Senator Mike Duffy has testified that Stephen Harper benefited politically by having him capitulate to a Prime Minister's Office scheme in which he would admit he mistakenly made expense claims on his Ottawa residence and that he would repay the amount.

Duffy has pleaded not guilty to 31 charges of fraud, breach of trust and bribery related to expenses he claimed as a senator and later repaid in March 2013 with $90,000 from Nigel Wright who was then the prime minister's chief of staff.

During testimony in the Ottawa provincial court on Tuesday, Duffy said he received no benefit from that payment or by agreeing to the PMO's repayment scheme.

"Anything I did in this political manoeuvre was for the prime minister's benefit, not for mine," Duffy testified. 

Duffy's lawyer Donald Bayne asked the senator if he received numerous emails, verbal instructions and scripted statements to execute the plan as the "right thing to do."

"Yes, including from the prime minister of Canada Stephen Harper. He said 'Nigel will make the arrangements.'

"I was ordered to do this by the prime minister of Canada."

Bayne asked if Duffy received an advantage or benefit from Wright's payment.

"It was a political advantage for Stephen Harper," Duffy said.

Duffy said he was "coerced into going along with this" under the threat of losing his job. 

"I did what they insisted I do and read the script that they wrote and then found out in the fall of that year I was suspended without pay or benefits for two years."

Coerced into scheme, Duffy insists

Court has heard that members of the Prime Minister's Office, including Wright, had formulated the plan under which Duffy would admit he had made an unintentional mistake and pledge to repay the expenses, at the time thought to be around  $32,000. 

On Feb. 22, the P.E.I. senator went public about the expense controversy, telling CBC News he "may have made a mistake" by claiming the housing allowance for his Ottawa home and saying he would be paying the expenses back.

But Duffy said he was forced to make this concession by the Prime Minister's Office.

Duffy said he had insisted he had done nothing wrong by claiming these expenses — and that members of the Prime Minister's Office, along with Harper, had agreed with him, but they wanted this political controversy quashed. 

He said he was begging Harper's top aide Ray Novak that he not be forced to admit a mistake and repay the expenses, just five minutes before he eventually went public.

"I'm not a cheat, I'm not a thief. I don't break the rules and I was not going to embrace this kind of process," he said.

"I was pleading with all these born-again Christians."

Duffy said he eventually capitulated to the scheme after intense pressure from the PMO, Conservative senators and threats by Wright that he would be kicked out of caucus and possibly the Senate if he defied the prime minister.

"I fought and I fought and I fought. And I tried every kind of resistance. "When they pulled that knife out and held it over my head, I felt I had no other choice."

Party balked at payment

Although initially Duffy's expenses would be paid out of the party's fund, the deal went sour when it was learned Duffy's expenses actually totalled $90,000. Conservative Senator Irving Gerstein, who was chair of the Conservative Party fund, would no longer allow money from the fund to be used to cover the expenses, Wright testified. He said that's when he personally intervened with his own money

Duffy testified that he thought the money was coming from the party fund and never knew that Wright had personally paid. 

"Why would Nigel Wright, why would anybody write a cheque for $90,000 to somebody who you knew didn't owe any money. I mean it's crazy."

Earlier in the day, Duffy testified that on Feb. 13, he had a conversation with Harper and told him that he was being railroaded. He said he told Harper it was unfair that members of the PMO were forcing him to admit he made a mistake by claiming housing allowances for his Ottawa residence and that he would repay the amount.

The P.E.I. senator said he also complained that the PMO said he didn't spend enough time in his province.

Duffy testified that Harper said, "Well, you only spend 66 days" there.

Duffy testified that he said that that was "a lie," that he spent more time in the province, and that he was also on the "rubber chicken circuit" on behalf of the prime minister.

Duffy said Harper just "looked at me with a blank look."

Mike Duffy arrives for day 58 of his trial0:58

He testified that Harper said: "I know it seems unfair. I know you didn't break the rules, but the rules are inexplicable to our base. Therefore, you are going to have to pay the money back. Nigel will make the arrangements."

Duffy said he was in shock, and couldn't believe how Harper could be so disloyal to someone who had been so loyal to him.

Duffy said he believed that Harper would change his mind, that he will "think about it, and his conscience will kick in."

Senate speech by Duffy

Duffy's testimony Tuesday about Harper's comments echoed statements he made in a fiery speech to the Senate in Oct. 22, 2013, as he faced suspension by the Red Chamber over his expenses.

At that time, Harper's spokesman confirmed the Feb. 13 meeting, but said Harper made it clear to Duffy that any inappropriate expenses should be repaid. The next day, Oct. 23, Harper told MPs in question period: "the issue is not a matter of perception."

Mike Duffy Stephen Harper photo - exhibit104

Senator Mike Duffy says this photo, from the Prime Minister's Office, shows the moment he made a plea to Stephen Harper about repaying his Senate expenses. The photo was entered as evidence at Duffy's trial Tuesday. (Prime Minister's Office)

"You cannot claim an expense you did not incur. That is not right, that is not proper, and that will not be tolerated in this party," Harper told the House that day, contradicting Duffy's assertion Harper had told him his expenses weren't improper.

"Mr. Duffy now says he is a victim because I told him he should repay his expenses. You're darn right I told him to repay his expenses," Harper told MPs that day.

Bayne finished his questioning of Duffy on Tuesday. The Crown will begin its cross-examination on Wednesday.

With files from John Paul Tasker