$912 million Trudeau government contract went to real estate holding foundation for WE Charity

The Canada Student Service Grant contract was instead given to the WE Charity Foundation which is a separate charity without any track record.

Trudeau announced that the controversial contract was with WE Charity, though it was confirmed by the government and the charity that it was not.

The controversial move has now placed Trudeau in the middle of an ethics scandal and his government will now likely have to provide their reasoning for awarding the sole-sourced contract to the foundation instead of WE Charity.

WE described the WE Charity Foundation as inactive in Aug. 2018, and it was only formed into a legal corporation in Jan. 2018. It wasn’t until April 2019 that it turned into a federally registered charity with the stated purpose of holding WE Charity real estate worth many millions of dollars.

Trudeau originally said that the Canadian Student Service Grant was going to be “administered by WE Charity,” though it was confirmed on Tuesday that the government had actually given the contract to WE Charity Foundation. The news was confirmed by the Minister of Diversity and Inclusion and Youth, Bardish Chagger’s office.

“The contribution agreement for the Canada Student Service Grant is between the Government of Canada and WE Charity Foundation,” said Dani Keenan.

WE Charity Foundation noted that it is not a section, branch or division of WE Charity or any other charity. The organizations do however, share the same phone number and Toronto address.

Mark Blumberg, a Blumberg Segal LLP partner and charity lawyer called the news that the contract went to WE Charity Foundation instead of WE Charity “shocking.”

“This appears to be completely different than what was said by a number of government officials in different forums,” noted Blumberg.

“It is absolutely shocking that the government would say that they provided a grant to We Charity when in fact they provided the grant or funds to WE Charity Foundation—a shell corporation with no assets, no history, no record of charitable work.”

Blumberg added that the government would struggle to recover funds if the WE Charity foundation could not follow through with the student volunteer program.

“It is close to useless to obtain an indemnity from a charity with no assets,” he said. “I can understand why WE Charity would want this agreement with any potential exposure to be in the name of WE Charity Foundation, but I cannot understand, if the government was protecting the interests of Canadian taxpayers or citizens, why the government would either agree to this or incorrectly state who the correct party is to this very important agreement.”

“It would be like saying the Government of Ontario has given $100M to London, Ontario, to help fight the impact of COVID versus actually providing the funds to London, England,” he said.

WE Charity said it’s lawyers advised it to make the foundation the “contracting party” because of legal concerns.

“The use of multiple corporate entities to isolate liabilities for particular projects is not uncommon. This action was done with the advice of legal counsel and with the consent of the board of directors,” WE said in a statement.

“WE Charity counsel proposed that WE Charity Foundation be the party to the funding agreement in part to protect WE Charity’s pre-existing charitable assets, which are needed to continue to deliver WE Charity’s longstanding charitable programs. The WE Charity Board of Directors is structured to provide governance and legal oversight over the WE Charity Foundation.”

Tax filings show that WE Charity owns $43.7 million in Canadian land and buildings.