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Senator Mike Duffy arrives to the Senate on Parliament Hill in Ottawa on Oct. 28, 2013. (DAVE CHAN FOR THE GLOBE AND MAIL)
Senator Mike Duffy arrives to the Senate on Parliament Hill in Ottawa on Oct. 28, 2013. (DAVE CHAN FOR THE GLOBE AND MAIL)

How the Duffy deal was reached - and how it collapsed Add to ...

With the latest batch of RCMP documents, the timeline of the deal to repay Mike Duffy’s expenses is becoming clearer.

The scandal over Nigel Wright’s decision to give Mr. Duffy $90,000 to repay expense claims has shaken the Conservative government and the Prime Minister’s Office – leading to Mr. Wright’s resignation as chief of staff, Mr. Duffy’s suspension from the Senate and RCMP investigations into each of them.

A court document released Wednesday – based on police interviews and 2,600 emails, though not proven in court – offers new details on how the Duffy deal transpired.

Wright gets involved

The issue landed on the radar of Mr. Wright on Feb. 5, police say. He spoke with Mr. Duffy two days later, and the senator professed innocence.

Mr. Wright had thought Mr. Duffy agreed to repay some claims, but “felt deflated” upon hearing from Mr. Duffy’s lawyer, RCMP wrote. The sides continued to talk. On Feb. 13, Mr. Duffy approached Prime Minister Stephen Harper, leading Mr. Wright to “interject” in the discussion.

Later that month, Mr. Duffy’s lawyer proposed a deal with five conditions. The Deloitte audit into his residency would be abandoned; the government would acknowledge Mr. Duffy could continue to serve as a senator from PEI; Duffy would be “kept whole,” or not be on the hook for his legal fees or repaying his expenses; he’d could collect a living allowance going forward, if rules allowed; and both sides would stick to “media lines,” or talking points designed to conceal the pact.

Not all those would happen, but Mr. Wright thought the Conservative Party was “open to keeping Sen. Duffy whole,” or paying his bills.

Senator Irving Gerstein, chair of the Conservative Fund, told Mr. Wright the Fund would cover $32,000 in housing claims only – “nothing else,” Mr. Wright stressed – and legal fees, estimated by Mr. Wright to be $12,000.

Mr. Wright said Feb. 22 he had ”the go-ahead” on repayment, but that “I do want to speak to the PM before everything is considered final” An hour later, he said: “We are good to go from the PM.”

It’s unclear what was said in that hour. At that point, the Conservative Party was planning to pay roughly $44,000 on Mr. Duffy’s behalf. But Mr. Harper said Wednesday he understood that they were “good to go with Mr. Duffy repaying his own expenses.”

Mr. Duffy went and got a mortgage, part of an apparent attempt to conceal the source of the repayment. His lawyer wanted a deal in writing, which the PMO refused. The deal wouldn’t last anyhow.

How it fell apart

On Feb. 26, Mr. Wright learned Mr. Duffy had been charging meals and per-diems, and that the bill would be roughly $80,000, rather than $32,000. “I am beyond furious. This will all be repaid,” Mr. Wright wrote in one e-mail.

The next day, the final tab came in – $90,172.24. The party wouldn’t pay it.

On March 1, Mr. Gerstein got an e-mail from Mr. Wright, saying he “had a solution,” but it’s unclear what. On March 8, though, Mr. Wright wrote fellow PMO staffer Chris Woodcock saying: “For you only: I am personally covering Duffy’s $90k.”

Meanwhile, Mr. Gerstein was working a “contact” at Deloitte to get them to agree to stop the audit if Mr. Duffy’s claims were repaid. “The Senator will call back once we have Deloitte locked in,” a PMO said after speaking with Mr. Gerstein on March 8.

Talks continued. On March 21, Senate Conservative Leader Marjory LeBreton wrote Mr. Wright, recounting a conversation with Mr. Duffy. “I said ‘Mike you have just got to trust us on this and please don’t go crashing around invoking Nigel’s name or that of the PMO. Go through your lawyer and pay the money – I’m sure that everything will be fine,’” Ms. LeBreton recalled.

But Mr. Duffy had made it clear he couldn’t pay the money himself, and wouldn’t anyhow.

On March 25, Mr. Duffy’s lawyer sought a guarantee from the PMO that the Conservatives would “vote against any motion to refer the matter to the RCMP.” Mr. Wright refused.

RCMP believe Mr. Wright’s cheque was sent to Mr. Duffy’s lawyer on March 25, and Mr. Duffy’s cheque was sent to the Senate on March 26.

Controlling the fallout

The issue was dormant until the audit was done – the first draft of an ensuing Senate report was critical of Mr. Duffy, and therefore “went against the media lines and conditions already agreed upon by the PMO and Senator Duffy.” It violated the deal. The PMO then “set out to have the Senate Report changed to reflect how they wanted it to appear,” RCMP allege.

On April 19, Mr. Duffy announced he’d repaid the $90,000, but reached out around that time to speak to the auditors – it’s unclear why.

The next day, the Senate steering committee sent a letter to Mr. Duffy saying the audit was done and he didn’t need to meet with auditors. This had the effect of pulling the rug out from under him. “My only concern is Sen Duffy. Even though he claims he is careful in what he says and does, the evidence is the opposite!” Ms. LeBreton wrote in one e-mail.

On May 8, “major changes” were made to the Senate report – sections critical of Mr. Duffy were removed. The whitewashing was opposed by Chris Montgomery, who worked for Ms. LeBreton, but the PMO pressed forward. The revised report was released May 9.

On May 14, Mr. Wright got an e-mail from Andrew MacDougall, then Mr. Harper’s communications director, saying a journalist was asking whether Mr. Wright co-signed a loan for Mr. Duffy to repay the money. Mr. Wright replied: “The PM knows, in broad terms only, that I personally assisted Duffy when I was getting him to agree to repay the expenses. On the specific matter, I did not co-sign a loan.”

That night, CTV reported that Mr. Wright had personally intervened in the audit, and the issue blew open.

The RCMP allege that it was altogether enough to warrant criminal charges against Mr. Wright and Mr. Duffy, though no charges have been laid. Mr. Duffy declined comment Wednesday. Mr. Wright issued a brief statement through his lawyer: “My intention was always to secure repayment of funds owed to taxpayers. I acted within the scope of my duties and remain confident that my actions were lawful.”

In Question Period on Wednesday, Mr. Harper said he wasn’t involved. “The record is very clear. From all documents, the sole responsibility for these actions rests with Mr. Wright and with Mr. Duffy,” he said.

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