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As a minister of the Crown, Francois-Philippe Champagne, seen here on March 9, 2020, should expect scrutiny of his finances.

Adrian Wyld/The Canadian Press

Foreign Affairs Minister François-Philippe Champagne still owes Canadians answers about his financial dealings with the Bank of China Ltd.

Mr. Champagne, initially taken aback by the controversy over his indebtedness to the state-owned lender, changed tack last week. He told a parliamentary committee that he has repaid the two mortgages in full and secured refinancing from an unnamed Canadian bank.

Although Mr. Champagne is eager to put this matter in the past, there are too many lingering questions about his previous mortgages, and how his disclosures ever passed the federal ethics commissioner’s smell test. This wasn’t a manufactured scandal. His former financial liabilities also raised eyebrows in banking circles – and not just because of strained Sino-Canadian relations.

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As a minister of the Crown, Mr. Champagne should expect scrutiny of his finances. His intentions are irrelevant when it comes to matters of national security. That’s exactly what this controversy was all about and why he still needs to get down to the nitty-gritty.

China is showing no conscience in its treatment of imprisoned Canadians Michael Kovrig and Michael Spavor, and is ratcheting up its specious trade war with Ottawa. Beijing is also increasingly hostile to some of our closest allies, including Australia, and eroding democratic freedoms in Hong Kong – all in the middle of a global pandemic. Is it really a stretch to think that Beijing would use a state-owned bank to strong-arm Canada’s Foreign Affairs Minister?

As The Globe and Mail reported this month, Mr. Champagne bought two apartments in London, one in 2009 and one in 2013, while he was still an executive with British construction and engineering company Amec Foster Wheeler PLC. Together, the mortgages were initially valued at $1.7-million, and the balance owing was $1.2-million in early June. Both mortgages had 30-year terms.

Mr. Champagne has said that he had difficulty securing his desired type of loan while living in Britain on a visa. But he’s never explained how he became a customer of the Bank of China. Did he simply walk into a branch, or did someone facilitate an introduction?

These are pertinent questions because banking is all about relationships. In fact, “know your client” is part of the industry’s lexicon. That’s why it seems unusual that Mr. Champagne selected a Chinese lender that’s a bit player in Britain’s residential mortgage market instead of a High Street bank such as Barclays, Royal Bank of Scotland or HSBC.

There are plenty of legitimate reasons for customers to take their business to a foreign bank – more attractive interest rates, niche services or access to overseas markets. Mr. Champagne needs to be forthcoming with his rationale.

Although he wasn’t a politically exposed person, or PEP, when taking out those loans, he certainly put his political ambitions on the public record in 2009. That’s relevant because bankers might consider him a “prominent influential person” – an individual working in the private sector who has significant sway.

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For those reasons, the finer details of his mortgages, including interest rates, are germane. He must also disclose whether he refinanced those loans at more favourable terms after he was elected to the House of Commons in 2015.

Banks like to make their clients “sticky” through cross-selling additional products and services, so he should likewise divulge whether he forged other financial ties with the Bank of China.

Canadians are entitled to know whether the ethics commissioner took such factors into consideration when vetting Mr. Champagne’s disclosures. Exactly how exhaustive was that examination? Did anyone scrutinize his borrower risk rating, or BRR? Was he offered financing terms that were not available to other clients with a comparable BRR? How did Bank of China conduct its customer due diligence before and after Mr. Champagne became a PEP? Was his account ever flagged by the lender’s compliance department? Do we know if his customer information was ever shared with Chinese government officials? Did FinTRAC, Canada’s financial intelligence unit, have access to this information and was it ever shared with the ethics commissioner or Prime Minister’s Office?

The only way to put to rest fears that Mr. Champagne’s prior debts created “personal financial vulnerability” is through full disclosure. Conflict of Interest and Ethics Commissioner Mario Dion shouldn’t be muzzled on this matter.

The Chinese practice of guanxi involves using personal connections to forge business ties. While there’s nothing wrong with networking, guanxi is known to influence the lending decisions of Chinese banks. Canadians deserve to know if this was a factor in Mr. Champagne’s dealings with Bank of China, whether he was aware of it and if there was any implicit quid pro quo.

Keep in mind that PEPs are considered high-risk clients for banks because they occupy public roles that can be easily abused for the purposes of bribery, corruption, money laundering and terrorist financing.

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There’s something seriously wrong with our federal ethics rules if Mr. Champagne’s financial relationship with the Bank of China met with approval. At the end of the day, regulations are never a substitute for common sense.

If the Trudeau government wants to improve Canada’s standing on the world stage, its officials cannot behave like amateurs. Their comportment must be above reproach. Canada’s top diplomat cannot afford to be naive about China or dismissive of Canadians’ right to know.

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