Politicians and certain other persons with a potential conflict of interest sometimes put their assets and especially their listed and unlisted shares into a "blind trust", so that an independent trustee can in future make (and be seen to be making) all the required investment decisions.

The beneficial owner of the assets under such an arrangement is then not only precluded from giving any directions to the trustee but is also denied all knowledge of the actual composition of the portfolio for the duration of the blind trust. The theory is that owners in that position can then carry out their official duties without being influenced by the effect on their own pockets.

However, to a large extent this advantage may really be quite illusory, as the owner:

• would know the composition of the portfolio as at the start of the arrangement (although this knowledge would become less relevant with the passage of time, especially if additional funds were being fed into the trust)
  
  
• would usually have a reasonable idea of the likely stocks such a trustee would hold in such a portfolio
  
  
• would still gain from legislation or other measures benefiting companies at large as distinct from individual companies
  
  
• would probably know the identity of the companies in which other members of the owner's family, or associated family companies or trusts, or for that matter friends, held shares.

The last dot point raises difficult definitional problems: just where should a line be drawn?

It also glosses over the fact that even close associates have personal rights, too (the spouse of a politician should naturally be entitled to invest his or her own money as that person sees fit).

A blind trust as described above does not involve the alienation of assets, as in the case of gifts to a family trust. The intention would normally be to transfer the legal ownership of the assets back to the beneficial owner at the end of the arrangement, on vacating office.

In a practical sense this then means that the benefits of ownership are very little different from those that would have applied if the blind trust had not been set up at all.

An alternative approach would be for the person concerned to give up share ownership completely on assuming office. In that case the shares could be transferred to a family trust as long as this was at all times controlled by an independent trustee. However, the conceptual problems described above would still remain.