Nigel Wright offered to resign at the outset of the Senate scandal, shortly after revelations that he gave a $90,000 cheque to personally refund Senator Mike Duffy's illegitimate expense claims, sources said.
Mr. Wright's resignation, announced Sunday morning, comes as a one-two punch to a Conservative government that has campaigned consistently on issues of accountability and economic stewardship.
Stephen Harper initially refused his chief of staff's offer, as the Prime Minister and his office decided to weather the storm, with Mr. Harper sending out the message that he stood by his top aide.
While Mr. Duffy and his colleague Pamela Wallin quit the Conservative caucus over the expense scandal to sit as independents last week, Mr. Wright stayed put.
But it wasn't enough.
The controversy raged on, and questions mounted about what the Prime Minister knew and when.
Mr. Wright spent the past few days – including his 50th birthday Saturday – reflecting on the matter and consulting with friends, before telling the Prime Minister he felt he was hurting the Conservative Party and government. People in contact with Mr. Wright said he is upset and regrets giving Mr. Duffy the money, stating he made the gesture in a moment of weakness.
"He says it's something he wishes he would not have done," a source said. "He had Duffy in his office, whining and complaining. Duffy cried poor, he complained about his health. In a weak moment, he broke down and said he'd help."
The departure means that Mr. Harper has lost one of his main economic advisers, and highlights the extent to which the government's agenda has been sidetracked by the controversy over senators' expenses. Mr. Harper's new chief of staff is his long-time aide, Ray Novak, who has the most seniority in the PMO at the relatively young age of 36.
While Mr. Novak was a lead adviser on matters of foreign affairs, defence and national security, he does not possess Mr. Wright's business or financial acumen. Still, he does offer a reassuring yet low-profile presence to Mr. Harper, who has leaned on Mr. Novak's advice for more than a decade, including years in which they constantly travelled together.
The PMO continued to keep a tight lid on all information related to the controversy over the weekend, and efforts to reach Mr. Wright and Mr. Duffy proved unsuccessful.
Mr. Wright said in his resignation announcement released on Sunday morning that he did "not advise the Prime Minister of the means by which Sen. Duffy's expenses were repaid, either before or after the fact."
"My actions were intended solely to secure the repayment of funds, which I considered to be in the public interest, and I accept sole responsibility," Mr. Wright said.
In a separate statement, Mr. Harper said he trusted his chief of staff's motives in making the payment to Mr. Duffy, although he confirmed that he did not agree with the procedure.
"I accept that Nigel believed he was acting in the public interest, but I understand the decision he has taken to resign. I want to thank Nigel for his tremendous contribution to our government over the past two and a half years," Mr. Harper said.
The opposition argued that by paying the money to Mr. Duffy, Mr. Wright actually impeded a Senate investigation into the expenses and thus attempted to thwart the disclosure of any potential wrongdoing. Once Mr. Duffy repaid his expenses, he stopped collaborating with the ongoing audit into the expenses. In addition, the Conservatives insisted that other senators caught in the scandal – Patrick Brazeau and Mac Harb – should also repay taxpayers, although Mr. Wright's financial help was never offered to them.
The Prime Minister's Office has argued that Mr. Harper was not made aware of the payment to Mr. Duffy at the time of the deal, but that has not stopped calls for a full probe, including details of the Prime Minister's actions and knowledge of events.
"Nigel Wright needs to come clean on the details of the deal he negotiated to cover up for Senator Duffy's expense claims and whitewash the Senate committee report," NDP MP Charlie Angus said. "With so many unanswered questions and serious allegations, more than ever we need an independent investigation to determine exactly what happened."
Liberal MP Dominic LeBlanc said that the Ethics Commissioner and the RCMP need to continue their investigations into the matter, but that the first step is for Mr. Harper to "actually fess up in the House of Commons."
"Mr. Wright's resignation only elevates the number of questions to which there appears to be no answers," Mr. LeBlanc said.
Associates of Mr. Wright say he does not have a ready plan for the next step in his career, and will take some time before making a move. He would likely find open doors in private equity, where he made his fortune working as a deal-maker for Onex Corp., the investment company controlled by Gerald Schwartz.
Mr. Harper will be speaking to his caucus on Tuesday ahead of a planned trip to Peru and Colombia. It remains unclear when he plans to address the controversy in public for the first time, and whether it will be at home or abroad.