ME Charity Inc. is a non-profit Canadian corporation that was founded in 2007 by two brothers, Matt and Nat Burger. Its mission is to encourage youth development and provide volunteer opportunities. By 2020, it was enjoying great success. There were volunteer trips to Kenya to build schools; an annual “ME Day” event in Toronto that attracted celebrity speakers like Ryan Reynolds and Justin Bieber; and many large corporate sponsors including Telus and Cadbury who donated millions of dollars per year in exchange for charitable tax receipts. In 2020, COVid hit Canada. 

The federal government decided to put a youth program into place that would provide volunteer opportunities for youth. They needed a third party to administer the program, and ME was lucky enough to be chosen as the administrator, meaning that they could collect about $10 million in fees and expenses. It turns out that the federal Minister of Finance, who was going to be in charge of the program, was a personal friend of the Burger brothers. It also turns out that the Prime Minister, his wife and his mother, had previously been paid significant amounts totalling over $250,000 to speak at ME Day events over the years. There were no other organizations considered to run the COVid program, ME was simply chosen without any competition. 

Cadbury was going to sell chocolate bars as part of the COVid program, meaning an increase in sales and free marketing and publicity. Telus was going to be the exclusive cell phone provider to all youth who were part of the program. In addition, not only was there no clear indication of what ME was going to do with the $10 million, but some suspicions about whether all of the charitable donations received in past years had actually been spent on charitable endeavors like building schools in Africa, or were instead being spent on items like the salaries of Matt and Nat Burger (including perks like flights and accommodation in Davos, Switzerland to attend the annual World Economic Forum), or paid to speakers including the Prime Minister, his family, and various other celebrities. ME’s Board of Directors approved all financial statements prepared by the CFO, as well as the annual operating budget which included all salaries and expenses.

 QUESTION: Analyze the fact situation with references to the similar case of WE Charity in order to determine potential risks and liabilities for all parties involved, including from a corporate governance point of view. [For background, you can refer to the House of Commons Ethics Committee Report, Questions of Conflict of Interest and Lobbying in Pandemic Spending, available at https://www.ourcommons.ca/DocumentViewer/en/43-2/ETHI/report-2/page-48

Answer rating: 100% (QA)

The fact situation described presents several potential risks and liabilities for all parties involved including from a corporate governance point of view Drawing parallels with the case of WE Charity ... View the full answer