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Minister of Finance Bill Morneau stands during question period in the House of Commons on Oct. 23, 2017.Sean Kilpatrick/The Canadian Press

The Trudeau Liberals used their parliamentary majority Tuesday to defeat an NDP motion on closing a loophole that allowed Finance Minister Bill Morneau to retain close control over a significant stake in his family company even as he ran a department with power to affect the fortunes of Morneau Shepell.

The Liberals also continued to dodge questions on whether Mr. Morneau recused himself from internal discussions on Bill C-27, legislation that opposition parties say could be expected to benefit Morneau Shepell, one of four major firms in Canada's human-resources and pension-management sector.

Read more: Liberals hope modest fiscal package will make up for everything else

As The Globe and Mail first reported last week, Mr. Morneau ran the Finance Department for nearly two years without putting his substantial assets into a blind trust – as Justin Trudeau did for his family fortune, a move that the Prime Minister holds up as the gold standard for avoiding conflicts of interest in federal politics. After days of defending his conduct, the Finance Minister last Thursday reversed course and pledged to sell his remaining one million shares in Morneau Shepell and put all other assets in a blind trust.

The NDP motion, which also called on Mr. Morneau to apologize for his conduct, drew the support of the Conservatives, the Official Opposition, but was easily defeated 163-131 by the Liberal majority in the Commons.

The motion called for the immediate closing of "loopholes in the Conflict of Interest Act as recommended by the Conflict of Interest and Ethics Commissioner, in order to prevent a Minister of the Crown from personally benefiting from their position or creating the perception thereof."

Ethics Commissioner Mary Dawson's office explained last week that Mr. Morneau was able to keep the shares and avoid a blind trust because he held the shares indirectly through a holding corporation.

NDP ethics critic Nathan Cullen, sponsor of the motion, criticized the Liberals for killing it.

"Every single Liberal voted against closing the ethics loophole," Mr. Cullen said. "Either they don't get it or they don't care."

While the Liberals have the votes in the Commons, Mr. Cullen argued the Finance Minister has suffered permanent political damage. He noted how guffaws erupted in the Commons on Tuesday when Mr. Morneau, during his fall fiscal update speech Tuesday, talked about helping the middle class rather than a privileged few.

"The House burst out laughing. It's hard to see how he can recover from this," Mr. Cullen said. "That is the concern they must have. Does this cloud of scandal stay over him almost regardless of what he does next. …"

Controversy over Bill C-27 continues. It would enable federally regulated businesses to create "target benefit" pension plans that lower the monetary liability for employers by shifting risk to employees.

The proposed law would require actuarial valuations every year for this type of plans, which could also mean more work for firms such as Morneau Shepell.

In the Commons on Tuesday, opposition parties continue to press the government to say whether Mr. Morneau was involved in any discussions on the legislation.

Deputy Conservative Leader Lisa Raitt noted that Mr. Morneau lobbied on behalf of targeted pensions plans when he was executive chair of Morneau Sheppell.

"When he became the minister, he actually brought legislation in to make these law. He also collected dividends from the company, because he still had shares," she told the Commons. "Given all of these conflicts around this issue, did the minister recuse himself from any of the discussions around Bill C-27?"

Mr. Morneau was not in the Commons for Question Period but his parliamentary secretary Joel Lightbound refused to answer the question, saying the minister put in an ethics screen to guard him against potential conflicts of interest.

Prime Minister Justin Trudeau accused the opposition of "torquing up insinuations with no basis" and argued that the ethics screen prevented any potential conflicts of interest.

The ethic screen called for Mr. Morneau's chief of staff to tell the Finance Minister when he had to recuse himself from discussions that involved his former company. Mr. Morneau's office said he has recused himself from cabinet discussions on two occasions but his office would not say if that involved Bill C-27.

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