Here's why Bill Morneau didn't sell his stock or set up a blind trust -

Here’s why Bill Morneau didn’t sell his stock or set up a blind trust

The embattled finance minister was told he didn’t technically have to, but the reason isn’t going to help him fend off critics

Finance Minister Bill Morneau appears at Commons committee for pre-budget consultations on Parliament Hill in Ottawa on Tuesday, Feb. 23, 2016. (Sean Kilpatrick/CP)

Finance Minister Bill Morneau appears at Commons committee for pre-budget consultations on Parliament Hill in Ottawa on Tuesday, Feb. 23, 2016. (Sean Kilpatrick/CP)

Bill Morneau wasn’t in the House today to face a sustained, gleeful onslaught from Conservative and NDP MPs over why, after he became finance minister, he didn’t either sell his shares in Morneau Shepell—the pension management company he built up from a family business to a major publicly traded corporation—or put his stake in a blind trust.

Those are the two options clearly spelled out in the federal Conflict of Interest Act. Morneau will remain under intense pressure to explain more precisely and publicly why, when he made the leap from business to politics, he opted for a third way of avoiding conflicts. Today he sent a letter, which he released to the media, to federal Ethics Commissioner Mary Dawson, declaring that he has followed her advice on all this “diligently,” but is open to revisiting the matter now, since “these recommendations have recently been the subject of increased public scrutiny.”

READ: Throw another minister on the bonfire: the ballad of Bill Morneau

On exactly what Dawson advised him to do with his multimillion-dollar holdings, a spokesman for Morneau told Maclean’s she sent him a private letter, dated Feb. 2, 2016, in which she stated that he did not have to set up a blind trust. Here’s the key line from Dawson’s letter to Morneau that his office provided: “Considering that you do not hold controlled assets as contemplated under section 17 of the [Conflict of Interest Act], a blind trust agreement is therefore not required under section 27 of the Act.”

Dawson’s reasons for deciding that Morneau’s shares in the company he formerly headed didn’t qualify as “controlled assets” now stands as a central mystery in this controversy. Guidelines from Dawson’s office state that controlled assets include “publicly traded securities of corporations” whose value might be “directly or indirectly affected by government decisions and policy.” That language certainly seems to cover any shares Morneau still owns in Morneau Shepell.

WATCH: Opposition parties turn up heat on Morneau

However, in an email to Maclean’s, Dawson’s office pointed to a broad exception, without commenting directly on Morneau’s specific holdings. Her communications staff confirmed that public office holders, like Morneau, must divest or place in a blind trust any controlled assets they “hold directly.” The email went on, though, to add: “This divestment requirement does not apply to any controlled assets that reporting public office holders hold indirectly, through a holding company or other similar mechanism.”

It seems likely this is why Dawson decided Morneau didn’t have to sell his shares or put them in a blind trust. But having to explain that his shares are in a “holding company or similar mechanism” is unlikely to make for compelling political rhetoric. Even Dawson doesn’t approve of the distinction existing under law. Her staff pointed out that, back when the federal Conflict of Interest Act was last reviewed in 2014, Dawson recommended that it be amended to require divestment of “controlled assets held indirectly as well as directly.”

That change wasn’t made. Morneau would probably be better off today if it had been.

UPDATE: Oct. 18: Surprisingly, Dawson’s office told Maclean’s late Wednesday afternoon that it has no written guidelines for the sort of situation facing Morneau, where the issue is the difference between directly owning so-called “controlled assets,” like shares in a public corporation, and owning them through some sort of holding company. “We do not have a guideline document relating to the…. prohibition against reporting public office holders holding controlled assets,” an official in Dawson’s office said in an email. Although the Conflict of Interest Act only refers to holding controlled assets, the ethics commission points to other federal laws that draw a distinction between assets held directly and those held indirectly.



Here’s why Bill Morneau didn’t sell his stock or set up a blind trust

  1. There is a difference between legal and ethical. Unfortunately, politicians think the Ethics Commissioner’s interpretation of legality defines ethics.

  2. I for one am grateful that the Conservative Party of Canada and Ottawa media have chosen Pierre Poilievre, an icon of integrity, honour, decency, and a member of the House Commons who represents the most elevated moral principles in service to his country to lead the crusade against Morneau.
    The contrast between Poilievre and his adversary is striking.

    • I don’t think we need give to much credit to this abrasive PR guy. Dabbling in university commerce programs is hardly any kind of experience for a person who presumes to be minister of finance in waiting. This is a guy who deliberately crashed the security gate on parliament hill (because he’s special!?). This is a guy who admitted to violating the Canada Elections Act. This is a guy who branded indigenous people as lazy. This is a guy who said Nigel Wright ‘did the right thing’. This is guy who’s Question Period bloviation provided endless comic fodder. The modern incarnation of Reform party politics known for foul language and inappropriate gestures.

  3. So we still basically don’t know the details of why Morneau’s 2.5 million shares in his (former) company were exempted from conflict of interest rules. We can only at this point *assume* it’s because they are in some sort of holding company, which may or may not be directly controlled by Morneau.

    It’s odd, to put it nicely, that *all* the details re this were not released the moment the issue was raised; especially when one considers the PM’s promises re transparency.

  4. This entire thing is a tangled mess of legal language and manipulative interpretations. Huge loopholes for people like Morneau to easily stroll through. Certainly the language of the Act must be improved otherwise only more of this will happen.

    Regarding Mr. Morneau, he should have known better. Any person that is fit to be Finance Minister would have known better. Even assets held through a holding company can still be controlled by the majority shareholder of the holding company. There is no real separation of owner and business with the use of a holding company, and so a very real conflict of interest is present.

    Now Mr. Morneau is going to grasp at pathetic excuses in a vain attempt to portray himself as a man that followed the rules. And maybe he did follow the rules to the letter of the law. But he certainly did not consider or follow the spirit of the law. Instead he used a loophole for his own personal benefit, possibly at the expense of other decent and law abiding people of our country. For that we must conclude that Mr. Morneau is no longer acceptable for the position of Minister of Finance.

  5. Too bad it’s politically unpalatable to make Ralph Goodale the finance minister and be done with it.