Finance Minister Bill Morneau told the company he once helmed that he would be placing his substantial holdings of Morneau Shepell in a blind trust – a mechanism used by cabinet members in office to insulate themselves from conflict-of-interest accusations.

Ultimately, he changed his mind and instead indirectly kept his holdings – a decision that only came to light this week when The Globe and Mail reported that Mr. Morneau had not used a blind trust, as Justin Trudeau did for his family fortune.

Opinion: Bill Morneau and a new sort of Liberal arrogance

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A spokeswoman for Morneau Shepell on Wednesday said Mr. Morneau, who resigned as executive chair of the firm after winning a Commons seat in the October, 2015 federal election, informed them that a blind trust was how he would be dealing with his company stock while in public life.

"Just prior to leaving the company in October, 2015, we understood from Mr. Morneau that his shares were to be placed in a blind trust," Cathren Ronberg, director of corporate communications for Morneau Shepell, told The Globe and Mail.

Shortly after being appointed Finance Minister, Mr. Morneau told the CBC that he expected he would need to put his assets in a blind trust. Such a move would put the share holdings beyond his reach.

Mr. Morneau's office, asked for comment about Morneau Shepell's discussion of his 2015 blind-trust plans, repeated that this week the minister wrote Ethics Commissioner Mary Dawson and asked "if there is more that he can do to go above and beyond her original guidance" on arranging his finances while in public life.

Questions mounted Wednesday in Ottawa over a loophole in Canada's ethics law that is allowing Mr. Morneau to continue owning a stake in his family's firm outside of a blind trust.

Facing a barrage in the Commons, the Prime Minister for a second time this week mounted a major defence of his senior minister, going so far as to dismiss all queries from opposition benches on the matter as mere "gutter politics."

He said Mr. Morneau simply followed the advice of the Ethics Commissioner and suggested the Conservatives and New Democrats are trying to distract his government from "the things that really matter to Canadians" instead of the "petty politics that the members opposite are focused on."

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Mr. Morneau has repeatedly refused to say what he did with his shares in Morneau Shepell. His former company said at the time he resigned from the firm that he owned more than 2.2 million shares. That amount of stock is worth more than $46-million today and earns more than $143,000 in dividends from Morneau Shepell each month.

Conflict-of-interest law says ministers are supposed to divest "controlled assets" such as publicly traded securities by selling them in an arm's-length transaction or putting them in a blind trust while in public office.

Mr. Morneau's office has consistently declined to say whether he has sold his Morneau Shepell holdings.

It was revealed this week though that Mr. Morneau still owns Morneau Shepell shares because he's holding them indirectly through a holding company – an arrangement that means he can avoid the requirement to divest.

"He doesn't hold them, the corporation holds them, that's the legal entity," Ms. Dawson told CTV News.

In a statement provided to The Globe, her office said the divestment requirement "does not apply to any controlled assets that reporting public office holders hold indirectly, through a holding company or other similar mechanism."

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The Ethics Commissioner has recommended to the federal government that this loophole be closed and that even assets held indirectly be considered "controlled assets" – but Ottawa has not taken action.

The Prime Minister's Office was asked Wednesday whether Mr. Trudeau's government would close this loophole but it did not answer the question. Spokesman Cameron Ahmed said he had no "additional comment on this beyond what the Prime Minister has already said."

Mr. Morneau was absent from Question Period in the House of Commons Wednesday for the third time this week – despite the fact he'd announced significant tax measures for small business on Monday. His office said he has been busy speaking about small business to Canadians and would be present for Question Period on Thursday.

The Finance Minister has justified his actions by saying he took the advice of Ms. Dawson in not establishing a blind trust. Ms. Dawson has made clear, however, in remarks this week that she merely told him a blind trust was "not required."

But opposition MPs brandished copies of the mandate letter Mr. Trudeau wrote to Mr. Morneau when he appointed him Finance Minister in 2015, pointing to passages that talked about how merely following the law on matters including conflict of interest was not enough. "The arrangement of your private affairs should bear the closest public scrutiny. This is an obligation that is not fully discharged by simply acting within the law," Mr. Trudeau wrote.

Conservative finance critic Pierre Poilievre accused Mr. Morneau of trying to keep information from Canadians and pressed Mr. Trudeau to divulge when he learned his minister had retained ownership of family firm shares.

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"The Finance Minister used a loophole to keep himself invested in a financial company which he regulates … He used a loophole in order to get around the ban on ministers owning stocks. This is the Finance Minister, the country's most powerful financial decision-maker, and he kept secret from the Canadian people over $40-million of investments that he had in a company that he regulated. When did the Prime Minister learn that?" Mr. Poilievre asked.

The NDP hammered the same theme, asking why Mr. Morneau had let the impression stand that he had placed his holdings beyond his reach in a blind trust.

"The Prime Minister says that putting holdings in a blind trust is – in his words – the gold standard. The opposition, media, Canadians, even Liberals and the company Morneau Shepell all believed the Finance Minister had placed his wealth in a blind trust. He never once corrected the record," NDP ethics critic Nathan Cullen asked. "Did the Prime Minister know, and if he did know, what did he do about it?"