Morneau cleared on two ethics complaints
Watchdog leaves decision on conflict of interest over pensions up to her successor
OTTAWA— The federal ethics watchdog has cleared Finance Minister Bill Morneau of two Opposition charges he abused his office and used insider knowledge to benefit himself and his former company.
Ethics commissioner Mary Dawson dismissed complaints that Morneau may have acted on insider information about tax changes to sell off about one million shares in advance of pending tax hikes that would hit wealthy Canadians.
She says it was clear to everyone after public statements by the government when it took power in November 2015 that it would make the tax changes, and so Morneau was not using “insider information” that was “not available to the public” when he sold a first tranche of shares then worth about $15 million. He donated the profit on his shares to charity.
Dawson also concluded Morneau was not involved in the renewal of a government contract with his former company to manage the Bank of Canada’s pension plan.
But Dawson, in her final act as the federal ethics commissioner, left Morneau’s fate hanging in a third — and potentially more politically troublesome — complaint.
It relates to whether Morneau was in a conflict of interest when he tabled Bill C-27, on pension reform, in the fall of 2016, because the bill — which has languished on the order paper and not been studied — potentially could create more business for pension management companies such as his former family firm.
Dawson’s failure to complete her investigation in that matter before her term ended Monday leaves it to her successor Mario Dion to decide whether to pursue the minister. Dion told a Commons committee in December he would consider it. The office he takes up formally on Tuesday would only say it is still “active.”
NDP ethics critic Nathan Cullen said Monday, “Our concerns remain about Mr. Morneau introducing legislation without clearing it with the ethics commissioner that would directly benefit him. The new commissioner will now be left to pick up the investigations where Ms. Dawson left off.” He added he is concerned that the incoming commissioner hasn’t pledged to do so.
In a letter to Morneau, but not released publicly by her office, Dawson rejected complaints from the NDP and Conservatives in relation to Morneau’s sale on Nov. 30, 2015 of about one million shares that he had held in Morneau Shepell — the company he built with his father, took public in 2005, and quit after he was elected in October 2015.
Dawson accepted Morneau’s argument that the government had made its intention to proceed with 2016 tax measures that hit high-income earners quite clear, and publicly so. But she archly rejects Morneau’s contention it was clear from the Liberal Party’s 2015 platform it intended to raise the income tax bracket on Canadians earning $200,000 or more, from 29 per cent to 33 per cent.
Dawson says she didn’t give “any weight” to that fact “since electoral promises are not official government matters.”
But she did put stock in public pronouncements on Nov. 4, 2015 — the day Prime Minister Justin Trudeau unveiled his new cabinet — by House leader Dominic Leblanc. Leblanc told reporters the Prime Minister’s intention was to recall Parliament on Dec. 3 in order to introduce legislation to make sure the tax changes were in place for Jan. 1, 2016.
“This was well in advance of the sale of your Morneau Shepell Inc. shares on Nov. 30, 2015, and the tabling of the Dec. 7, 2015 Ways and Means motion on this matter,” Dawson wrote.
Dawson said the law prohibits the use of insider information “which, in light of the above, was not the case in this instance. The same reasoning would apply in respect of the sale of Morneau Shepell Inc. shares by a member of your family.” Morneau’s father, Bill Morneau Sr., also sold about 200,000 shares before the tax changes were tabled that fall.
As for the other Opposition complaint that Morneau had a hand in the renewal contract for the management of the Bank of Canada’s employee pension plan, Dawson dismissed it. She writes that she reviewed documents from the bank’s lawyer and Morneau’s own submission and “I am satisfied . . . you had no involvement in the Bank of Canada’s decision of the renewal of the Morneau Shepell Inc. contract.”
“I am satisfied . . . (Morneau) had no involvement in the Bank of Canada’s decision of the renewal of the Morneau Shepell Inc. contract.” MARY DAWSON ETHICS COMMISSIONER
“For these reasons, I consider both matters closed.”
Now, a larger question remains: whether Morneau overstepped the bounds of a “conflict of interest screen” he put in place at Dawson’s request — which should have ensured his chief of staff kept him out of any dealings with policy discussions that could have benefitted Morneau Shepell. Despite that screen, Morneau was the sponsor of the bill, which allows federally-regulated workplaces to create “target benefit” pension plans that shift more risk to employees. Morneau has publicly argued it helps “all Canadians.”
Conservative finance critic Pierre Poilievre continued to slam Morneau’s “terrible judgment” and “hypocrisy.”
“This is the same minister who attacked small businesses, suggesting they were not paying their fair share,” he said.