Prime Minister Mark Carney speaks in Ottawa on Thursday. Conservatives have scrutinized his blind trust and apparent use of tax havens at Brookfield Asset Management Inc., which he used to chair.Adrian Wyld/The Canadian Press
The House of Commons ethics committee has recommended that prime ministers should be required to sell their assets, rather than placing them in a blind trust, within two months of taking office, and should have to divest fully from tax havens.
A report published Thursday also suggests that the ethics watchdog be able to impose a sliding scale of penalties on public office holders who breach ethics rules, tied to their level of authority and the seriousness of the breach.
The report follows a review by the cross-party Commons ethics committee of the 2007 Conflict of Interest Act. The law applies to the prime minister, ministers and parliamentary secretaries, as well as some unelected individuals including deputy ministers, ministerial staff and advisers.
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The committee recommended the act be strengthened and also apply to leaders of political parties who are not MPs, such as the new NDP Leader Avi Lewis.
The four Liberals on the committee dissented from the report, which was passed with Conservative and Bloc Québécois support and the casting vote of the Tory committee chair John Brassard.
Liberals said they could not support it because it appeared to be designed to target Mark Carney.
In a dissenting report published Thursday, Liberal MPs on the committee said a number of the recommendations “appear to have been crafted with one individual in mind, rather than in pursuit of sound, durable public policy.”
Mr. Carney placed all of his financial assets, other than personal real estate, into a blind trust after taking office. But he has faced concerted criticism from Conservatives over his blind trust and the apparent use of tax havens by his previous employer Brookfield Asset Management Ltd.
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In a blind trust, an individual’s assets such as stocks and bonds are managed by an arm’s-length third party who makes trades, sales and purchases without the beneficiary’s knowledge.
The ethics committee had heard from some witnesses that blind trusts are not truly blind because the person who sets them up knows what was put in there.
The majority committee report recommended that a prime minister, rather than using a blind trust, should have to sell all controlled assets, including publicly traded securities. Controlled assets are defined under the act as those whose value could be directly or indirectly affected by government decisions or policy.
In their dissenting report, the Liberals said the recommendation “is a rule built around one individual.” It contended that the final report did not reflect evidence heard by the committee that blind trusts work, and that the Prime Minister would no longer know what is in the trust or how it is being managed.
The committee of MPs also recommended that the Conflict of Interest Act be updated to prohibit public office holders from investing in companies that use tax havens.
Before taking office, Mr. Carney chaired Brookfield Asset Management. Last year, Radio-Canada reported that while at Brookfield, Mr. Carney co-chaired two investment funds worth about $25-billion registered in Bermuda, a tax haven.
Mr. Carney has said the structure is designed to benefit the Canadian pension funds that invest in them. He said taxes are paid in Canada, because the “flow through” of the funds goes to Canadian entities who pay taxes properly.
Mr. Brassard, said at a press conference Thursday that reviewing the Conflict of Interest Act gave the committee the chance to “shed further light on its application to Prime Minister Mark Carney ... but more importantly, to the position of prime minister itself, now and into the future.”
“The Prime Minister very clearly knows what’s in his blind trust, and the way to assure confidence for Canadians is for complete divestment,” Mr. Brassard added.
Duff Conacher, co-founder of the non-profit advocacy group Democracy Watch, appeared before the committee during its review. He said if the report’s recommendations were to be enacted, Mr. Carney and several cabinet ministers and top government officials would have to sell investments “in businesses that cause conflicts.”
Public office holders should also arrange their affairs to prevent both a real or apparent conflict of interest, the committee said.
The government has 120 days to respond to the report’s 20 recommendations. But the Liberals on the committee urged caution to ensure any changes to the act are “principled, workable, and designed to serve all Canadians – not to target any one individual.”
The report was written at a time when opposition parties still held a combined majority. After securing its majority, the government announced plans this week to change House of Commons rules so that it has a majority in committees.
The ethics committee last conducted a review of the Conflict of Interest Act in 2013, presenting its report in February, 2014. It did not result in any reforms.