Prime Minister Stephen Harper's chief of staff Nigel Wright wrote a personal cheque worth more than $90,000 to pay back Senator Mike Duffy's living expenses, Harper's office confirmed Wednesday.
"Mr. Duffy agreed to repay the expenses because it was the right thing to do," Harper's spokesman Andrew MacDougall said in a statement.
"However, Mr. Duffy was unable to make a timely repayment. Mr. Wright therefore wrote a cheque from his personal account for the full amount owing, so that Mr. Duffy could repay the outstanding amount."
The confirmation came following a CTV News report Tuesday night that Wright intervened to arrange a deal with Duffy that involved him reimbursing taxpayers $90,172 in return for helping him financially and assuring him that the government would go easy on him.
Duffy publicly said he may have made errors filling out the claim forms that declared his P.E.I. home as his primary residence and that he would pay some money back.
On Wednesday afternoon ethics commissioner Mary Dawson announced she is reviewing Wright’s involvement in the repayment of Duffy's expenses. She said she is following up with Wright "in respect of his obligations under the Conflict of Interest Act."
It is likely that Wright, a Harvard-educated lawyer, can afford to personally handle a $90,000 gift of money. Before his Ottawa appointment, he was the managing director of Onex, a private equity firm with assets worth $44 billion.
His job as Harper's chief of staff isn't his first political position. During his 20s Wright was a speechwriter and policy adviser for former prime minister Brian Mulroney.
Money won't be repaid to Wright
It is not expected that the money will be repaid to Wright. Conservative Party spokesman Fred DeLorey told CBC News that the party has not reimbursed Wright for his payment.
Duffy has not yet declared the gift on the Senate ethics office's website.
As for his paying tax on the sum, a spokesperson from Canada Revenue Agency said in an email that gifts aren't generally taxable.
However, the email from CRA also stated that the courts have said that any gift must be freely given, with no "right, privilege, material benefit or advantage conferred on the donor or any person designated by the donor in exchange for the donor making the gift."
Reached by phone Wednesday, Rob Walsh, a former parliamentary law clerk, said, "Nigel Wright is a public official. Any time money passes hands, it raises questions." Walsh added that a full accounting of the deal should be provided by the Prime Minister's Office.
The advocacy group Democracy Watch says in a press release Wednesday that it intends to complain to the Senate ethics office that Wright has violated the Senate's conflict of interest code by offering a gift that is far more generous than the usual hospitality gifts that senators receive as they travel and attend events.
Duffy was asked Wednesday morning for comment and declined.
Duffy, a senator from Prince Edward Island who owns a home in Ottawa, was one of three senators whose living allowance expenses were being reviewed by the external auditing firm Deloitte. He voluntarily repaid $90,172 in March, weeks before the audit was released last week.
Senator Patrick Brazeau, a former Conservative, and Liberal Senator Mac Harb are the other two senators whose expenses were questioned.
RCMP examining expense claims
Senators are eligible for a housing allowance of up to $22,000 per year to cover accommodation while they're working in Ottawa, if their primary residence is more than 100 kilometres from the capital.
Duffy did not co-operate with the Deloitte audit. It noted that he had already paid money back for the housing allowance, but also said he improperly claimed per diem expenses while he was in Florida for non-Senate business. Duffy has also paid back $1,050 for what he explained as a clerical error.
Harper's office said Wednesday that it believes taxpayers should not be on the hook for Senate expenses that are improperly claimed.
"The independent external audit by Deloitte looking into Senate expenses was completed and the results tabled. Mr. Duffy has reimbursed taxpayers for his impugned claims. Mr. Harb and Mr. Brazeau should pay taxpayers back immediately," MacDougall said.
Brazeau, who now sits as an Independent after being forced out of the Conservative caucus because he is facing criminal charges for sexual assault, said Tuesday he doesn't think he should pay any money back. The Senate wants him to reimburse taxpayers about $48,000.
The report recommends that Harb repay $51,000 for housing and mileage claims dating from April 2011.
Asked by CBC News on Wednesday if Wright or anyone affiliated with the Conservative Party had offered money to Brazeau, or to Conservative Senator Pamela Wallin, whose travel expenses are still being reviewed, MacDougall replied, "No to all."
Late Wednesday Senator David Tkachuk, head of the Senate committee that oversaw Duffy's expenses review, rejected what he called press inquiries about "undue influence" the committee may have exerted over the outcome of the audit.
"We had no control — nor did we wish to have control — over what Deloitte would conclude," he said in a statement.
The RCMP said it is examining senators' expense claims following the Deloitte reports, and "may or may not" initiate an investigation.
The NDP jumped on the newest revelations about Wright's involvement, issuing a statement that called for an independent investigation to look into "unethical behaviour and coverups" inside Harper's office.
NDP Leader Tom Mulcair said that there is still a question about whether Duffy is allowed to be a P.E.I. senator since he only lives there 30 per cent of the time. "So this begs the question, how did he ever become a senator and what does he know about the Conservatives for them to be bending over backwards to keep him there, even giving him 90,000 bucks to shut him up?" Mulcair asked.