National Newswatch

OTTAWA - What exactly went down on Feb. 22, 2013, when the prime minister's chief of staff approached him about how to deal with the Mike Duffy Senate expenses headache?

Two clear but very different versions of events have emerged:

A) Nigel Wright meets with Harper and conceals the details of an agreement with Duffy, but then tells other staff in the Prime Minister's Office that the PM has approved the deal.

B) Harper was informed of and approved a deal, or parts of a deal, that could turn out to be criminal.

Duffy and Wright face police allegations of bribery, breach of trust and fraud in connection with the fateful agreement. No charges have yet been laid.

Stephen Harper's spokesman Jason MacDonald spoke to a variety of media outlets on Sunday to lay out in detail Harper's account, in the wake of a release of an RCMP affidavit on the affair.

MacDonald said when Wright and Harper met that day, Wright sought approval to "compel" a stubborn Duffy to repay his contested housing expenses — at that time estimated at only $32,000.

"You have a caucus member who is actively resisting paying, doesn't believe he did anything wrong, doesn't believe he should repay it," MacDonald told The Canadian Press.

"So Nigel goes back to the prime minister and says, 'We're going to go back to him again and tell him he has to repay it, and he's not going to like that, he's going to resist it and he's going to fight it,' and we all know that even to this day he still doesn't believe he did anything wrong or should have had to repay, and hasn't."

When asked how Wright proposed to "compel" Duffy to repay, whether there was some sort of ultimatum attached, MacDonald said it was just telling Duffy to repay. The opposition have ridiculed the suggestion that Harper's permission was sought simply to have Duffy repay his own expenses.

Wright's version, revealed in emails and interviews obtained by the RCMP in their ongoing investigation, suggests Wright went to Harper with a different, much more elaborate scenario that included covering Duffy's expenses.

At the time, discussions were underway between the PMO and Duffy's lawyer Janice Payne that would see the embattled senator repay his expenses and say so publicly, even though he felt he had nothing wrong. In exchange, the party would repay him for the outlay, Duffy would be spared any further questions about whether Ottawa or PEI was his primary residence, and he would be withdrawn from a Senate-commissioned audit.

At the time, Duffy was being scrutinized for claiming housing expenses for a secondary residence in Ottawa, even though that was where he mainly lived.

Wright wrote to PMO lawyer Benjamin Perrin and other staffers on Feb. 22 about the deal.

"Ben, please go back to Ms. Payne on these points and ascertain where they stand on everything else. I do want to speak to the PM before everything is considered," Wright wrote to the PMO lawyer and other staffers on Feb. 22, messaging back an hour later: "We are good to go from the PM..."

Ultimately, when Duffy's expense bill reached $90,000, an apparently exasperated Wright decided to cover the cost himself — something at least six other Conservatives were told about. Harper has insisted he was not in the loop about that either.

When the story broke in the media in May, Wright wrote to another PMO staffer telling him, "The PM knows, in broad terms only, that I personally assisted Duffy when I was getting him to agree to pay the expenses."

Three of the other major figures in the deal with Duffy — Sen. Irving Gerstein, former PMO director of issues management Chris Woodcock, and parliamentary affairs manager Patrick Rogers remain employed by either the party or the government.

MacDonald repeated Harper's argument that Wright bears sole responsibility.

But Gerstein, chairman of the Conservative Fund Canada, was not Wright's subordinate. In fact, Wright sought Gerstein's approval to use party funds to repay Duffy.

The 80-page RCMP court file showed that Gerstein approached a contact he knew at the firm Deloitte to ask about the audit they were doing on Duffy's expenses for the Senate.

They wanted the examination of Duffy's residency to be declared moot as soon as he repaid his expenses, which was part of Duffy's demands.

Following that Gerstein contact, emails between figures inside the PMO suggest that some sort of information was communicated to them about the audit. The Senate committee that first commissioned the audit has summoned Deloitte to answer questions about this on Thursday.

Harper was also unaware this was going on, MacDonald said.

"One, he was not aware that Mr. Gerstein was reaching out to Deloitte or had been asked to reach out to Deloitte, and again had he known about that he would have put a stop to it," he said.

MacDonald and Harper have emphasized that only Wright and Duffy face allegations of criminal wrongdoing. But did they breach any moral or ethical standards by playing along with the Duffy scheme?

"Ultimately, Mr. Wright has taken responsibility for this. Yes, he has identified people that he informed of what he was doing, or involved in some way, but ultimately these folks are not being investigated by the RCMP," said MacDonald.

Wright's lawyer did not immediately respond to an email asking for reaction to MacDonald's comments, but Wright issued a statement last week saying he acted within the scope of his duties and is confident his actions were lawful.

Duffy has said he was coerced into admitting fault on the threat of losing his Senate seat.

NDP Leader Thomas Mulcair told reporters Sunday that MacDonald was "talking nonsense" when he said Harper did not know about the Duffy deal with PMO.

"Of course everything points to Stephen Harper knowing full well what's going on his office," said Mulcair. "He's a control freak and it's simply not credible that every single senior member of his staff was involved in this but somehow he knew nothing of it."

When it comes to another point of controversy, the fact the PMO was deeply involved in shaping a Senate report on Duffy's expenses, Harper's office says it's not concerned. Emails show that pressure was brought to bear by PMO staff, later carried out by key senators, to remove criticism of Duffy from the report and even stop the audit.

The internal economy committee has been traditionally viewed as one of the most non-partisan bodies in the upper chamber, and some — including the Senate clerk — bristled at the interference.

"On the broader point of working with senators, senators are caucus members and the prime minister works with caucus members on government issues, whether it's policy issues, whether it's communications issues, and so it wouldn't be out of the ordinary for people from our office to be working for senators..." said MacDonald.

"We know what's now in the RCMP document and at the end of the day the Senate itself had said that they believed they acted independently and came to an independent conclusion."

—With files from William Campbell

The Canadian Press
Click here for more political news headlines