Harper's chief of staff bailed out Sen. Mike Duffy

OTTAWA -- Less than a week after the Conservatives hailed Sen. Mike Duffy's "leadership" in repaying $90,000 in improper housing expenses, it turns out the office of an entirely different leader made the bill go away.

Stephen Harper's chief of staff Nigel Wright personally covered Duffy's repayment, the Prime Minister's Office said Wednesday -- a transaction one insider described as a gift between friends that occurred without Harper's knowledge.

The surprising transaction is raising questions about just how involved the Prime Minister's Office might have been with an independent audit into Duffy's expenses, and how they later portrayed that audit publicly.

The Senate's conflict of interest code explicitly prohibits senators from accepting any gift that "could reasonably be considered to relate to the senator's position." The Senate ethics officer refused to comment on the matter Wednesday, despite the fact gifts are supposed to be publicly disclosed.

One government source, speaking on anonymity because he was not authorized to discuss details publicly, said the transaction was a gift to help a friend in financial difficulty, and that Harper knew nothing about it.

But according to a CTV News report Tuesday night, Duffy appeared to contradict the PMO conformation in an email to the network in which he claimed he secured a loan to repay his expense claims.

"The Royal Bank helped me," Duffy reportedly wrote in the email. "I dealt with my bank personally. Nigel played no role."

NDP ethics critic Charlie Angus has called for a full investigation, saying the prospect of a $90,000 gift doesn't pass the smell test.

"We can't trust the Senate; obviously the Senate has no credibility on this. We can't trust the prime minister's word," Angus said.

"But we can't allow this to be swept under the carpet because this looks and smells like a cash payout from the Prime Minister's Office. This is as about as serious as it gets."

The expense claims of Duffy and two other senators -- former Conservative Patrick Brazeau and former Liberal Mac Harb, both now sitting as independents -- were examined by auditor Deloitte after they were accused of improperly claiming a housing allowance intended to compensate those who must maintain a secondary residence in Ottawa.

Deloitte concluded that all three live primarily in the national capital region. However, the auditor conceded that the rules and guidelines governing primary and secondary residences need to be clarified.

The repayment of Duffy's expenses, facilitated by Wright, had a direct impact on the audit commissioned by the Senate and the amount of information that has ultimately been made public.

Deloitte noted in its report that Duffy stopped co-operating with the audit once the repayment was made in March.

"We received a copy of a letter dated March 26, 2013, from his counsel indicating that Sen. Duffy had repaid an amount regarding housing and living allowance, and also indicating Sen. Duffy's participation in the review of the requested information was no longer needed," the firm wrote.

Government Senate leader Marjory LeBreton declared Duffy's expense matter closed last week, pointing to his repayment and making note of the finding that the rules governing primary residence are unclear.

But Duffy did not provide auditors with financial statements, credit card statements or details on his whereabouts for certain periods of time. He also did not meet with the auditors.

Now the government is refusing to provide any detailed breakdown of the expenses repaid by Duffy, keeping secret the full circumstances under which he was making claims.

In one instance caught by Deloitte, Duffy claimed a per diem for Senate business while he was in Florida. He attributed the claim to a "clerical error." In other instances, it's unclear whether Duffy was eligible to make a claim.

"Based on the information provided in the travel claims, it is not clear from the claims where Sen. Duffy was located on days he claimed per diem amounts," the audit says.

At the same time, the government has been sharply critical of Harb and Brazeau, both of whom are resisting demands to repay their own housing expenses.

In Brazeau's case, auditors found the senator actually met the four criteria they had set up to establish a primary residence. But the Senate committee determined he had not spent enough time in Maniwaki, Que., to warrant the designation of "primary" and demanded payment of $48,744.

Deloitte concluded that Harb had not met the criteria, and the Senate is asking him to repay $51,482.

Both Brazeau and Harb provided Deloitte with much more documentation than Duffy did, including financial statements. They also met with the auditors in person.

Harper's office continued to push Wednesday for Brazeau and Harb to repay.

"The independent external audit by Deloitte looking into Senate expenses was completed and the results tabled," said PMO spokesman Andrew MacDougall.

"Mr. Duffy has reimbursed taxpayers for his impugned claims. Mr. Harb and Mr. Brazeau should pay taxpayers back immediately."