Despite conflict-of-interest claims, ethics commissioner not examining Morneau over tax reforms

While the heated debate over the government’s tax changes carries on in Parliament, the ethics watchdog is keeping its distance — at least for now — from allegations by Conservative MPs that Finance Minister is putting himself in a conflict of interest.

The Morneau family business, , is one of the major pension management firms in the country. The opposition has been increasingly citing it as an attack line in the tax debate, claiming it will ultimately benefit from the proposed reforms on tax planning through private corporations.

A spokesperson for Ethics said they are monitoring the situation, but the office doesn’t see the need to formally investigate the matter.

Ethics Commissioner Mary

“There does not appear to be reasonable grounds at this time for the Commissioner to launch an examination under the Conflict of Interest Act or an inquiry under the Conflict of Interest Code for Members of the House of Commons,” said Jocelyne Brisebois.

She said the office generally does not investigate “if there is no specific information to suggest that a provision of the Act or the Code may have been contravened.”

Poilievre, the Conservative finance critic, has often brought up the conflict-of-interest concerns during question period, but said the party hasn’t filed a formal complaint.

“We are considering a complaint to the ethics commissioner but we’re still in the information-gathering phase,” he said.

Conservative MP and finance critic Pierre Poilievre is applauded by fellow MPs during question period in the House of Commons on Parliament Hill in Ottawa on Wednesday, Sept.27, 2017.

The most frequent accusation made against Morneau is that the proposed restrictions on keeping money inside private corporations will prompt more people to take out individual pension plans, of which Morneau Shepell is one of the largest providers in the country.

Morneau has previously this allegation “absurd,” saying it’s a tiny proportion of the company’s business. The National Post has also reported that finance officials have been urging the government to make these reforms for years, well before Morneau was named finance minister.

This week the Conservatives brought up another area where Morneau could be in a conflict. They noted that Morneau Shepell has a subsidiary registered in Barbados, where there are rock-bottom corporate tax rates, and the government has indicated it will soon review the treaty that allows Canadian companies to benefit from these low rates.

Over the past few months, the tax debate has brought closer scrutiny on Morneau’s relationship to the company he ran before getting elected in October 2015. He resigned from all positions upon taking public office, but it is unclear how large his ownership stake in Morneau Shepell remains today.

At the time of his election, publicly viewable documents showed that an Alberta numbered company controlled by Morneau owned more than two million shares of Morneau Shepell, worth more than $30 million. Morneau still reports that numbered company on his ethics disclosure form, but his office will not comment on his current shareholdings beyond noting that he has complied with all of the rules for a minister’s investments.

Those rules state that a minster must divest assets that could be affected by government decisions, by either selling them in an arm’s-length transaction or placing them in a blind trust.

A Morneau Shepell spokesperson said that “since the time Bill Morneau’s shares were placed in a blind trust in 2015, we have no knowledge of whether or not the blind trust continues to own shares in Morneau Shepell.”

When Morneau took office, a conflict-of-interest screen was put in place that obligated Morneau to “abstain from any participation in any matters or decisions, other than those of , relating to Morneau Shepell Inc. or its subsidiaries, affiliates and associates.”

Critics point to the “general application” clause as a loophole in Canada’s conflict-of-interest rules that allows a minister to continue engaging in almost all discussions that could affect the named company.

“Ninety-nine per cent of the decisions that they make as ministers are matters of general application,” said Duff Conacher, the co-founder of Democracy Watch. He has an ongoing Federal Court challenge of these screens as ineffective, and argues that handing out contracts or hiring staff would seem to be the only decisions that don’t fall under general application.

“It’s a gigantic loophole that means the Conflict of Interest Act should really be called the Almost Impossible To Be In A Conflict Of Interest Act.”

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