financial interest for its role,” he said. “Their involvement in WE’s day-to-day operations is so prevalent that the organization’s interests are also those of its co-founders.”