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Senator Mike Duffy arrives at the Ottawa airport on May 20, 2013.

DAVE CHAN/The Globe and Mail

A Senate committee accused of toning down its report on Mike Duffy's expense claims will reopen its probe of the PEI politician's conduct – the very matter that triggered a controversy now rattling the Harper government.

Conflict of Interest and Ethics Commissioner Mary Dawson announced on Tuesday that she is formally investigating the role of former Harper chief of staff Nigel Wright in the Senate expenses controversy. Mr. Wright resigned on Sunday after it was revealed he used his personal wealth to repay more than $90,000 that Mr. Duffy had claimed improperly as expenses.

Stephen Harper told his caucus on Tuesday he was "not happy and ... very upset" about the matter, but failed to quash growing questions about his involvement before leaving Canada on a four-day business trip to South America.

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At the centre of the furor are allegations the government whitewashed a report from the Senate internal economy committee on Mr. Duffy's living-expense claims.

Sources say an earlier draft of the committee's report devoted more space to picking apart the senator's claim that his PEI cottage was his principal residence.

"His continued presence at his Ottawa residence over the years does not support such a declaration and is contrary to the plain meaning of the word 'primary' and to the purpose and intent of the provision of living allowance in the [National Capital Region]," says a sentence removed from the final report on Mr. Duffy.

On Tuesday, opposition Liberals set in motion efforts to launch special parliamentary hearings that could force the Prime Minister, Mr. Wright, Mr. Duffy and others to testify publicly about all that transpired.

Liberal Senator James Cowan, the opposition leader in the Senate, is alleging Mr. Harper's office violated the sacrosanct privileges of parliamentarians, and may well be in contempt of Parliament.

He is asking the Speaker of the Senate to find the Harper government in contempt of the legislative branch because of Mr. Wright's payment to Mr. Duffy, who quit the Conservative caucus last Thursday as the scandal spread.

Mr. Cowan alleges the payment effectively caused an audit of Mr. Duffy's expenses to be cut short and the final report on Mr. Duffy's actions to be "whitewashed" of harsher language.

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"It's critical that Canadians have confidence in their public institutions," Mr. Cowan said in presenting the motion.

If the Senate Speaker agrees with Mr. Cowan, special hearings would begin.

Mr. Cowan's complaint centres on his allegation that the Conservatives intervened to remove criticism from a Senate internal economy committee report on Mr. Duffy's improperly claimed expenses.

He cited a May 12 CTV news story about that "secret deal" would see the Senator "reimbursing taxpayers in return for financial help and a promise from the government to go easy on him."

The Conservatives moved in a debate Tuesday evening to have the audit into Mr. Duffy's expenses returned to the internal economy committee.

The Prime Minister's Office on Tuesday denied there was a secret deal between Mr. Wright and Mr. Duffy and that, as a result, there is no record of such an arrangement.

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"It is our understanding that no such agreement exists," PMO director of communications Andrew MacDougall said, adding it is up to the Office of the Conflict and Ethics Commissioner to determine this.

The government says the only stipulation Mr. Wright put on the $90,000 given to Mr. Duffy was that the Senator send the amount to the Receiver General to cover the improper claims.

The Senate Ethics Officer has so far not commented on the Wright payment to Mr. Duffy, but the Senate conflict of interest code prevents a member of the Red Chamber from accepting "any gift or other benefit, except compensation authorized by law, that could reasonably be considered to relate to the Senator's position."

A former PMO legal adviser issued a statement on Tuesday challenging media reports that he worked on a deal between Mr. Wright and the Senator.

"I was not consulted on, and did not participate in, Nigel Wright's decision to write a personal cheque to reimburse Senator Duffy's expenses," Benjamin Perrin said. He is an associate professor at the University of British Columbia's Faculty of Law.

"I have never communicated with the Prime Minister on this matter."

Mr. Harper, meanwhile, delivered a public address to his caucus on Tuesday in an attempt to contain the fallout from the controversy.

He spoke in vague generalities about the incidents, telling MPs he "not happy ... [and] very upset about some conduct we have witnessed – the conduct of some parliamentarians and the conduct of my own office." He didn't name Mr. Duffy or Mr. Wright.

Mr. Harper called the controversy a distraction and urged his caucus to remain focused on governing.

The Prime Minister then boarded a plane for a trip to Peru and Colombia – long planned – that will keep him out of the country most of this week.

Foreign Affairs Minister John Baird was left to defend his leader, insisting that the Conservative Prime Minister, known for micromanaging the government, was in the dark about Mr. Wright's cheque. "The Prime Minister was not aware of the payment until last week when reports surfaced in the media," Mr. Baird told the Commons.

The idea of returning the Duffy expenses report to the Conservative-dominated Senate internal economy committee was put forward by Marjory LeBreton, the Government Leader in the Senate, during a dramatic and emotional late-night debate over what the minister acknowledged is a "crisis" in the Red Chamber.

With a report from The Canadian Press

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