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Morneau conflict-of-interest controversy has Ruined the reputation of a Workplace meant to Guarantee Canadians

30 Oct 17
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This is the last time a national politician can attempt to hide behind the integrity commissioner.

On Thursday, Finance Minister Bill Morneau went to see Ethics Commissioner Mary Dawson because, he explained, he wanted to reassure Canadians. He sought to kill the allegation he would enrich himself government by asserting that he would donate to charity the proceeds from the sale of shares from the company he once led, Morneau Shepell.

The donation could reassure Canadians. But meeting with Ms. Dawson should not. That is where the problem began.

It was Ms. Dawson’s office that stated there was a loophole in the law that meant Mr. Morneau did not have to sell his shares, or set them in a blind trust. It was bad advice and Mr. Morneau made a terrible decision in carrying it.

Since Mr. Morneau did not hold the Morneau Shepell stocks personally, but instead through a private company, Ms. Dawson’s office stated, the Conflict of Interest Act did not require that he automatically divest them. Mr. Morneau did not legally own them, she concluded, his firm did. That is how Ms. Dawson interpreted the law.

Many experts in corporate law contacted lately think she is wrong and there isn’t any such loophole: If Morneau Shepell shares are “controlled assets” that has to be divested, they said, then so is the private company that retains them. One, Mohamed Khimji, the David Allgood professor in Business Law at Queen’s University, stated Ms. Dawson’s interpretation is problematic.

“You can make that argument. I don’t agree with it,” Prof. Khimji stated. He said he would have advised Mr. Morneau to obey the intent.

It is not just a quibble over legal issues with Ms. Dawson, herself a lawyer. Ms. Dawson wrote a report faulting a CRTC commissioner for not returning chocolates and flowers from a radio station, but the Morneau case revealed a failure in implementing the fundamental intention of the conflict of interest rules. Those principles, and the integrity commissioner, are supposed to guarantee Canadians. They can’t.

Ms. Dawson is the chief compliance officer for the federal conflict of interest regime. She chose, based on a narrow, debatable interpretation, the law has a enormous flaw that defeats its own purpose: A public office holder may dodge the crucial requirement that they divest assets whose worth could grow or shrink due to a government decision, by simply placing the resources in a private company.

Yes, Ms. Dawson supposes that as a defect in the law which ought to be amended, in a 2013 entry to a committee reviewing the laws. But she did not tell Mr. Morneau to comply with the intent of this law. And she could have.

Her office sent Mr. Morneau a letter stating flatly that he did not have any “controlled assets” that must automatically be divested. Again, that is at best a debatable interpretation of the letter of the law.

But the economic reality was that Mr. Morneau possessed the Morneau Shepell shares, which letter should have recommended he sell them to comply with the intent of this law. She should have insisted: The legislation gives her power to dictate an advantage be divested if it produces a conflict.

It’s tough to think Mr. Morneau entered politics to improve himself. Up to now, the allegations he made decisions to boost Morneau Shepell stocks seem stretched. One was that his small-business tax proposals could promote the use of individual retirement programs, or IPPs, sold by Morneau Shepell; however, the company said only $265,000 of its $592-million in earnings came from IPPs. Ottawa gave a loan to Bombardier, a Morneau Shepell customer, but the firm says it’s 20,000 customers, and no one customer will have a material effect on the bottom line.

However, the public is not supposed to have to judge that. The Conflict of Interest Act is supposed to create public office holders divest assets whose value could be affected by government decisions.

Rather than telling Mr. Morneau to do that, Ms. Dawson advised him to put up an ethics “display,” where an aide ensures he is not involved in decisions which could create a conflict, raising those questions. Such screens are not in the legislation; they’re something designed by Ms. Dawson’s office. Worse: Mr. Morneau had to publicly declare he possessed the Alberta holding firm, but Ms. Dawson’s office didn’t require it stipulate what it held was Morneau Shepell shares.

That is not reassuring. Ms. Dawson has been at work a decade and she is soon to be replaced. But no politician could expect Canadians to have confidence when they say they have done exactly what the ethics commissioner advocates — not until the everybody knows the law is crystal clear and the integrity commissioner is obviously enforcing its intent.

Courtesy: The Globe And Mail

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