Duffy’s lawyer confronts Wright at trial on ethics of payment

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Former Harper chief of staff Nigel Wright was thrust on the defensive at the Mike Duffy fraud trial Friday as he was confronted with e-mails demonstrating that the Prime Minister's Office sought to willfully deceive Canadians about where the senator obtained money to repay his controversial expense claims.

As the RCMP investigation and released e-mails have shown, the PMO first tried to arrange for the Conservative Party, with a war chest full of taxpayer-subsidized donations, to repay the claims, but after the amount soared to $90,172.24 from around $32,000, Mr. Wright stepped in personally to cover the tab.

"I would like it to be explicit," Mr. Wright wrote in a February, 2013, e-mail to PMO staff about the need for Mr. Duffy and his lawyer to make a clear pledge to keep mum on the repayment deal. "For its part the party would not inform anyone," he said.

Donald Bayne, Mr. Duffy's defence lawyer, hammered Mr. Wright on this, asking him if he really thought that it was "principled and ethical" to go secretly to the chair of the Conservative fundraising arm and use what amounted to taxpayer-subsidized political donations to reimburse the Senate.

Mr. Wright replied he "thought that was okay," saying what was important was repaying the inappropriate expenses.

Mr. Bayne, using PMO staff e-mails against Mr. Wright, pressed his thesis in court when talking to the ex-aide: "It was done, because of the following: because you wanted to 'end the Chinese water torture.' Your words. … 'End our public agony over this matter.' Your words."

Making fun of Mr. Wright's comments earlier this week that he kept the gift to Mr. Duffy silent because of how a verse in the Book of Matthew calls for donations to the poor to be given quietly, Mr. Bayne asked: "It's not the language of Matthew in the Bible, is it? … Matthew doesn't say stop our public agony, stop the Chinese water torture, stop the story dribbling out … you're hurting the Prime Minister, does he?"

Mr. Wright replied: "No, he does not."

Mr. Duffy, a Harper appointee, is on trial after being charged by the RCMP with bribery, fraud on the government and 29 other charges related to Senate expenses.

Revelations during the trial this week that even more people in the PMO knew Mr. Duffy did not repay his own expenses are putting more pressure on Conservative Leader Stephen Harper, who has long insisted that he was kept in the dark on his chief of staff's decision to repay the expense claims out of his own pocket.

E-mails show that Ray Novak, one of Mr. Harper's closest aides – and now a campaign staffer – was copied on e-mails referring to the plan.

Mr. Harper dodged a question on the matter during a campaign stop in Hay River, NWT, on Friday, saying: "These are the actions of Mr. Duffy and Mr. Wright. You hold people responsible for their own actions. You certainly don't hold subordinates responsible for the actions of their superiors."

On Day 3 of Mr. Wright's testimony, the court heard how the PMO was furious with the Conservative Senate leadership after it acted to address a growing expense scandal without informing the PMO – measures that helped to jeopardize a plan in which Mr. Duffy would himself reimburse taxpayers for his questionable claims.

Mr. Bayne used internal e-mails to paint a picture of a Prime Minister's Office that ruled the Conservative majority in the Senate with an iron fist when it needed to do so.

"You're not just commanding and controlling Senator Duffy. The PMO is controlling Senate leadership here," he said to Mr. Wright in court. "They are not to issue independent statements. They're to clear anything and everything they do with you, and they apologize for having stepped out of line, right?"

Mr. Wright replied: "I certainly did ask that office to co-ordinate with us and clear things with us before they took actions, yes."

Mr. Wright quit the PMO in May, 2013, after it was revealed that he personally paid $90,000 to reimburse taxpayers for questionable expenses incurred by Mr. Duffy after the PEI senator balked at paying them himself.

PMO e-mails cited by Mr. Bayne in court on Thursday show how angry Mr. Harper's office was after Conservative leadership in the Senate, namely then-senator Marjory LeBreton, co-wrote a letter with Liberal Senate Leader James Cowan that called for a crackdown on senators claiming taxpayer-paid allowances for second homes.

Ms. LeBreton, then the Conservative Senate leader, and Mr. Cowan had set in motion a process to target questionable expenses that end up branding senators as rule breakers. "We request you proceed to interview each senator who has claimed a secondary residence allowance to confirm the legitimacy of such claims. Should any senator be unable to convince you that the claim is valid that senator should be required to repay immediately all monies so paid with interest," the letter instructed Red Chamber staff.

This letter was made public in early February, 2013, and helped to jeopardize a plan being hatched by the PMO to get Mr. Duffy to quietly repay his housing expenses and promise not to make further claims, as long as it was made clear that he had not intentionally broken the rules and he was removed from a list of senators being targeted for audit.

It was important to Mr. Duffy that this process not put at risk his qualification to sit as a PEI senator and not brand him a rule breaker. In February, 2013, he was growing increasingly adamant that he had, in fact, done nothing wrong.

An e-mail cited by Mr. Duffy's lawyer illustrates the anger the Ms. LeBreton and Mr. Cowan letter triggered in the PMO when Mr. Novak fumed about the Senate leadership releasing their crackdown publicly.

"Why on earth did their letter to the committee have to be public? It's as though there is a deliberate strategy to feed every media cycle with this," Mr. Novak wrote on Feb. 11, 2013, to Mr. Wright and other PMO staffers.

Mr. Wright, for his part, penned an acid note to fellow Harper aides asking them to thank Ms. LeBreton for all the trouble she caused. "Please convey my thanks to Sen LeBreton's office for making this more difficult," he wrote on Feb. 11, 2013.

On Thursday in court, Mr. Wright called the tone of this letter "facetious," but he challenged Mr. Bayne's characterization that the PMO controlled the Conservative presence in the Senate. "It doesn't actually work that way," he said.

The LeBreton and Cowan letter prompted significant worry by Mr. Duffy, and PMO staff themselves remarked in e-mails how the crackdown on housing allowances would ensnare the senator. "I am worried this letter has pretty much hooped Senator Duffy," PMO staffer Patrick Rogers wrote to Mr. Wright and others.

Mr. Wright, who works for private equity giant Onex Corp., has returned from London to testify in the Duffy case.