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Suspended Senator Mike Duffy arrives at court April 7, 2015 in Ottawa.Dave Chan/The Globe and Mail

Mike Duffy's lawyer is alleging the Prime Minister and his chief of staff weren't convinced the PEI senator had broken any rules when they forced him to pay back $90,000 to taxpayers, shedding new light on one of the most controversial aspects of the Senate scandal.

Mr. Duffy pleaded not guilty to 31 charges of fraud, breach of trust and bribery at the start of the 41-day trial. In his opening remarks, defence lawyer Donald Bayne denied charges that his client repeatedly abused Senate rules to obtain fraudulent living and travel expenses.

However, Mr. Bayne used his main artillery to fight back against allegations Mr. Duffy "corruptly" obtained $90,000 from Stephen Harper's chief of staff at the time, Nigel Wright, to pay back the controversial expenses in 2013.

The payment has been at the heart of one of the biggest political headaches facing the Harper government: Why did Mr. Wright use his personal funds to put an end to a scandal, and who else was aware in the government?

Mr. Bayne provided new details on the deal at the trial, quoting from Mr. Wright's statement to RCMP investigators about his conversation with the Prime Minister on Feb. 22, 2013.

"I was aware of the fact that I was pushing very hard to have a caucus member repay a significant amount of money to which he may have been legally entitled. I needed the Prime Minister to know this," Mr. Wright told the RCMP, according to Mr. Bayne's version of events.

Both Mr. Wright and Mr. Harper have said the Prime Minister was not aware that the $90,000 was ultimately coming from Mr. Wright. Still, the revelation provided new context to Mr. Wright's statement to Conservative colleagues, contained in an already public e-mail, that they were "good to go from the PM" on the Duffy repayment plan.

The Crown will be arguing at the trial that Mr. Duffy was an "equal partner in this arrangement, if not the instigator or the principal party involved in those negotiations."

However, Mr. Bayne said the money was part of a damage-control scenario to force Mr. Duffy to admit that he had made mistakes on his expense claims.

"The payment was the culmination of a conspiratorial strategy directed by Nigel Wright, in concert with a small group of his PMO cohorts and underlings and three senators …," Mr. Bayne said. "Seldom has an extorted person been called an equal partner."

In his opening remarks, Crown prosecutor Mark Holmes alleged that Mr. Duffy repeatedly abused his position to obtain compensation to commute to work, attend funerals of friends, travel out West for family events and pay for inappropriate expenses, including a personal trainer.

Mr. Holmes argued there were even questions as to whether Mr. Duffy was eligible to sit in the Senate as a representative from Prince Edward Island, given he had been living in Ontario for decades and only had a summer cottage in his home province.

Mr. Holmes said the Crown would present evidence that Mr. Duffy got taxpayers to reimburse his travels to British Columbia to attend the opening of his daughter's play, see a newly born grandchild and spend the holidays with his children. In addition, he alleged that Mr. Duffy was compensated by taxpayers to travel to Peterborough, Ont., to buy a puppy.

Mr. Bayne replied that senators were allowed and even encouraged to tack on "family reunions" during Senate business trips, and said the allegations about the dog purchase was false.

Mr. Duffy's defence will be highly political, with Mr. Bayne stating his client, as a former acclaimed television journalist, was a star in the Conservative caucus after his appointment in 2008. Mr. Duffy accepted invitations across the country to appear with Conservative MPs at partisan functions, and was "conscripted by the Prime Minister" to be a front man for the government's Economic Action Plan.

In relation to a $300 payment to a makeup artist that is the subject of a fraud charge, Mr. Bayne pointed out that the woman worked on Mr. Duffy ahead of a G8 meeting, but also did makeup for the Prime Minister that day. Mr. Bayne hinted he would present "graphic evidence" during the trial, potentially a photo, in which Mr. Harper expressed his gratitude toward Mr. Duffy's efforts for the Conservative team.

"Senator Duffy, as every Canadian knows, had a unique senatorial role on his appointment," Mr. Bayne said in his opening remarks. "He travelled extensively at the behest of the Prime Minister and the Conservative caucus."

With a presentation that was theatrical at times, Mr. Bayne presented Judge Charles Vaillancourt with a compendium of Senate rules: "It's not a book of common sense, but it is the book that governs the Senate."

He added that it was not up to the court system to "fill in the gaps" in the Senate's administrative rules. He said Mr. Duffy handled his living and travel expenses, as well as his office budget, according to the wide discretion allowed by the policies and criteria in place at the time.

"Senator Duffy is not to blame if they are found lacking," Mr. Bayne said.

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