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.