Conflict of interest guidelines need to be tightened up
If we listen to corporate Canada we might believe the only possible future for pensions is to move away from the defined benefit model in favour of a defined contribution system, also known as targeted benefit plans. Under that system there is no guarantee of what pensioners will eventually receive, only how much they will contribute as employees. That was the system called for in a speech to investors by an executive from Canada’s largest private pension company, Morneau Shell, back in 2013. That executive is now our finance minister and media reports claim he is using loopholes to skirt around conflict of interest guidelines while introducing pension legislation in the House of Commons. This is something that parliament has been seized with lately.
The CBC reported in mid-October that the finance minister forgot to tell the ethics commissioner about a French villa he owns. That same report also explained that the minister used loopholes in the Conflict of Interest Act to place Morneau Shell shares in a private company that he still controls-instead of divesting them, or placing them in a blind trust. As a result, the Conservatives and New Democrats brought motions to parliament on the subject in the last week.
Perhaps the biggest concern being raised by MPs relates to the minister’s legislation, Bill C-27, which would increase the use of targeted benefit plans. The NPD says it is undeniable that if C-27 were to become law, Morneau Shell will benefit significantly from additional business and revenue, and that as a massive investor, the minister would personally benefit financially from the passage of that law. They explained that shares he controls in the company have been paying him monthly dividends (in the neighbourhood of $150,000/month) through the private company he place them in-and still controls.
New Democrats also tell us that five days after Bill C-27 was tabled, the value of shares in Morneau Shell shot up by almost five percent, an increase that could have allowed the minister to make as much as two million dollars and even if he sells the shares to divest himself he still comes out on top. That’s why people are calling this, at the very least, a perceived conflict of interest since the minister was in a position to further his own private interests through his public duties.
Opposition MPs believe these are compelling reasons to revisit the loopholes being employed by the minister. The New Democrat motion called on the government to immediately close the loopholes in the Conflict of Interest Act. The language echoes recommendations from the conflict of interest and ethics commissioner dating back to 2013 and would prevent any minister of the Crown from personally benefiting from their position or creating the perception thereof going forward.
Both opposition motions were defeated in separate votes. The focus will now move onto C-27 which, if defeated, would send a strong message from the government that they will stand up to any conflict of interest. That bill has not begun to move through parliament yet, so it may take time to see how the government proceeds. In the meantime, they could still bring in changes to the conflict of interest act to clean up these loopholes to preserve Canada’s good reputation.