Ethics watchdog says blind trust for Morneau’s assets ‘not required’

The federal ethics watchdog confirmed Tuesday that she advised Finance Minister Bill Morneau there was no need to put his substantial assets in a blind trust. (Photo: Bill Morneau/Facebook)

OTTAWA — The federal ethics watchdog confirmed Tuesday that she advised Finance Minister Bill Morneau there was no need to put his substantial assets in a blind trust.

“I told him that it wasn’t required,” ethics commissioner Mary Dawson said, although she acknowledged it was ultimately up to Morneau to choose how to handle his affairs.

“I took a look at what he disclosed and according to what was disclosed, and which I do for anybody, I make a judgment as to what’s necessary.”

Dawson later told CTV News that Morneau’s shares are controlled by a private corporation and not directly controlled by the finance minister. She said he didn’t technically need to divest or put the shares in a blind trust.

“He doesn’t hold them, the corporation holds them, that’s the legal entity,” Dawson told the network in an interview.

However, CTV also reported late Tuesday that it has learned Morneau continues to own shares in his family’s business Morneau Shepell through a corporate structure that keeps him from having to divest or put his shares in a blind trust.

Dawson’s confirmation came amid a continuing furor over Morneau’s personal financial arrangements, which have combined with the angry backlash to his small business tax reform proposals to leave his credibility in tatters.

So politically damaged has Morneau become that he was even asked Tuesday if the escalating ethics controversy has him reconsidering his career in politics.

“Absolutely not,” he said in French after an event in Montreal.

“I know that we still have things to do and, for me, I have a great privilege to have the opportunity to be with a team that will do very important things for people here, for the rest of our country. I would like to continue with this work.”

Rumours have been circulating around Parliament Hill for months that the wealthy former businessman is disenchanted with politics after two years in the Finance hot seat. He’s unlikely to feel more positively about politics now that the focus has shifted to his personal fortune and ethics.

He’s also under attack from both the Conservatives and NDP for revelations that he failed to disclose to Dawson a private corporation that owns a family villa in France and that he did not place his assets in a blind trust.

The day he was named to cabinet in November 2015, Morneau told CBC he had communicated with Dawson about his holdings in his human resources and pension management company, Morneau Shepell — including shares reportedly worth more than $40 million. He said he expected to put them in a blind trust, much like former Liberal finance minister Paul Martin did with Canada Steamship Lines.

However, it transpired this week that he did not put them in a blind trust. Morneau has refused to say what he’s done with his shares in the company founded by his father.

On Tuesday, Morneau asked Dawson for a meeting to discuss the recommendations she originally gave him to avoid any appearance of conflict of interest — recommendations which he said he’s followed “diligently.”

“As a result of this discussion, should you determine that additional measures — such as a blind trust — would be an appropriate course of action, I would be pleased and eager to move forward on any revised recommendations you might provide,” he wrote in a letter to the ethics commissioner.

Dawson refused to discuss Morneau’s financial holdings specifically.

However, in general terms she explained that the Conflict of Interest Act requires only that “controlled assets” — those that are directly held by a public office holder — be placed in a blind trust.

“Sometimes, the asset is not directly held and our act covers things that are directly held,” she said after appearing at a Commons committee meeting.

In his filings with the commissioner, Morneau has disclosed the existence of a family trust. Dawson said it’s possible, “depending how it’s done,” that transferring shares into a family trust might be sufficient to consider them as indirectly held assets that don’t need to be placed in a blind trust.

She acknowledged that the act could be strengthened to apply to indirectly held assets.

“It could be. I think it would catch a broader net.”

Dawson’s intervention did nothing to quell opposition attacks on Morneau for failing to place his assets in a blind trust.

New Democrat MP Nathan Cullen called on Dawson to investigate Morneau for spearheading pension reform legislation that could benefit Morneau Shepell and, through his shares, the minister himself.

“The appearance of conflict of interest in this case is worrisome, it is shocking,” said Cullen, contending that legislation will “directly benefit Morneau Shepell and directly benefit the finance minister.”

Morneau’s office has set up a conflict of interest screen, overseen by the minister’s chief of staff, to ensure he abstains from any discussions or decisions that could benefit his personal interests.

Dawson has allowed such screens for other ministers as well. But Duff Conacher, head of the ethics advocacy group Democracy Watch, said they’re meaningless because of “a huge loophole in the act” which stipulates that ministers do not need to recuse themselves from decisions that apply generally to Canadians, even if they stand to benefit personally.

Democracy Watch is challenging the legality of such screens in court.

The Conservatives demanded that Morneau publicly divulge everything he has submitted to the ethics commissioner since the Liberals took office in 2015.

In particular, Tory MP Pierre Poilievre said Morneau should disclose who controls his interests in Morneau Shepell.

“Minister Morneau has not told the nation what became of his $30 million in Morneau Shepell shares,” Poilievre said. “We’re just asking him to come clean with Canadians.”