POLITICS
08/10/2020 17:40 EDT

Tories Accuse Liberals Of Ethical Breach With Rent-Relief Program

Conservatives are drawing parallels between the decision to have the CMHC run the program and the WE controversy.

The Canadian Press/Natahn Denette
The federal Liberal government is defending its decision to have the Canada Mortgage and Housing Corp. oversee a rent-relief program for small businesses struggling because of the COVID-19 pandemic. CMHC president Evan Siddall speaks to the Canadian Club of Toronto, in Toronto on June 1, 2017.

OTTAWA — A quiet choice this spring to have the Crown corporation responsible for helping Canadians obtain affordable housing run a commercial rent-relief program during the COVID-19 pandemic has become the latest front in a war between the Liberal government and opposition.

Opposition parties are trying to draw parallels between the decision to have the Canada Mortgage and Housing Corp. run the program and the WE controversy, arguing both involve ethical breaches at the highest levels of the Liberal hierarchy.

That is because the CMHC ended up contracting out administration of the Canada Emergency Commercial Rent Assistance program to a mortgage lender where the husband of Prime Minister Justin Trudeau’s chief of staff is a senior executive.

That contract with MCAP was initially worth $56 million when the rent-relief program was launched in May and later expanded to $84 million in July.

The Liberals are pushing back against opposition allegations of unethical conduct as well as comparisons with the WE controversy, saying it followed the rules when it came to MCAP and that CMHC alone made the decision to have the company run the program without any political involvement.

The root of the dispute goes back to April 24, when Trudeau announced Ottawa had reached an agreement in principle with all provinces and territories to implement the rent-relief program, which promised to reduce the rent for small businesses by 75 per cent through subsidies and loans to their landlords.

Trudeau at the time said the CMHC would administer the program, a decision the Liberals are now defending. Finance Minister Bill Morneau’s spokesperson Maeva Proteau says the Crown corporation was considered the best fit because it deals with mortgages and has the best understanding of Canada’s real-estate market.

“In consultation with the Department of Justice it was determined that CMHC was able to make payments without requiring new legislation that would have further delayed roll out,” Proteau said in a statement, adding it also had experience delivering a program that involved working with the provinces and territories. 

WATCH: Crisis Management: Rent relief program ‘was terribly constructed.’ Story continues below.

But then CMHC, which describes its singular mission as “to make housing affordable for everyone in Canada,” outsourced administration of the program. According to CMHC spokesperson Audrey-Anne Coulombe, that was because it did “not have the internal capacity to stand up the program in short order.”

That should have been obvious to the Liberals from the start, say the Conservatives, who argue the program should have been given to the Canada Revenue Agency. It is already managing a variety of support programs related to the COVID-19 pandemic, such as the federal wage subsidy.

The Conservatives say that would have also prevented the CMHC outsourcing the rent-relief program to MCAP, the Toronto-headquartered mortgage lender that hired Robert Silver as an executive vice-president in January. Silver is married to Katie Telford, Trudeau’s chief of staff.

The Liberals and CMHC say the Crown corporation awarded MCAP the contract on its own, independent of any political involvement.

Coulombe said the CMHC reached out to two financial institutions with experience dealing with commercial mortgages and asked for proposals. She said MCAP’s proposal was stronger, and cost less. She said the second company told the CMHC it would still be prepared to support the program if it needed a back-up plan.

The Prime Minister’s Office has also released emails it says show Telford consulted with federal ethics commissioner Mario Dion in January before Silver was hired by MCAP.

Trudeau spokesperson Alex Wellstead said Dion advised no additional measures were needed.

“However, out of an abundance of caution, Ms. Telford implemented a voluntary conflict screen at that time,” Wellstead said. “This screen applies to anything related to MCAP and it has been diligently followed since it was implemented. Ms. Telford has not been involved in any discussions related to MCAP.”

The Conservatives nonetheless say they want answers.

They are also comparing the issue to the government’s ill-fated decision to have the WE Charity run a student-volunteer program during the COVID-19 pandemic. Dion is now investigating whether Trudeau and Morneau violated conflict-of-interest rules over the agreement, which was cancelled in early July, due to connections to WE.

“Our economy will take a $100 billion hit this year, and what is the prime minister focused on?” Conservative finance critic Pierre Poilievre said Sunday in Ottawa. “Not on getting Canada through this crisis or rebuilding our economy, but on helping his friends, helping his cronies.”

Trudeau has been found to have violated the Conflict of Interest Act twice before.

The first time was for accepting two paid family vacations on the private island of the Aga Khan, and the second was for improperly pressuring Jody Wilson-Raybould, who was the attorney general, to halt the criminal prosecution of SNC-Lavalin.

Meanwhile, the rent-relief program has been criticized for falling short in meeting the needs of small businesses, many of which are struggling to survive due to the pandemic-related shutdowns.

The Canadian Federation of Independent Businesses, which represents such companies, says only 20 per cent of its members felt the program was helpful.

“It’s not working for anyone — tenants or landlords — yet no major changes have been made to the program since it was announced, beyond an extension to July and August,” said CFIB president Dan Kelly, who has proposed a number of amendments to make it more accessible to companies.

This report by The Canadian Press was first published Aug. 10, 2020.