OTTAWA — During his leadership-race victory speech on Sunday, now Liberal Prime Minister Mark Carney went off-script to take a shot at Conservative Leader Pierre Poilievre.
“I know the leader of the Opposition is into full disclosure,” he quipped, gesticulating with his hands and raising his eyebrows, an apparent retort to Poilievre and the Conservatives’ criticism of Brookfield Asset Management’s decision to move its head office from Toronto to New York, last year, when Carney was still its chair.
Carney had tried to downplay the role he played in the relocation during the Liberal leadership race, saying the decision was finalized after he ceased to be chair. He also said, “I do not have a connection with Brookfield Asset Management.” However, Brookfield announced the move while he was still the chairman and documents show he had championed the decision.
But it’s not just Conservatives: Some on Bay Street are raising concerns about the transparency of Carney’s business dealings, too, according to financiers who spoke to the National Post on the condition they not be named.
Carney’s quick ascension to prime minister without having held elected office, and his swift decision to put all his assets other than his “personal real estate” into a blind trust mean that Canadians are not fully aware whether he could find himself in conflicts of interest for his work at Brookfield, a firm with US$1 trillion in assets under management. Or more precisely, the billions in capital Carney personally helped raise for net-zero projects around the globe.
“He’s the prime minister of the country, having never been scrutinized,” said a managing partner at an asset management firm. “I think now people are going like, ‘Hold on a second. What have we got here’?”
A partner at a private equity fund added: “I think people are generally concerned with his conflict of interest, given his association with Brookfield.”
A third financier, who works in the real estate investment business, said he has met Carney on a number of occasions and thinks “highly of him as an individual.” But he said him not being more forward about his current assets may make him more prone to criticism.
At a press conference on Friday after being sworn in as prime minister, Carney said he was going above and beyond Canada’s ethics rules by putting his assets in a blind trust before he is legally required to.
“Once assets are in a blind trust by definition you don’t know the assets, because the trustees take over the responsibility. I would like to reassure you that the assets I have were earned through employment, employment income, employment as a public servant and employment in the private sector,” said Carney.
Carney was not only Brookfield Asset Management’s board chair but head of transition investing, which observers say was likely to have been his main source of income.
In his role as head of transition investing, Carney co-led efforts to raise capital for two major clean energy funds, Global Transition Fund (“BGTF I”) and the Second Global Transition Fund (“BGTF II”).
He was also in the process of raising money for a new fund, the Catalytic Transition Fund (“CTF”), when he cut ties with Brookfield in January to run for the Liberal leadership.
The total capital raised for these three funds was at least US$27.4 billion, according to public disclosing by Brookfield.
BGTF I, considered the largest fund in the world focused on the clean energy transition, has helped fund “a range of landmark investments across renewable power, business transformation, carbon capture and storage, renewable natural gas, and nuclear services opportunities,” according to a February 2024 press release.
BGTF II has served a similar goal, investing in the “expansion of clean energy, the acceleration of sustainable solutions, and the transformation of companies operating in carbon-intensive sectors to more sustainable business models,” according to the release.
The projects include investments into acquiring a majority share of Westinghouse Electric Company, but also investments in a green energy producer in India, a nuclear power project in China, and an onshore renewables developer in the United Kingdom.
CTF, on the other hand, was launched at COP28 with capital provided by a private investment fund based in the United Arab Emirates, with the goal of deploying capital exclusively in emerging and developing markets for the energy transition.
In his role, Carney was entitled to Brookfield share options and deferred shared units, but also potentially tens of millions in undisclosed “carried interest” in Brookfield.
Carried interest is essentially bonus payments based on a fund’s performance. Brookfield CEO Bruce Flatt wrote in a recent letter to shareholders: “Put simply, carried interest is our share of the profits realized on an entire fund, subject to that fund exceeding a minimum target return for clients. If we meet fund expectations, we get 20% of the profits.”
Despite repeated attempts, Brookfield Asset Management and Carney’s transition team have declined to clarify if the new prime minister still possesses any financial interest in Brookfield.
Flatt went on to say that Brookfield estimates the value of its total carried interest at around US$30 billion. Financiers interviewed for this article said that it was not out of the question that Carney could benefit from tens of millions of dollars from these profits that are undisclosed to shareholders.
They also said those assets were incompatible with a blind trust, since Carney would know what those funds are invested in and how his decisions as public officer holder, specifically on policies affecting net-zero and clean energy investments, could affect their value.
“The blind trust works for large liquid stock portfolios, but not for specific investments that are known and quantified in a fund that he once controlled,” said one financier.
Vern Krishna, a professor of law at the University of Ottawa, said the term “blind trust” is meant to inspire a certain degree of confidence but said it is “a bit of a placebo.”
“Journalists and everybody else will see the term ‘blind trust’ and say, ‘Oh, well, that’s very nice,’ and it’ll make everybody feel very comfortable — just as when your doctor gives you an aspirin for your cancer,” he said.
Krishna however said that, at this stage, absent of any evidence, he is “not prepared to say that Mark Carney is going to abuse his position” as prime minister.
The Office of the Conflict of Interest and Ethics Commissioner has already been in contact with Carney’s team about his assets but will not divulge the details of what was discussed.
Spokesperson Michael Wrobel said the initial compliance process must be completed within 120 days of Carney’s appointment as prime minister. At the end of that period, a summary of his personal and financial information will be published in the public registry, but the summary may be published sooner if the process is completed faster than that.
Political insiders agree that Carney should have been more proactive with his assets.
“I think with somebody with Mr. Carney’s wealth and background, there are fair questions to be asked about how he will manage, no doubt, the conflicts that could arise being prime minister,” said Garry Keller, a former senior Conservative aide who helped draft the 2006 Conflict of Interest Act.
“Mr. Carney has never been involved in elected politics and probably has a giant blind spot when it comes to these rules,” added Keller, who is vice president at StrategyCorp.
Sharan Kaur — a former deputy chief of staff to finance minister Bill Morneau, who was also under scrutiny for his family’s high-value business dealings during his time in politics — said he does not think it is lost on Carney’s team that questions are swirling around any potential perceived conflicts.
“It will be vital for him to exceed the basic compliance measures to eliminate any concerns,” she said. “Opposition members are going to beat this horse dead.”
National Post
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