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Corruption Trial in Canada Dishes Political Secrets as Prime Minister’s Former Right-Hand Man Testifies

A scandal involving a Conservative senator returned to the spotlight this week, with the resumption of a fraud and bribery trial. Prime Minister Stephen Harper kept his distance as he campaigned for re-election.

by Justin Ling
Aug 14 2015, 5:25pm

Nigel Wright leaves the Ottawa courthouse. Photo by David Kawai

A visibly nervous Nigel Wright took the stand on Wednesday morning to begin answering questions on his involvement in paying out what is alleged to be a $90,000 bribe, made out to a sitting Canadian senator as part of one of the most closely scrutinized political corruption stories in Canada's recent history.

Wright served as chief of staff to Conservative prime minister Stephen Harper from 2010 to 2013. At the time, he was arguably the most important operator inside the Canadian government, apart from Harper himself.

It was in that role that Wright cut a hefty cheque, paid out to Senator Mike Duffy, to cover a host of expenses incurred by the senator that were, according to two audits, inappropriate.

Email discussions, released as part of the trial, around the 90,000 cheque to Duffy — which police allege was accepted as a bribe, even though Wright has not been charged with giving a bribe — and the decision to kill politically problematic audits into the senator have offered a rare glimpse into the prime minister's inner sanctum.

Details of the affair have trickled out for months, as Duffy fights to beat 31 criminal charges in an Ottawa courtroom. If he is convicted, he could face years in jail.

In exchange for the money, the prosecution alleges, Duffy was expected to cooperate with a political effort to kill those two audits into his expenses and cooperate with a communications policy designed to mislead the public and the media.

The scandal has saturated the Canadian airwaves for the last two years and sharpened calls for an overhaul — or an outright abolition — of the unelected senate. It has also dogged Harper and put him on uneven footing as he fights his way through a tough re-election effort. A general election is scheduled for October 19.

The prime minister distanced himself from both the trial and Wright, opting to campaign in the north and western parts of the country while maintaining that his former deputy has kept him in the dark about the potentially illegal payment.

The Backstory

Duffy enters the Ottawa courtroom. / Photo by David Kawai

Duffy was appointed to the Canadian Senate by the prime minister in 2009, and remained a member of the Conservative caucus until his resignation in 2013.

Originally named as an agent of change, committed to Harper's plan to turn the Senate into an elected and accountable body — its members are currently appointed solely on the advice of the prime minister, and sit until they reach the age of 75 — Duffy quickly became known for his hyper-partisan attitude. He was a fixture at fundraisers and campaign announcements nation-wide.

But Duffy, a former broadcast journalist, saw his political life fall apart after it was revealed that he was claiming housing, travel, and per diem expenses for his home in Kanata, Ontario, not far from Parliament Hill where he worked, which he listed as his secondary residence. Duffy collected that cash based on the idea that his home on Prince Edward Island — a cottage that he spent scant time in — was his primary residence.

When news broke that Duffy was collecting taxpayer dollars to live in a home that he seldom even visited, two audits were launched to look into the misspending — one from the Senate itself, and another from independent auditing firm Deloitte. The Prime Minister's Office (PMO), publicly, ordered the senator to pay back the impugned money. Duffy told me at the time that he had cut a cheque for the expenses, which he chalked up to a series of clerical errors.

Yet, behind closed doors, Duffy was telling Wright that, despite his $132,300-a-year salary, he didn't have the cash to pay the expenses back. So Wright cooked up a plan to cover the money, in an effort to quell criticism.

Wright told the court that his initial plan was to have the Conservative Party quietly cover the amount from its bank account. When the total amount of Duffy's problematic expenses was revealed — $90,172 — that solution was kiboshed. Instead, Wright, who served as a manager at private investment firm Onex Corporation and has a net worth well into the millions, cut the cheque himself. 

Wright called the $90,000 a "good deed" and said he ultimately came to regret the move. The former chief of staff said he repaid the expenses himself for the sake of protecting the taxpayer from having to eat the charge.

It was that decision that led to some of the criminal charges against Duffy, Wright's exit from the prime minister's office, and a litany of scrutiny and criticisms of Harper's administration.

The Trial

At this point, Duffy is the only one to face charges.

The 31 offenses he's facing range from breach of trust, bribery, to fraud. Police allege that Duffy, as a sitting politician, accepted material benefit in exchange for political consideration and, further, he worked with Wright to mislead the public by covering up the deal.

Wright's testimony has attracted the most attention in what was already described as a media circus.

The defense has targeted the vague rules that govern senators' expenses, and gone after Wright as the puppetmaster that cajoled Duffy into the shady deal. In one email, produced by the defense, Duffy says he was unaware that Wright's funds covered his expenses, writing that "I said I did not want to know the name of the donor because I did not want to be beholding [sic] to anyone."

While Wright has not been charged in connection with the case, the whole affair has been politically disastrous for the prime minister.

Aside from Duffy, no fewer than eight members of parliament, staffers, and senators have been accused, charged or convicted of various corruption and spending violations. Their faces were strung together for an attack ad from the rival NDP.

One of the most damaging lines for the prime minister came out of police documents filed last year. In them, Wright emails his cohorts in the prime minister's office, telling them he has to check with the boss before he can forge ahead with the scheme for Duffy. Later, he writes: "we are good to go from the [prime minister.]"

Wright cleared up on the stand this week that "good to go" wasn't in relation to the $90,000 cheque, but instead it was a green light for the media lines and general strategy to put the scandal to bed.

Nevertheless, there are still questions about what the prime minister did know.

"The PM knows, in broad terms only, that I personally assisted Duffy when I was getting him to agree to repay the expenses," another email from Wright notes.

A document entitled 'scenario for repayment' appears to have been the groundwork for the scheme.

"The purpose is to put an end to the ongoing questions about his expenses," it reads. "A proactive repayment would allow Senator Duffy to say he is doing the right thing without being found guilty of breaking the rules by Deloitte. The Senate Committee would halt the audit provided that he acknowledges an error or wrongdoing."

Media lines in that document that Duffy was to read include: "I will be repaying in full the housing allowance associated with my house in Ottawa."

Reporters asked the prime minister at a campaign event on Thursday in Saskatchewan how he could sign-off on statements that appeared to quite deliberately mislead the public.

"Quite the contrary," Harper told the crowd. "As I've said, this came to my attention, my concern in this entire matter, is that Mr. Duffy was making use of taxpayer dollars in a way that could not be justified."

He declined to address any of the actual revelations from the case.

In the end, Wright and his staff were unable to quash the two audits. Between those documents, and investigations from reporters and the Canadian police, the whole affair came to light.

An Independent Senate?

Protesters outside the courthouse hold up masks of Duffy and Harper, and a fake $90,000 cheque. / Photo by David Kawai

In the hundreds of emails released as a part of the trial, serious questions have been raised about how independent the Senate really is.

Generally considered a home of 'sober second thought,' the Senate was intended to be a check on the power of the democratically-elected House of Commons.

In recent years, it's received heavy criticism that it is basically subservient of the prime minister.

When Green Party leader Elizabeth May accused the prime minister of having the Senate kill a democratically-passed piece of legislation during a leaders' debate in August, Harper rejected the criticism.

"We cannot force them [the senators] to do anything," Harper said.

In 2014, a VICE News investigation revealed that the Conservatives appeared to put significant pressure on the Senate to kill legislation affording protections for transgender Canadians.

The emails, released this week, paint a very clear picture of that management from the prime minister's office.

"The report can be — if Kanata [Ontario] were a primary residence, here is how much would be owed. It shouldn't conclude that 'Kanata is the primary residence,'" an email from Wright to one Conservative senator reads, instructing her on what the final report of the audit committee should look like.

Another email contains a draft version of that report that has been substantially edited by the prime minister's office to remove language that could cause blowback on Duffy.

One email, from February 2013, reads that the author of the audit, a non-partisan staffer, "threatened legal action if the original audit/report was not released" as the prime minister's office was trying to rewrite the report. It's not clear what became of that threat.

Other senators kicked up problems. Senator Carolyn Stewart Olsen, who pledged to do whatever it took to quell the issue, wrote of two problematic senators: "I am not certain if it is a feeling that they are independent.

Related: Dozens of Canadian Politicians May Go to Jail Over Spending Probe

Changes to language in the report were at the behest of the prime minister, who ordered that there should be no question of the qualifications of the senators he appointed. The fear amongst some, including Duffy, was that the more scrutiny was applied to his situation, the more questions would be raised of whether he was ever eligible to be appointed as the senator for PEI in the first place. Other Harper-appointed senators may have faced similar challenges, the emails show.

"As long as they maintain a residency in their province," reads a note from Harper, included in an email from Wright to his office staff, "we will deem that as sufficient."

The constitution of Canada stipulates that senators "shall be resident in the Province for which he is appointed." Duffy has not lived full-time in PEI since the 1970s.

Nevertheless, the prime minister's directive later made it into the Senate audit report of Duffy, and two other senators. In February, Chris Woodcock, a senior staffer in the PMO, writes to Wright: "the PM mentioned to me that this report should say that all senators are qualified to sit in the Senate on the basis of owning a residence."

Senate majority leader Marjory LeBreton promised to ensure the prime minister's will was done.

"I will double my efforts to ensure there is no reference to the legitimacy of of Senate seats in the report," LeBreton wrote to Wright.

Another email chain between Wright and others discusses a request from Duffy to commit, in writing, that they will not refer his case to anyone, including the Royal Canadian Mounted Police.

"How can we do that?" writes Wright. "If someone thinks a crime has occurred, can we have an internal agreement not to refer it to the RCMP? I think that would be a scandal, no?"

Instead, the staffers promised to add language that they would not refer his case to "any other party."

Eventually, efforts to whitewash the reports failed. Deloitte released a report finding, amongst other things, that Duffy incurred expenses in Ottawa, despite being in another part of the country at the time.

With that report public, the Senate committee released a report echoing the auditing firm's findings.

The senator resigned from the Conservative caucus the week after, and was suspended from the Senate itself in a divisive late-night vote the following November.

Duffy's two-year suspension, without pay, was nullified in August when the prime minister dissolved Parliament and called a new election. He began receiving his $132,300 salary again on August 2.

Follow Justin Ling on Twitter: @justin_ling

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