Mary Dawson has ordered Flaherty to refrain from writing such letters of support without first seeking permission from her office.
Opposition Leader Tom Mulcair responded by asking Prime Minister Stephen Harper to investigate Flaherty's letter to the Canadian Radio-television and Telecommunications Commission, saying this surely "requires action on your part."
Flaherty and the Prime Minister's Office have said the veteran cabinet member was merely helping a firm in his riding — as any MP should — by sending a letter to the CRTC, the federal broadcast regulator, backing Durham Radio Inc.'s licence bid.
In her order made public Friday, Dawson said Flaherty violated the Conflict of Interest Act — the law governing ethical conduct of cabinet members — as well as federal accountability guidelines for ministers.
"It is improper for you, as Minister of Finance and Minister responsible for the Greater Toronto Area, to have written a letter of support on behalf of a constituent to an administrative tribunal in relation to its decision making," Dawson wrote in the order.
"I therefore order you to refrain from writing any similar letters in the future without seeking approval from my Office."
Section 9 of the Conflict of Interest Act prohibits ministers from using their position to try to sway decisions when doing so would improperly advance another person's private interests.
Guidelines issued by the Prime Minister's Office say cabinet members should not intervene in licence decisions of tribunals such as the CRTC.
In his March 2012 letter to the CRTC, Flaherty praised Durham Radio's ultimately unsuccessful bid to obtain a licence to operate a new FM station for the Toronto area.
The broadcaster, based in Flaherty's Whitby-Oshawa riding, hoped to launch an easy-listening outlet — one of several applicants last year for the coveted spot on the FM dial.
"Durham Radio has a strong track record for providing excellent service for their listeners and this puts them in a solid position to offer this new service," Flaherty wrote in the letter.
"As the MP for Whitby-Oshawa, I support their proposal and their application."
In a statement this week to The Canadian Press, which recently uncovered the letter, Flaherty said he would "continue to be a strong advocate for the people and community I represent. It is my job."
However, Flaherty's signature on the letter noted that he is not just an MP but also finance minister and minister for the Greater Toronto Area.
In a statement Friday following Dawson's ruling, Flaherty indicated he believes the problem was not that he supported the licence application, but the fact his letter cited his ministerial titles.
Flaherty said the letter "was fully intended to be written and sent in my capacity as Member of Parliament for Whitby-Oshawa."
"It was drafted in my community office and printed on my MP letterhead, and in fact, I insisted the MP reference be added to the text to emphasize the point," he said.
"However, due to an oversight my ministerial title was used in the signature block. This is regrettable and I can assure the Ethics Commissioner that this will not happen again."
Flaherty's spokeswoman, Kathleen Perchaluk, said the minister was unavailable Friday and she refused to answer questions about his letter.
Asked if it would have made a difference to the ethics commissioner's ruling had Flaherty not mentioned his ministerial posts, a spokeswoman for Dawson said, "The Commissioner must decide on a case-by-case basis whether the action was improper."
The group Democracy Watch, which pushes for high ethical standards in government, argues that ministers should not write such letters at all because a cabinet member cannot remove their ministerial hat when dealing with a quasi-judicial tribunal.
The CRTC, which administers broadcasting and telecommunications, is one such tribunal — a court-like body that makes decisions at arm's length from the government.
Federal rules on ministerial responsibility, including interaction with administrative bodies, are set out in Accountable Government: A Guide for Ministers and Ministers of State.
The rules say decisions made by administrative tribunals often concern individual rights or interests, are technical in nature or are "considered sensitive and vulnerable to political interference (such as broadcasting)."
"Ministers must not intervene, or appear to intervene, with tribunals on any matter requiring a decision in their quasi-judicial capacity, except as permitted by statute."
The ministerial responsibility rules, last updated in December 2010, complement the Conflict of Interest Act, which took effect in 2007, the year after the Conservatives took office.
The NDP and Liberals have accused the government of failing to abide by its own ethical standards.
In his request to Harper, Mulcair noted the Conservative party promised more than six years ago to ensure accountability in federal politics. "It's time to take the first step by investigating the actions by Mr. Flaherty and start holding your ministers to account when they break the rules," Mulcair wrote.
Carl Vallee, a spokesman for Harper, indicated there would be no investigation. "We are satisfied with the minister's statement which acknowledges the administrative oversight and outlines that it would not happen again."
The Prime Minister's Office said late Thursday it stands by its accountability rules for ministers, after first declining to say whether it still endorses them.
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