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February 20, 2006
Finance Office Cleared Senior Staff In Scandal

The trading scandal that broke at the beginning of the Canadian election season resulted in an immediate but cursory investigation by the Finance Office itself, which cleared senior FMO staff of leaking advance word of a policy change to traders. However, the list of those who benefitted has widened as the Mounties continue their own, more in-depth investigation into how those firms got the inside information:

An internal Finance Department probe into the alleged leak of confidential income-trust policy exonerates senior staff — but also suggests the circle of those potentially in the know may have been wider than previously reported.

Documents released under the Access to Information Act show the department made inquiries of key staff in the days after Nov. 23, when then-finance-minister Ralph Goodale announced after markets had closed that there would be no tax applied to income trusts. ...

Mr. Goodale has already indicated he gave advance word of his decision to then-prime-minister Paul Martin, who shared it with three aides and to two cabinet ministers, one of whom — John McCallum — has said that he also shared it with aides.

Assuming that the findings of the initial Finance investigation remain valid, that points the finger in the direction of the Prime Minister's office -- another scandal that may attach itself to Liberal leadership, and this one personally to Paul Martin. Martin has declined to fight for the party leadership position, resigning as such after losing the election to Stephen Harper.

The RCMP has a tough job in investigating insider trading, and it doesn't get easier when it involves high government officials. With the gun registry off its back, the RCMP should have more time and resources to thoroughly check out how that information got leaked to the financial street; they'll start with those who benefitted the most and work their way back up the chain. The resultant report will garner a lot of interest when it finally appears.

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Posted by Ed Morrissey at February 20, 2006 6:57 AM

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