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Prime Minister Justin Trudeau speaks to the media in Stouffville, Ont., on Monday, as Finance Minister Bill Morneau looks on. The Prime Minister placed responsibility for the lack of Mr. Morneau’s blind trust on the shoulders of Ethics Commissioner Mary Dawson.


Prime Minister Justin Trudeau is defending his Finance Minister over the ex-businessman's decision not to place his substantial wealth in a blind trust while serving in public office, saying Bill Morneau merely did as instructed by the Ethics Commissioner.

As The Globe and Mail reported on Monday, Mr. Morneau, who is among the richest members of the Trudeau Liberal cabinet, has not put any assets in a blind trust that would be beyond his reach while he is in office. Mr. Trudeau, on the other hand, has placed his family's fortune inside one – a move the Prime Minister has previously championed as a significant ethical measure.

Margaret Wente: Tax reforms, blind trusts and the 1 per cent: How it all went wrong for Bill Morneau

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Mr. Trudeau and Mr. Morneau appeared at a joint news conference in Stouffville, Ont., on Monday to announce details of a tax cut for small businesses, but a significant number of the questions from reporters focused instead on the Finance Minister's financial arrangements.

The Prime Minister intercepted most of these queries, announcing, "I'll take them."

"You have to ask a question of me first – because you get a chance to talk to the Prime Minister," Mr. Trudeau told one reporter, who said he had a direct question for Mr. Morneau. The Prime Minister later indicated Mr. Morneau could answer.

The Prime Minister placed responsibility for the lack of a blind trust on the shoulders of Ethics Commissioner Mary Dawson. "We have in Canada a Conflict of Interest and Ethics Commissioner who is mandated to ensure everyone follows the rules … I can tell you the Minister of Finance worked extensively with [the Commissioner] when he came into this job and followed all her recommendations."

Mr. Morneau is facing a separate accusation of conflict of interest even as controversy lingers over his lack of a blind trust.

The New Democratic Party has written to the Ethics Commissioner, asking her to investigate why Mr. Morneau is allowed to sponsor legislation, Bill C-27, that makes significant changes to pension rules that, it argues, could reasonably be expected to benefit the human-resources company he once helmed, Morneau Shepell.

According to Canadian securities regulators' disclosure system for corporate insiders, Mr. Morneau owned 2.07 million common shares in Morneau Shepell at the time of the 2015 election – shares that would be worth more than $43-million today. He won't say whether he still owns these shares.

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In his filings with the federal Ethics Commissioner, Mr. Morneau disclosed the existence of one family trust, the Morneau-McCain family trust, but also said he is a potential beneficiary of the Nancy McCain 2013 Family Trust. Mr. Morneau, who had a successful career on Bay Street, married into far bigger money through his spouse, Nancy McCain, a member of the family that owns McCain Foods.

When federal politicians take office, they normally face two options: either place their directly controlled assets into a blind trust beyond their reach to insulate themselves from conflict-of-interest allegations or sell those assets in "an arm's length transaction."

Neither Ms. Dawson's office nor Mr. Morneau will explain why the Finance Minister has avoided a blind trust that other public office holders have been required to set up.

He said Monday that he would put assets in a blind trust in the future if Ms. Dawson advised him to do this.

The Conservatives are using their opposition day in the Commons this week to table a motion calling on Mr. Morneau to disclose all the documents he provided to the Ethics Commissioner. While the Liberal-dominated Commons can easily defeat the motion, it holds the potential to embarrass Mr. Morneau.

Conservative finance critic Pierre Poilievre said even when he held a junior position in the Harper government, the Ethics Commissioner instructed him to put assets in a blind trust.

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"When I was a parliamentary secretary, I needed a blind trust just for my meagre stock portfolio," he recalled. He said he is puzzled as to why Mr. Morneau won't divulge what happened to his Morneau Shepell shares. "The very least we can ask of him is to tell us if he still owns them."

The New Democratic Party contends that if Bill C-27 were to become law, Morneau Shepell would "significantly benefit in additional business and revenue," NDP ethics critic Nathan Cullen wrote to the Ethics Commissioner.

The NDP argues that Morneau Shepell, as one of Canada's leading pension and human-resources management firms, could be expected to receive a boost in business from C-27 because existing clients might want to switch to target-benefit plans from defined-benefit plans. Also, the party says, the new legislation would require actuarial valuations every year, which could also mean more work.

Responding to the NDP's allegations, Mr. Morneau said in a statement that he follows Ms. Dawson's advice on how he conducts himself. "I have been working with the Ethics Commissioner from my first day in office … I am willing to take any further steps to avoid conflicts, or any perception of conflict, as deemed appropriate."

His office said a conflict-of-interest screen is in place to make sure Mr. Morneau abstains from any decision-making or discussion where the subject matter affects his personal interests. This means his chief of staff is responsible for ensuring this screen operates properly.

Democracy Watch, a political-accountability advocacy group, is currently challenging the use of conflict-of-interest screens in court, arguing that they are illegal because federal law does not provide for these mechanisms and because they allow public-office holders to skip having to disclose each time they encounter a conflict of interest.

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Duff Conacher, a founder of Democracy Watch, said Canada's conflict-of-interest rules are weak.

"The federal ethics law really should be called the almost-impossible-to-be-in-a-conflict-of-interest act," he said.

Mr. Morneau's office pointed out that Bill C-27, as a piece of public legislation, is open for debate, amendment and votes by all members of the House of Commons.

Former prime minister Paul Martin faced significant criticism for continuing to own Canada Steamship Lines even when he was finance minister and was campaigning to lead the Liberal Party. At the time, he held the company in a blind-management trust, a mechanism that allowed him to receive updates from the ethics commissioner at the time. In August, 2003, he completed the transfer of the company to his three sons. Because this transfer was within his family and not to an independent buyer, he was still required to recuse himself from decisions that could affect CSL's interests.

With a report from Josh O'Kane in Toronto

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