Tuesday, January 23, 2018

Calculated Thought: Parliament conflicts of interest come to forefront

November 1, 2017 by Sean Annable, contributing writer

Finance minister Bill Morneau has been scorched in the media for not transferring his financial assets into a blind trust.

All assets held by a government minister must be disclosed to the Office of the Conflict of Interest and Ethics Commissioner. Generally, the recommendation is for government ministers to place their assets into a blind trust—a legal arrangement blocking them from selling or trading the assets while in office.

Morneau has maintained ownership of roughly one million shares in his family company, Morneau Sheppel, through a holding company, instead of transferring them to a blind trust.

Calculated Thought is a column dealing with student finances that is featured in every issue of Nexus.

When asked about the fact that Morneau still controlled the shares, current Ethics Commissioner Mary Dawson said that the rule does not apply to assets indirectly held in a holding company. She said that she flagged this provision in 2013 and recommended it be changed.

An investigation is being considered by Dawson, after NDP MP Nathan Cullen wrote to the Ethics Commissioner regarding concern that Morneau’s sponsoring of Bill C-27, a bill proposing changes to public pensions, could be a serious conflict of interest. The bill could see pension companies like Morneau Sheppel benefit from the changes. Dawson said in her written reply that the letter left her with “concerns in relation to Mr. Morneau’s involvement with Bill C-27.”

Since Morneau was elected, shares of Morneau Sheppel peaked at over $21 in September—up from $15.60 when he was appointed in 2015—meaning Morneau’s one million shares gained over $5 million in value during his time as finance minister.

When tensions heightened around the fact that Morneau’s shares were not held in a blind trust, Morneau announced he would sell the shares, saying this is “above and beyond” the ethics rules. The announcement caused the share price to fall, with his holdings losing over $400,000 in value. He has since announced that he will donate the profits made by the sale. Conservative finance critic Pierre Poilievre has questioned whether the charitable tax credit Morneau will receive from the donation will also be donated.

Now, I’m not accusing Morneau of intentionally using his position to create advantages for a corporation he owns an interest in; although that’s an important discussion, it is not the problem. The problem is that we allow our public officials to benefit from corporate interests while they are charged with serving the interests of Canadians.

The problem is that Morneau was being paid $65,000 in monthly dividends from his Morneau Sheppel shares, and he still would have been even if the shares were held in a blind trust. His salary as minister of finance is a third of that, at $21,000 per month. When a corporation is paying you three times the amount of your government salary, isn’t that in itself a conflict of interest?

The problem is that through a loophole, our minister of finance was allowed to control and sell those shares, which is exactly what the blind trust is supposed to prevent from happening.

Even though Morneau is trying to right this wrong, there may soon be an opening in Trudeau’s cabinet.

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