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Bill Morneau has been cleared of allegations that he broke federal conflict of interest laws when he introduced pension legislation while holding one million shares in his former pension management firm, Morneau Shepell.

Federal Ethics Commissioner Mario Dion issued the ruling Monday after taking over an investigation of the Finance Minister that had been launched by his predecessor.

The Conflict of Interest Act prevents cabinet ministers and other senior officials from participating in government decisions in which they have a private interest. However, the Act also includes an exception if the decision relates to a “matter of general application.” Mr. Dion ruled the exception should apply in this case.

Mr. Morneau thanked Mr. Dion for the decision and said in a statement that he has always followed the ethics commissioner’s advice.

“Canadians should always be able to trust that the people they have elected to serve are working in their best interests,” he said. “ I have always – and will always – hold myself to the highest standards.”

The report provides behind-the-scenes insight into the government’s decision to introduce Bill C-27 in the fall of 2016. The legislation aims to allow a new hybrid form of pension for federally regulated workers called target benefit plans, which are promoted as a middle ground between traditional defined benefit plans that guarantee set amounts in retirement and defined contribution plans that set money aside but make no promises in terms of future benefit amounts.

The report notes that Finance Canada studied the concept under the previous Conservative government. It also states that while Mr. Morneau’s former company, Morneau Shepell, advocated for the change, interviews with Mr. Morneau and senior public servants at Finance Canada indicate that the push for the legislation was driven by the public service and proposed to the Minister in late 2015.

“During this briefing, Mr. Morneau reportedly made few comments and approved the framework as presented,” the report states.

NDP MP Nathan Cullen had written to the ethics commissioner on Oct. 17, 2017, requesting an investigation of Mr. Morneau’s handling of C-27. Conservative MP Pierre Poilievre submitted a similar request to the office the following month.

Mr. Morneau was on the defensive throughout the fall of 2017 over the fact that he did not sell his private investment assets or place them in a blind trust after becoming finance minister. The minister announced on Oct. 19 – two days after Mr. Cullen filed his complaint – that he would sell his family’s Morneau Shepell shares and create a blind trust for his remaining assets.

Mr. Cullen accepted the ruling Monday, but said it highlights the need for Parliament to better define the exemptions in federal ethics laws.

“If this is not a wake-up call to Canadians – and hopefully this Liberal government – that we need to update our rules, then I don’t know what is,” he said. “I think that doesn’t really pass the smell test for a lot of Canadians.”

Mr. Poilievre, the Conservative finance critic, said Mr. Morneau should have known that his decision to introduce the bill would raise conflict of interest questions.

“It’s obviously surprising,” he said, in response to the commissioner’s ruling. “But regardless of whether Minister Morneau’s actions were illegal, they were definitely bad judgment. For a minister to introduce a pension bill while he owns a significant stake in a pension company is very problematic, even if, as it turns out, it’s not illegal.”

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