OTTAWA – Finance Minister Bill Morneau, under siege from relentless opposition attacks over how he handled his personal fortune when he entered government in 2015, went on the offensive Thursday with a promise to sell off tens of millions of dollars worth of shares in the family business that bears his name.
At least $21 million in Morneau Shepell shares held by Morneau and his family will be sold off, while the rest of his assets will be placed into a blind trust, the minister said as he sought to snuff out conflict of interest allegations threatening to undermine the federal Liberal government.
All the while, the wealthy former businessman continued to insist he disclosed all his assets to the federal ethics watchdog when he came into office two years ago, and that he that he followed her recommendations very carefully to avoid any conflicts of interest.
That, the embattled Morneau has now decided, wasn’t good enough.
“I perhaps naively thought that in Canada following the rules and respecting the recommendations of the ethics commissioner … would be what Canadians would expect,” Morneau told a news conference. “In fact, what I have seen over the last week is that I need to do more.”
Morneau said he currently owns about a million shares — $21 million worth at current stock prices — in the human resources and pension management firm he and his family helped to build. Public filings show that in March, Morneau’s father, William Morneau Sr., held just over 200,000 shares, worth about $4.2 million.
Morneau didn’t, however, mention the dividends those shares generate: 6.5 cents a share, equating to roughly $65,000 a month.
When asked why he changed his mind, Morneau admitted the issue has become a major distraction and was taking away from what he characterized as his important work as Liberal finance minister — work he wants to continue doing.
“I’m going to go farther, above and beyond anything that might have been recommended because I want to make sure that this isn’t the discussion that we’re having tomorrow or the day after,” he said.
“I am trying to make sure that we are successfully improving the lives of Canadians across the country, so if we’re getting distracted because some people are worried about my personal situation, it’s time to move on. And that’s what I’ve decided to do.”
Morneau said until his shares are divested they will remain behind a conflict-of-interest screen, which has been overseen by the minister’s chief of staff, to ensure he abstains from any discussions or decisions that could benefit his personal interests.
He said he could recall at least two instances where he was removed from meetings because of the screen.
Thursday’s decision — aimed at silencing Morneau’s increasingly vocal critics — could also be considered a tacit acknowledgment that the rules themselves are in need of an update, something the ethics commissioner herself has suggested in the past.
Commissioner Mary Dawson revealed this week that she told Morneau a blind trust wouldn’t be necessary, since his shares were indirectly held through private companies and were therefore not considered a “controlled asset” under the Conflict of Interest Act.
However, Dawson urged the previous Conservative government in 2013 to amend the law to require blind trusts for personal assets owned by public office holders, regardless of whether they were directly or indirectly owned — a change that was never made.
Morneau, who stepped down as Morneau Shepell’s executive chairman shortly after the election, said Thursday that when he first entered cabinet, he fully expected he would have to put his assets in a blind trust, as did the company he was leaving behind. However, Dawson told him it wouldn’t be necessary, he said.
At that time, public filings showed Morneau owned 2,254,109 shares, most of them through an Alberta numbered company. On Thursday, he said it was only about a million shares, although he didn’t elaborate on what happened to the rest.
All week long, the Conservatives and New Democrats have accused the government of being in a conflict of interest created by a finance minister regulating an industry that includes a company in which he owns significant shares.
NDP MP Nathan Cullen has called on Dawson to investigate Morneau for spearheading pension reform legislation that could benefit Morneau Shepell and, through shares he still holds, the minister himself.
In the days after Morneau personally introduced that bill, the value of Morneau Shepell shares rose 4.8 per cent, Cullen said during question period, Morneau’s first this week since the controversy exploded. The minister shrugged off Cullen, noting Dawson had already signed off on the arrangement.
The opposition charges have all but drowned out the government’s efforts to address another, earlier controversy over its widely panned changes to small business taxes.
“Of course, there’s been a distraction this week,” Morneau said earlier in the day during a news conference at a farm in the Ontario community of Erinsville, where he was trying to deliver good news: that the government would not proceed with a tax change that has angered farmers.
He said Ottawa will reconsider the proposal related to the conversion of income into capital gains after hearing concerns from farmers and fishers. The proposal raised fears about how it could hinder the intergenerational transfer of family business, like farms.
It had been one of the three key components of the government’s package of tax proposals.
Morneau’s first to the House of Commons on Thursday after spending the week making announcements to scale back some of the so-called tax reforms, which have angered small business owners, doctors, farmers and even Liberal backbench MPs.
Earlier this week, the government also ditched another proposed measure that would have had a negative impact on the transfer of family businesses from one generation to the next.
Morneau also announced this week that he will scale back a proposal to crack down on passive investment income, which was one of the most contentious elements of his plan.
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