What is a blind trust and why are people asking about Mark Carney’s?

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New Canadian Prime Minister Mark Carney has been questioned recently about his so-far undisclosed assets before joining public office, and the blind trust he’s put them in.

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But what is a blind trust and how does it protect the new Liberal leader and all members of the House of Commons from conflicts of interest?

What is a blind trust?

A trust on its own is a legal contract wherein an individual, the trustor, entrusts property to a trustee who holds it for a third-party beneficiary.

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A blind trust requires the trustee — a person or entity “at arm’s length” and without any pre-existing personal or professional relationship with the trustor — to manage the controlled assets and investments of a reporting public office holder, i.e. Carney, without any day-to-day decision-making input from that person, per the Parliament of Canada.

The trustee is also prohibited from informing the trustor about “the composition, nature or particular details” of the assets. They can, however, offer “periodic statements regarding the trusts’ overall net worth and any decrease or increase in their value” without revealing detailed investments, and are required to provide information for tax filing purposes annually.

Who has to use a blind trust?

All federal cabinet ministers, deputy ministers and members of the House of Commons are required to use a blind trust and disclose it to Canada’s conflict of interest and ethics commissioner.

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Also on the hook are agency heads, parliamentary secretaries, some ministerial staff, and appointees such as Crown corporation bosses and members of federal boards.

Why are we talking about it before an election?

Under the Act, anyone elected to federal or provincial public office in Canada must, within 60 days of being sworn in, provide the commissioner with a detailed report of their assets and liabilities. They then have 60 more days after that to share that information publicly.

After securing the Liberal leadership, and before being sworn in, Carney’s team said all of his assets, except for “personal real estate,” had been placed into a blind trust earlier than required and they’d already begun work on “a full and robust conflict of interest management plan.”

But unless Carney chooses otherwise, a general election he’s expected to call as soon as Sunday will likely be finished before he’s legally required to disclose his assets publicly within the 120-day window.

A spokesperson for the commissioner previously told the National Post a summary of that disclosure could be published sooner should the process be completed more quickly.

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Regardless, the timeframe and his long career in the private sector have led to speculation about potential existing conflicts of interest.

Under the Act, a conflict of interest happens when it’s deemed their position was used to further their own private interests or those of a family member, friend or another person. The prime minister, all party leaders and every member of the house are governed by the same set of rules.

How has he addressed this issue?

Pressed on the issue by reporters at Canada House in London, England, on Monday, Carney defended his compliance with the rules set out in the Act as enforced by the commissioner, and highlighted how he quickly met the requirements.

“You know that these requirements come into effect in months,” he said. “We’re talking days after I became prime minister.”

The back-and-forth, which involved other reporters, was tense at times, with Carney telling one to “look inside yourself.”

“You start from a prior of conflict and ill will,” he said. “I have served in the private sector. I have stood up for Canada. I have left my roles in the private sector at a time of crisis for our country. I’m complying with all the rules.”

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Some of the scrutiny stems from Carney’s involvement with Brookfield Asset Management and whether his blind trust contains assets from the firm that he chaired and served as head of transition investing until he resigned and announced his bid to lead the Grits.

Carney held stock options in Brookfield that were worth $6.8 million at the end of December, according to Bloomberg. The expiration date on these options is either 2033 or 2034.

Neither Carney’s transition team nor the investment company has confirmed if he still has those assets or if they were divested.

In Iqaluit on Tuesday, he said he would likely recuse himself from potential conflicts of interest and that the commissioner would create publicly available “screens” to keep it from occurring.

How have opponents framed this issue?

Conservative Leader Pierre Poilievre and members of his shadow cabinet criticized what they consider a lack of candour from Carney and called on him to divest of his assets, even before he won the leadership.

In their view, by becoming prime minister and calling a snap election, thereby skirting the 120-day public disclosure, Carney is abusing a legislative loophole. Poilievre has promised to cut it to 60 days if elected.

Ontario MP and Tory ethics critic Michael Barrett said this week that Carney should share his assets and conflicts of interest before the election.

“If he has nothing to hide, then it’s very easy for him to come forward today and to disclose to Canadians, to finally answer media’s questions about what his financial interests are and what those conflicts of interests are, because that’s what Canadians expect,” said he said Sunday.

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