Lib­er­als un­der fire over ethics ‘loop­hole’

Trudeau re­fuses to name min­is­ters hold­ing as­sets out­side blind trust


OT­TAWA— The op­po­si­tion says a cloud of sus­pi­cion lies over the en­tire fed­eral Lib­eral cabi­net with rev­e­la­tions that a hand­ful of min­is­ters in­di­rectly hold as­sets out­side a blind trust just as Fi­nance Min­is­ter Bill Morneau does.

Prime Min­is­ter Justin Trudeau re­fused sev­eral de­mands by the op­po­si­tion to iden­tify the min­is­ters, say­ing that crit­ics are sling­ing mud be­cause they can­not crit­i­cize the gov­ern­ment’s eco­nomic track record.

How­ever, late Mon­day, a se­nior gov­ern­ment of­fi­cial told the Star that the num­ber is two: Morneau and Jus­tice Min­is­ter Jody Wil­son-Ray­bould.

“From my un­der­stand­ing, there is no min­is­ter who owns or con­trols a pri­vate cor­po­ra­tion for the pur­pose of hold­ing con­trolled as­sets, so be­ing in the same po­si­tion as Min­is­ter Morneau, with­out hav­ing separately a blind trust be­ing in place,” said the of­fi­cial, speak­ing on con­di­tion of anonymity.

How­ever, Wil­son-Ray­bould doesn’t have a blind trust, an ar­range­ment whereby some­one’s as­sets are man­aged by an in­de­pen­dent body as a way to pre­vent a con­flict of in­ter­est. Her of­fice said Wil­son-Ray­bould does not hold any con­trolled as­sets in the man­age­ment con­sult­ing com­pany KaLoNa, and that Daw­son told her “that given the na­ture of her hold­ings, a blind trust wasn’t even an op­tion.”

On Daw­son’s ad­vice, Wil­son-Ray­bould has not been “ap­prised of the fi­nan­cial and man­age­ment de­ci­sions of the com­pany in which she holds a sig­nif­i­cant in­ter­est,” and any pub­licly traded shares once held by the com­pany were sold in April 2016.

The min­is­ter does, how­ever, have an ethics “screen” to keep her hand out of any mat­ters that re­late specif­i­cally to First Na­tions clients of the pri­vate man­age­ment con­sult­ing com­pany that she and her hus­band, Ti­mothy Ray­bould, own and of which he is pres­i­dent.

Af­ter two weeks of dodg­ing a di­rect an­swer to ques­tions about whether he held any other in­di­rectly con­trolled as­sets aside from Morneau She­p­ell shares, the fi­nance min­is­ter’s of­fice fi­nally told the Star the an­swer is no. But the con­tro­versy is not wan­ing. The House of Com­mons ethics com­mit­tee voted Mon­day to study the Con­flict of In­ter­est Act and in­vite Ethics Com­mis­sioner Mary Daw­son to dis­cuss her rec­om­men­da­tions from 2013, when she pro­posed clos­ing a loop­hole in the leg­is­la­tion that al­lows min­is­ters to own pub­licly traded se­cu­ri­ties with­out a blind trust if they are held in­di­rectly.

New Demo­crat MP and ethics critic Nathan Cullen also wanted to in­vite Morneau to “ex­plain de­ci­sions he has made” in re­la­tion to the Act, but the Lib­eral-con­trolled com­mit­tee did not ac­cept that por­tion of his mo­tion.

When asked if he would act on Daw­son’s pre­vi­ous rec­om­men­da­tion and change the law, Trudeau said late Mon­day he’s al­ways “look­ing for ways” to raise the bar on ac­count­abil­ity, open­ness and trans­parency, but he said the ethics com­mis­sioner is there to en­sure that ev­ery­one fol­lows the rules, and Cana­di­ans should have con­fi­dence in her.

The Globe and Mail re­ported Mon­day that Daw­son’s of­fice con­firmed fewer than five cabi­net min­is­ters cur­rently hold con­trolled as­sets in­di­rectly.

Daw­son’s of­fice re­fused Mon­day to clar­ify fur­ther or to ex­plain the ra­tio­nale for keep­ing se­cret the num­ber or their names.

“We will only say that fewer than five min­is­ters cur­rently hold con­trolled as­sets in­di­rectly and that they are not re­quired to di­vest them (ei­ther by plac­ing them in a blind trust or sell­ing them in an arm’s-length trans­ac­tion),” said Daw­son’s spokesper­son, Marie Danielle Va­chon.

The Star polled each mem­ber of Trudeau’s cabi­net Mon­day, ask­ing about the sta­tus of their per­sonal fi­nan­cial hold­ings and whether they were one of the min­is­ters iden­ti­fied by Daw­son as con­trol­ling as­sets in­di­rectly.

Nat­u­ral Re­sources Min­is­ter Jim Carr told re­porters on Par­lia­ment Hill that he does not have in­di­rect as­sets. Nor does Pub­lic Safety Min­is­ter Ralph Goodale, ac­cord­ing to his of­fice.

Hardly any other min­is­ters re­sponded to the Star in de­tail and sev­eral — in­clud­ing Sta­tus of Women Min­is­ter Maryam Mon­sef, Vet­er­ans Af­fairs Min­is­ter Sea­mus O’Re­gan, Sports and Dis­abled Per­sons Min­ster Kent Hehr, Lawrence Ma­cAulay, Min­is­ter of Agri­cul­ture, and Carla Qual­trough, min­is­ter of pub­lic ser­vice and pro­cure­ment — replied with the same re­sponse, word for word — a clear ef­fort at mes­sage con­trol.

“What Cana­di­ans ex­pect from me is to co-op­er­ate with the com­mis­sioner and her of­fice, and fol­low all her rec­om­men­da­tions and guid­ance. That is ex­actly what I have done and will con­tinue to do — and the same ap­plies to all mem­bers of par­lia­ment,” Gov­ern­ment House Leader Bardish Chag­ger told the Star through a spokesper­son.

Morneau re­sponded to in­tense po­lit­i­cal pres­sure by promis­ing to put his $20-mil­lion worth of Morneau She­p­ell shares in a blind trust, even though two years ago Daw­son told him it was not re­quired by the law. How­ever, that process has just be­gun and could take weeks. The New Democrats and Con­ser­va­tives pressed Trudeau Mon­day to iden­tify the other cabi­net min­is­ters they charged were us­ing a “loop­hole” to main­tain con­trol of their in­vest­ments.

“It is in­cred­i­bly im­por­tant to know who th­ese cabi­net min­is­ters are. Like the fi­nance min­is­ter, they could be prof­it­ing from in­vest­ments and stocks while mak­ing de­ci­sions that could im­pact the value of their own as­sets,” said Con­ser­va­tive Leader Andrew Scheer.

“If the prime min­is­ter is so sure and so proud that they are fol­low­ing all the rules, why will he not just tell us who they are?”

Trudeau said his MPs “fol­low the rules” set out by Daw­son, and the Lib­er­als were fol­low­ing the same prac­tices fol­lowed by the Con­ser­va­tive gov­ern­ment they re­placed.

All MPs are re­quired un­der a code of ethics to con­fi­den­tially de­clare to Daw­son’s of­fice all of their as­sets, in­clud­ing in­vest­ments in pub­licly traded se­cu­ri­ties, val­ued at more than $10,000.

Only sum­mary dec­la­ra­tions are made pub­lic.

How­ever, min­is­ters, other se­nior gov­ern­ment of­fi­cials such as deputy min­is­ters, and cabi­net ap­pointees face stricter re­quire­ments un­der the Con­flict of In­ter­est Act that states “that any such as­sets, ir­re­spec­tive of their value, must be di­vested by ei­ther the es­tab­lish­ment of a blind trust or by way of sale at arm’s length.” In other words, you can’t sell shares to a fam­ily mem­ber or friend.

The only other — and best — shield against po­ten­tial con­flicts in Daw­son’s view are “screens,” ba­si­cally, a top min­is­te­rial aide or deputy min­is­ter keeps the min­is­ter out of dis­cus­sions or writ­ten com­mu­ni­ca­tions about ar­eas in which he or she could face a po­ten­tial con­flict of in­ter­est.

How­ever, there are doubts whether such a con­flict screen worked for Morneau, as Daw­son is look­ing into his in­volve­ment in tabling a pen­sion re­form bill, Bill C-27, which the op­po­si­tion says could ben­e­fit pen­sion man­age­ment com­pany Morneau She­p­ell di­rectly.

The gov­ern­ment says it was a law of “gen­eral ap­pli­ca­tion” to all com­pa­nies.

As a re­sult of Daw­son’s ad­vice, Morneau con­tin­ued for the past two years to in­di­rectly hold a mil­lion shares in Morneau She­p­ell be­cause they were con­trolled by a num­bered cor­po­ra­tion in Al­berta he set up in 2005, that was in turn di­rected by an On­tario cor­po­ra­tion he owned.

Only un­der a firestorm of po­lit­i­cal crit­i­cism did he of­fer to fol­low the prime min­is­ter’s lead and put all those shares in a blind trust.

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