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EXCLUSIVE: Morneau using ethics loophole to maintain ownership of shares in family business
OTTAWA -- Finance Minister Bill 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, CTV News has learned.
Morneau has been able to do so by using a loophole in the ethics law that Conflict of Interest and Ethics Commissioner Mary Dawson says she flagged long ago.
Dawson first confirmed on CTV’s Power Play that Morneau does not directly own the shares -- instead, he owns them indirectly through a holding company.
“He doesn’t hold them, the corporation holds them, that’s the legal entity,” Dawson told CTV News in a subsequent interview.
The confirmation comes after a day of questions to the government over potential conflicts of interests as a result of Morneau’s cabinet portfolio and his personal finances.
Securities filings accessed by CTV News show that he owned as many as two million shares in Morneau Shepell in 2011 -- today worth more than $40 million, through a numbered company he set up in Alberta.
Morneau personally holds a one third stake in the Calgary-based company, with the remaining two thirds owned by another numbered corporation in Ontario that Morneau solely owns.
Six weeks before the 2015 election, Morneau's wife Nancy McCain was made director of the Ontario holding company according to its corporate filings. She also received employment income from the Alberta corporation, according to the ethics disclosure he filed with Dawson.
Generally, as the law operates now if someone has stock, it’s a “controlled asset” and upon becoming a public office holder would be required to either divest or put it in to a blind trust. However, shares that are held by a corporation are not considered to be directly held by the individual.
Dawson says she interprets the law to refer to shares that are held directly, and not those held indirectly, as is the case with Morneau. This loophole is something she’s advocated to have amended in the past, to count both shares directly or indirectly held.
“This provision has sat there since I came in. I made a recommendation in 2013 that it be adjusted and it wasn’t, so my job is to fulfill the will of Parliament on what the rules are.”
When he took the Finance minister position, Dawson set up an ethics screen managed by his chief of staff to keep Morneau from getting involved in government business that could affect the company, but his continued ownership of the giant HR firm creates numerous conflicts of interest, the opposition charges.
NDP ethics and deputy finance critic Nathan Cullen said this shows that the Conflict of Interest act needs an overhaul, and that it’s time for Morneau to lay everything on the table.
“If this isn’t a conflict of interest, then almost nothing is,” he said. “He’s still getting the benefit and he’s using his public office to get that benefit and that is wrong no matter which way you interpret.
Conservative finance critic Pierre Poilievre told CTV News that he finds it ironic that after going after business owners for tax loopholes, Morneau has been using one to get around having to divest or put his assets in a blind trust.
“The fact of the matter is Bill Morneau is the nation’s top financial decision maker and he owns tens of millions of dollars in shares in his family business, which is involved in financial services and pension administration. There are obvious problems and Mr. Morneau is failing to live up to the highest ethical standards here,” said Poilievre.
Earlier Tuesday, Dawson acknowledged that she didn’t advise Morneau against establishing a blind trust for his assets, just that it was not necessary to do so, though now she says perhaps setting up a blind trust anyways is something people in the future will likely consider.
“Hindsight is always very valuable,” said Dawson.
Morneau's office said Tuesday night that he has followed all the advice the ethics commissioner gave him. Today he wrote to her saying he's willing to meet and discuss putting his assets in a blind trust.
“Over the last two years my family and I have placed our trust in you, and we have the utmost confidence in the recommendations you put forward. I have taken great care to follow them diligently. However, as you know, these recommendations have recently been the subject of increased public scrutiny, and I am writing to seek further guidance in this matter. I would ask that we meet again to discuss the guidance you have provided and the assets, holdings and disclosures I have,” Morneau’s letter to Dawson said.