OTTAWA (Reuters) - Canadian Industry Minister Christian Paradis, who must approve all major foreign takeover bids and also runs the sensitive telecommunications file, broke conflict-of-interest rules by doing a favor for an ex-colleague, Canada's ethics watchdog said on Thursday.
The decision is an embarrassment for the Conservative government, which came to power in early 2006 promising to boost accountability in Ottawa.
Paradis, the first Conservative minister to have been formally investigated for breaking ethics rules, made clear he would not be resigning.
Although the main opposition party said the announcement put Paradis in a difficult position, Prime Minister Stephen Harper has often stood by ministers who land in trouble.
Paradis, who last week announced rules for foreign investment in the telecommunications sector, now has to decide whether to approve Glencore International's C$6.1 billion ($6.1 billion) takeover bid for Canadian grain handler Viterra.
Ethics Commissioner Mary Dawson said, after an investigation, that when Paradis was public works minister in 2009, he violated the Conflict of Interest Act by telling bureaucrats to set up a meeting with a former Conservative legislator who wanted to do business with Ottawa.
"Although I found that Mr. Paradis contravened the Conflict of Interest Act, I believe his inclination to direct that a meeting for his former caucus colleague be arranged is easy to understand: it is natural to want to help someone one knows," Dawson said in a statement.
"However, I believe that facilitating access to decision-makers or those who may influence them is captured by the act's prohibition against providing preferential treatment. Ministers are in a position of power and have a special responsibility to ensure that that power is exercised fairly," Dawson added.
The former Conservative legislator did not win a government contract. Paradis issued a statement saying he accepted Dawson's conclusions and noted that he had never tried to influence the decisions of public servants.
"In the future, I will take further precautions when approached by Canadians seeking more information about the services and programs provided by their government," he said.
The main opposition New Democratic Party (NDP) said the ruling would be a distraction for Paradis at a time when he must focus on the Glencore bid, which was announced this week.
"It's really disappointing and we feel that ... Mr Harper will definitely have to make some tough decisions, the reason being that Minister Paradis is the one in charge of some important files," said NDP industry affairs spokesman Guy Caron.
In 2010, a senior aide to Paradis resigned after it emerged he had improperly interfered in the release of documents to the media under access to information laws. The incident took place when Paradis was public works minister.
Paradis served as public works minister from June 2008 to January 2010, when he moved to the natural resources portfolio. He became industry minister in May 2011.
In 2009 and 2011 Dawson fined Defense Minister Peter MacKay C$200 for minor offenses under the Conflict of Interest Act.
Reporting by David Ljunggren; Editing by Peter Galloway