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Questions are being raised about Mr. Barton’s connections to China through his long association with McKinsey, which is a high-priced adviser to many Chinese companies.

Paul Chiasson/The Canadian Press

Dominic Barton is setting up a blind trust to hold his investments and protect himself from possible conflicts of interest as Canada’s ambassador to Beijing.

Mr. Barton’s New York lawyer, Catherine Redlich, told The Globe and Mail that the ambassador had disclosed all his assets to federal Ethics Commissioner Mario Dion and will put them in a blind trust where necessary. Before becoming ambassador, Mr. Barton ran McKinsey & Co., one of the world’s largest consulting firms, as it built up a substantial presence in China.

“As required by Canadian federal law, all of Mr. Barton’s investments have been disclosed to Canada’s Conflict of Interest and Ethics Commissioner for review, and will be subject to a statutory disclosure and conflict-of-interest regime, including a blind trust,” Ms. Redlich said in a statement. “We expect the review to be completed by early 2020.”

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The Conflict of Interest and Ethics Act requires public-office holders, such as Mr. Barton, to outline their assets, liabilities, income and past activities and any other information to the commissioner. They have 120 days to work out an arrangement to avoid potential conflict of interest that could arise.

In a blind trust, a trustee manages the assets for the public-office holder, based on the theory this insulates them from accusations that they are making decisions that could benefit their personal wealth.

But Duff Conacher, co-founder of watchdog group Democracy Watch, says blind trusts don’t work.

“Blind trusts are a sham because the person knows what they put in the trust and chooses the trustee and can give the trustee instructions,” he said.

Mr. Conacher said the only way to resolve conflicts is for public-office holders to divest their holdings.

Questions are being raised about Mr. Barton’s connections to China through his long association with McKinsey, which is a high-priced adviser to many Chinese companies; according to The New York Times, this includes as many as 22 of the country’s 100 largest state-owned enterprises.

MIO Partners Inc., McKinsey’s multibillion-dollar investment fund, has many Chinese-related investments. MIO manages retirement and after-tax funds for about 30,000 current and former employees of the firm.

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Gary Pinkus, chairman for McKinsey in North America, said current and former McKinsey employees have no role in deciding how MIO invests their money.

“One cannot have a conflict or a benefit himself based on information that the person is unaware of,” Mr. Pinkus said.

Former ethics commissioner Mary Dawson said Mr. Barton has three options to avoid the appearance of a conflict of interest: sell all his holdings in McKinsey and the MIO fund; put the investments in a blind trust; or set up a screen where someone in the embassy would ensure he was not involved in any decisions or activities that could benefit his former firm.

“Basically the rule is you cannot take advantage of your job to benefit personally, so much turns on the actual facts and this is what the [ethics] office would spend a fair amount of time sort of examining: a trust or to advise some of kind of screen or recusal when necessary,” she said.

As most McKinsey employees and alumni maintain significant portions of their fortune in the MIO, Ms. Dawson suggested the best course would be to follow the example of Finance Minister Bill Morneau, who sold all his holdings in his family’s pension management business, Morneau Shepell, to avoid potential conflicts of interest.

Conservative MP Peter Kent said he hopes Canadians will be informed as to what assets are in Mr. Barton’s trust. “I hope there is some transparency as to what is contained in the trust and … whether it has to do with Chinese holdings.”

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When Mr. Barton was named ambassador to China in September, then-foreign affairs minister Chrystia Freeland said he would “sever all business ties and step away from any boards he served to avoid any conflict of interest.”

Upon his appointment, Mr. Barton resigned as chair of Teck Resources Ltd., a Vancouver-based metals and mining giant partly owned by state-owned China Investment Corp. A member of Teck’s board of directors once sat in China’s National People’s Congress.

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