UPDATE 4-No conflict in Carney vacation with Liberal-Bank of Canada

Louise Egan and Randall Palmer
Reuters Middle East

* Confirms Carney stayed with Liberal MP, finance critic

* Central bank says Carney and Brison friends for decade

* Liberals reported to have pressed him to run for leader

OTTAWA, Dec 17 (Reuters) - Bank of Canada Governor Mark

Carney did not breach conflict of interest policy by vacationing

at the home of a Liberal Party lawmaker, his chief spokesman

said on Monday, following a report that the visit occurred while

the opposition party was seeking to recruit him.

Carney, who will become the Bank of England governor in

July, finds himself at the center of controversy after the Globe

and Mail newspaper reported new details on Saturday about the

Liberals' efforts earlier this year to woo him into running for

leadership of the third-place political party.

A Bank of Canada spokesman confirmed the report that Carney

and his family stayed at Liberal legislator and finance critic

Scott Brison's home in Nova Scotia during part of their summer


The news led some analysts to question Carney's judgment and

the central bank's political independence. The spokesman said

Carney and Brison had been personal friends for about a decade.

"The Bank of Canada's general counsel, who is responsible

for enforcing the bank's conflict of interest policy, has

assessed that this visit does not breach the bank's conflict of

interest guidelines in any way," the spokesman, Jeremy Harrison,

said in a statement.

"Neither the Bank of Canada, nor Governor Carney, have an

actual or potential commercial or business relationship with Mr.

Brison," the statement said. "Mr. Carney's acceptance of

hospitality provided by a personal friend does not arise out of

'activities associated with official bank duties'. Nor can it be

defined as partisan or political activity."

The Globe and Mail newspaper reported that Brison, along

with a number of other senior party members, have expressed

interest in seeing Carney lead the Liberal Party.

The article cited unnamed Liberal officials as saying Carney

asked questions about the race. The bank said it would not

comment on anonymous citations.

Carney, in an interview with the newspaper, declined to

answer questions about any political leanings. He said he had

been approached over the years by people from across the

political spectrum and that he "obviously" did not act on any

invitation to seek political office.

"Different people, different parties, different approaches,

different -- and you can say different levels of seriousness.

And so, I mean there's nothing striking about anything in the

recent past," he said, according to a transcript provided by the

central bank.

"Nobody did anything on my behalf. I never asked anybody to

do anything. I never made an outgoing phone call ... so take

anything you hear with a grain of salt."

In public, Carney has repeatedly batted away questions about

any political ambitions, at one point saying at a news

conference in October: "Why don't I become a circus clown? I

appreciate the great concern about my career but I have gainful

employment and I intend to continue it."

Then in a Nov. 7 television interview, Carney gave his

clearest denial of interest, saying "I have no intention of

seeking political office."


But the latest revelations have led to criticisms from some

commentators, who say there are risks that the central bank's

impartiality could be called into question if officials are

linked too closely to politics.

The bank's conflict of interest guidelines urge employees to

avoid the appearance of impropriety in accepting hospitality or


"It does shows a complete lack of judgment," said Mike

Moffatt, an economist at the Ivey School of Business at the

University of Western Ontario.

"The larger issue here is that Carney is being seen as the

guy who can do no wrong," Moffatt said. "For the most part, he's

been a very strong governor. There's some point where you start

to believe that anything you do is justified because you've been

doing such a great job and that's where these sort of ethical

lapses get in."

Finance Minister Jim Flaherty declined to comment on the

issue when questioned by reporters on Monday. Conservative Prime

Minister Stephen Harper's chief spokesman Andrew MacDougall

said: "Mr. Carney has done an admirable job as governor of the

Bank of Canada."

There had been reports for months that the Liberals, once

Canada's dominant party, had tried unsuccessfully to recruit

Carney after losing heavily in the 2011 election. A Facebook

page was created called "Draft Mark Carney for LPC (Liberal

Party of Canada)" with Brison being one of the high-profile

Liberals who "liked" it.

In the end, he accepted an offer to replace Mervyn King at

the Bank of England.

The current front-runner for Liberal leadership is Justin

Trudeau, a former school teacher and son of onetime Canadian

Prime Minister Pierre Trudeau.