Flaherty Says Bank of Canada Hire Followed Guidelines

Canadian Finance Minister Jim Flaherty said the country’s central bank followed conflict of interest guidelines when it hired an adviser from Goldman Sachs Group Inc.

Bloc Quebecois lawmaker Daniel Paille and Thomas Mulcair of the New Democratic Party both asked about the hiring of Timothy Hodgson for an 18-month term. Flaherty said in response that the bank makes its own staffing decisions and that Hodgson has “severed” his ties to the private sector.

Governor Mark Carney and Hodgson worked together at Goldman Sachs in New York from 1998-2000, and Hodgson was hired by the central bank this year to work on developing rules for trading repurchase agreements and over-the-counter derivatives, and regulations to ensure banks have enough capital. Carney told opposition lawmakers during committee testimony yesterday employees are bound by a code of conduct and a conflict of interest policy.

“It’s a question of the revolving door back to the private sector,” Mulcair said today while asking questions of Flaherty, adding that Hodgson’s contract has no “cooling-off period.”

“Any appearance of conflict of interest in our democratic institutions undermines the public’s trust,” Mulcair said.

Flaherty replied by saying “the person in question has severed his ties with the private sector” and “the Bank of Canada makes its own hiring decisions.”

Bank of Canada spokesman Jeremy Harrison said that Hodgson “has resigned from Goldman Sachs, severed all ties, divested himself of all his holdings of Goldman Sachs stock and placed his other investments in a blind trust.”

“The bank’s conflict-of-interest policy will appropriately limit his activities upon his departure,” Harrison said.

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