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Results: 1 - 15 of 496
Vivian Krause
View Vivian Krause Profile
Vivian Krause
2020-07-22 12:16
Good morning, everyone. Thank you very much for the invitation to testify today, and also thank you, everyone, for the hard work you're doing on this file.
I've been following the WE Charity from afar for several years now, and over the last couple of weeks I have taken a closer look at its annual reports, website, videos, social media, press releases, financial statements and tax returns—both Canadian and U.S. tax returns. I also looked at the job ads for about 20 positions to see what type of work WE has been hiring staff to do. I have spoken with former staff who have been employed by WE. I'll just say that unless I specify otherwise, I'm referring to WE, the registered charity, when I say “WE”.
Overall, what I see is an organization that has grown fast, unusually fast, and has shifted its focus. In terms of revenue, WE Charity has soared from annual revenue of about $1 million to $66 million in the span of about 15 years. In total, I find that since 2003, WE Charity, a Canadian-registered charity alone, has reported total revenue of nearly half a billion dollars, about $490 million in revenue, and about $470 million in expenditures. That's just what WE Charity, the Canadian-registered charity, has reported.
What has surprised me is that only about one-quarter of the total revenue of WE Charity is from tax-receipted donations. What this means is that three-quarters of WE Charity's revenue is from sources that for some reason are not interested in a tax receipt.
In 2019 alone, WE Charity, according to its U.S. tax returns, was granted a total of $118 million from U.S. sources, including some very large amounts: Allstate Finance, $32 million; Microsoft, $10 million; Unilever, $10 million; Walgreens, $8.3 million; and KPMG U.S.: $4.6 million. The thing that strikes me about this list of donors who account for $118 million is that so many of them are big brands. In addition to those names that are on the list on U.S. tax returns, WE Charity also partners with the Royal Bank, Telus, Nordstrom, Holt Renfrew, Staples, DavidsTea, The Keg restaurants, Virgin Atlantic, DHL and other for-profit companies.
As I watched some of the WE Charity's videos, I was surprised to see the corporate logos of some of these companies pop up: KPMG t-shirts, Royal Bank t-shirts, the DHL delivery trucks, and so on.
Looking through the job ads, I found that WE Charity has advertised only for positions in sales and marketing. I could not find one job ad for staff in any other country. Now, that just may be the function of the ads that were available at the time. However, a couple of the ads in particular did catch my eye, and I'll give you one example. WE Charity advertised.... The description of the job states that this program between Allstate and WE Charity—and I quote—plays a vital role in Allstate's success. Then the job ad goes on to explain how “by advancing the business priorities of the corporation with reputation-building strategies”. That job ad also goes on to say that this program drives business results through improved external reputation with investors, policy-makers, media, customers, consumers and opinion leaders.
I'm almost done here.
I notice that WE has a program called “Track Your Impact”, which allows a consumer to go online and input a code when that consumer purchases a WE product. That code links the consumer to information about the village that the consumer is helping with that purchase.
That data, consumer data, is collected by WE—consumer data mostly for children, for young people. WE says, as part of their literature for this specific program, that they have almost four million people in their movement. If that’s the case, that’s a gold mine of consumer data about a highly desirable, hard-to-reach market segment—children and millennials.
Lastly, this got me thinking: What does WE do with all that data? So I read their privacy policy. I found in their privacy policy that WE clearly spells out the restrictions that WE Charity has promised to adhere to with regard to personal information. It also specifies very clearly that WE does share data with third parties. Last week I wrote to WE and asked, “Who do you share your data with? Do you share it with your corporate partners? Is that part of the reason, perhaps, big companies like Microsoft, Telus and Nordstrom are paying so much to WE?” I also asked whether WE Charity provides this data to political parties, and specifically to the Liberal Party of Canada.
This brings me to the conclusion of my opening remarks. I could say much more, but I will leave it at that for now. In summary, I think questions need to be asked about whether WE Charity is operating for purposes that are exclusively charitable, as is required by law under the Income Tax Act, or whether WE Charity is tapping into the advertising and marketing budgets of these big companies, like Allstate, that granted WE Charity at least $40 million. This of course raises a series of troubling questions about not only whether the federal government did proper due diligence, but furthermore, whether in fact the government, in awarding this contract to WE, was on the cusp of awarding a $1-billion contract to a charity that is offside of the law.
Thank you for the opportunity to testify. I'll be glad to answer any questions.
View James Cumming Profile
CPC (AB)
On corporate bankruptcies or people going into CCAA prior to bankruptcy—and for sure, creditor protection in front of bankruptcy is always the desired approach—some of the experiences I've seen, particularly when you hit a really difficult period like we're seeing right now, are that the banks won't act. If a business has zero revenue and it's struggling and it's on the bottom, you might see an uptick in action after it comes off the bottom. There's some potential to reorganize or potentially put the company up for sale or do something with it.
Do you see trends like that, from what you've seen before? Have you seen that it's not necessarily the bottom of a drop where we start to see bankruptcies, but in a rebound shortly after that period?
Elisabeth Lang
View Elisabeth Lang Profile
Elisabeth Lang
2020-07-07 18:06
I don't know if I could speak to seeing a trend in that regard.
From talking to the LIT community, I think one trend that I would note in the past few years is an increase in informal workouts, in creditors working with debtors and finding a solution. They don't necessarily need to file with my office. In that case, we don't have the data. For me, any time a company can resolve its financial issues and remain a viable going concern is great news, no matter how they do it.
View Elizabeth May Profile
GP (BC)
Oh, my heavenly days. Sorry, Mr. Chair, this never happens.
My last question would be this. Given what you're seeing happening in the pandemic, how are you monitoring the reactions from businesses? Will you be monitoring to make any kind of changes as you see upticks or responses? How responsive can your office be to changes in bankruptcy rates and stresses?
Elisabeth Lang
View Elisabeth Lang Profile
Elisabeth Lang
2020-07-07 18:17
As I mentioned, engagement with stakeholders has been one of my strategic objectives for the organization. We've increased our dialogue with the licensed insolvency trustee community significantly. This has really helped us be in touch with what's going on on the ground. That is why we were able to respond so quickly in mid-March, and we would continue to do that.
I have biweekly calls with the Canadian Association of Insolvency and Restructuring Professionals. We get a sense of what the needs are and what the challenges are. Licensed insolvency trustees across the country never hesitate to have productive and innovative solutions for our office on how we can help to improve things.
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2020-07-07 18:35
It's funny. I have a local judge who just moved into the house next to me, so maybe I'll chat with him about it.
I have an additional question that I'm quite concerned about. I think one of the reasons why you haven't seen the dominoes start falling is that there has been a mix of emergency supports that are landing in the right place. There have been, as you pointed out, informal dealings, as there's an incentive for a creditor not to force a debtor into bankruptcy, because they might come out on the other side.
I want to make sure that we don't get into the business of throwing good money after bad if there are companies that are not going to come through this. I would rather deal with that now than spend a lot of taxpayers' money to float structurally unsound companies through a difficult period. Are there particular factors that you've observed historically that would be indicators as to when a company is likely to succeed in a financial storm like this?
Elisabeth Lang
View Elisabeth Lang Profile
Elisabeth Lang
2020-07-07 18:36
That wouldn't be data we would have, because we have the companies that have filed a formal proceeding, although, as I mentioned, many of those are filing, doing a restructuring and coming out the other end. That would certainly be a good question for policy-makers to look at.
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2020-07-07 18:37
I'm curious. One of the things I've seen from commentaries in the news on the issue of bankruptcies is about what we're likely to see. Perhaps when the emergency supports are no longer in place or when taxes become due, or whatever the case may be, when we have a clearer picture of what “normal” looks like, to use your analogy, that's when we'll have a handle on whether things have gone wrong or not.
Certain sectors have been hit very hard. I'm thinking of restaurants, for example, and tourism operators. I've seen some concerns raised about the potential for significant liquidation efforts across entire industries, essentially, all at the same time. Have you ever seen an instance where an entire sector faced extraordinary pressure that led to difficulties in the liquidation process?
Essentially, I'm trying to find all the things that could go wrong should there be an uptick in bankruptcies. I'm wondering if you've seen them before and what lessons there may be. Have you ever seen anything like that on the liquidation side of things?
Elisabeth Lang
View Elisabeth Lang Profile
Elisabeth Lang
2020-07-07 18:38
I haven't studied my historical stats that closely to be able to say that I have, but I would say that I don't think a specific sector suffering inordinately versus other sectors would have an impact on our capacity to handle the insolvency filings.
View Peter Julian Profile
NDP (BC)
Thank you very much.
That's reassuring because this has been something that needs to be thoroughly examined, particularly given the significant bank profits we've seen so far in the pandemic.
Another program that raises real concerns is the LEEFF program. Of course, we've seen, under this current government, loan forgiveness. Loans are granted, and then, all of a sudden, they're magically forgiven, which means that they are grants, but it's not done in a forthright transparent manner. It's done in two stages.
We saw the current government forgiving $196 million in loans earlier this year. They are not releasing the name of the company, the corporation, that benefited from that.
What are the difficulties when you have two stages, where first the loan is granted, and then, magically, the loan is forgiven? In terms of auditing and following up, and making sure the taxpayers' interests are protected, what are the challenges around that sort of two-stage process, which many people fear will be part of the LEEFF program, where first the loan is granted and then it is magically forgiven?
Karen Hogan
View Karen Hogan Profile
Karen Hogan
2020-06-22 12:43
You raise a very important question, as we try to tackle the timing of when we might want to do certain audits, when there is a program that has a two-stage tiering to it, sort of an eligibility criteria and then, depending on whether or not certain factors are met further down the line, there's a forgiveness or a repayment that's needed.
Those are the kinds of programs that maybe we can look at in the beginning, and then we would have to pause and provide you with some information on perhaps how they were designed and how the funds were rolled out, but we couldn't really talk about the intended outcomes until later on in time, when stage two comes out. It presents a challenge from that perspective when you're looking for whether or not there is value for money in what occurred.
From a financial perspective, it's a completely different audit that would impact the financial statements of the entities or the departments that are running that program, so that's a whole other different set of challenges that we would have to examine and look at every year. The complexity of a program adds to the time and effort needed to audit, which again adds to the reasons we need sufficient funding in order to have the right amount of auditors on the ground, looking at programs from financial angles as well as performance angles.
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2020-06-18 16:04
Excellent.
This is for you, Ms. Cooper. I was fascinated by your testimony. There were a number of pieces that jumped out, so thank you for being here.
One of the points you made was that the federal government should be looking to support viable businesses that will essentially be able to stand on their own two feet at the back end of this pandemic. We don't want to throw good money after bad. I completely agree. However, there is a part of me that wonders if the federal government is really the body to pick winners and losers because, quite frankly, the private sector can surprise people. There is an entrepreneurial spirit when people have their own skin in the game that oftentimes is more effective than policy-makers sitting in a boardroom in Ottawa.
I'm curious. How can we conduct an exercise that will give us confidence that the support that we're putting out there into the marketplace is actually reaching viable businesses and not just delaying the inevitable for businesses that weren't structurally sound going into this pandemic?
Sherry Cooper
View Sherry Cooper Profile
Sherry Cooper
2020-06-18 16:05
Exactly, and that's the great conundrum. I don't believe that it should be politicians or bureaucrats in Ottawa who should be making those decisions. Among businesses themselves, in even the hardest hit sectors, some will be big winners because they're making adjustments. There are so many examples of businesses learning to do business remotely, or to provide safe services and goods in a very user-friendly way, and they are going to outperform. That's going to be different for every sector of the economy. You can't have blanket money giveaways, and I do believe that there ought to be private-public coordination in how these assessments should be made.
As an economist, I believe that we need to let the markets work, and that means that if you aren't creditworthy, you shouldn't be able to borrow money. If you aren't creditworthy for a moment in time, for a short period, when you're cash strapped for very good reasons, and you've been forced not to open your doors and your fixed costs are being paid, that's one thing. But unfortunately, what this pandemic has done is shown us who the weak players were to begin with, and many of those people will not reopen their doors; nor should we subsidize them to make them do so, because it's an inefficient allocation of resources and very unfair to the taxpayer.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
I should note that the Conservative motion from a few weeks ago, which was not voted on in Parliament, would have only given us three and a half hours for discussion of the estimates tomorrow night. We actually have more because of the NDP motion than we would have had with the Conservative motion. I think that's an important note to make.
Thank you very much to our witnesses for being here. We deeply appreciate your availability. We hope that your families are safe and healthy.
I have two questions to start for the Ministry of Finance.
First off, are there any projections in terms of corporate loan writeoffs for this year? In 2018, the federal government wrote off about $2.6 billion in corporate loans. Earlier this year, 2019-20, they wrote off $196 million. We still don't know which company received that benefit.
The second is on the amount, the line item in the main estimates around managing government assets including the Trans Mountain pipeline. We are losing $150 million a year with Trans Mountain. Is there a projection within the Ministry of Finance for the construction costs currently?
Has it been updated? The last one we had from the company is way out of date. The costs have skyrocketed since then.
Has the Ministry of Finance done an estimate of the cancellation costs? If we cancel the project right now, how much would Canadians save?
Those are my questions to start.
Thanks for being here.
Evelyn Dancey
View Evelyn Dancey Profile
Evelyn Dancey
2020-06-16 17:36
Sure.
On the first part of the question, in respect to corporate loan writeoffs, the Department of Finance does not extend loans directly to companies, to my awareness. That information wouldn't be reflected in our individual departmental reporting.
My understanding is, for example, the financial Crown corporations or the departments that extend repayable contributions are all reporting on a departmental or organization-based basis on what their provisioning is and any breakdown of the assets for which they're responsible. I don't have that kind of estimate to offer.
In respect of the TMC entities, I know this committee had a meeting last Thursday where Mike Carter from the Canada Development Investment Corporation was present. He received a very similar question. I can reiterate his response, which continues to be the timely response, which is the public cost estimate most recently provided by Trans Mountain Corporation, which is a subsidiary of CDEV, where Mike Carter is the executive vice-president. It continues to hold as our best estimate right now of the construction costs. At this point, TMC is spending on construction, but that is actually an investment activity.
Overall, the entity is not experiencing a loss. It is making investments, however, that are using up cash from that perspective.
These estimates are disclosed through the TMC reporting as a federal Crown corporation as well as subsumed in the parent's reporting—that's CDEV's reporting.
Thanks.
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