Canadian senator pleads not guilty to fraud, bribery

A revised Canadian immigration law came into force on May 29, 2015 enabling the government to revoke the citizenship of persons convicted of terrorism, treason, spying or taking up arms against Canadian soldiers (AFP Photo/Vaughn Ridley) (Getty/AFP/File)

Ottawa (AFP) - A Canadian senator at the center of an expenses scandal pleaded not guilty Tuesday at the start of a fraud trial which threatens to cast a shadow over Prime Minister Stephen Harper's bid for re-election.

Senator Mike Duffy faces 31 charges of fraud, bribery and breach of trust related to his government expense claims, and for Can$90,172.24 ($72,155) he received from Canadian leader Harper's then chief-of-staff, Nigel Wright.

"I am not guilty your honor," Duffy replied in an Ottawa court after the accusations were read aloud.

With elections looming in October, any revelations at the trial could potentially be damaging to the Conservatives and Harper's hopes for a fourth mandate since first coming to office in 2006.

Duffy, a former broadcast journalist, faces several years in prison if convicted, and has vowed to air the Tories' dirty laundry during the court proceedings.

Prosecutors accuse the senator of disbursing taxpayer funds to friends and family for personal expenses including for hair and makeup, and for a fitness trainer.

He is also accused of filing travel expenses for "partisan political activities" such as giving speeches at party fundraisers, and for personal trips including to buy a puppy, and attend his daughter's play and several funerals.

- 'Equal partner, instigator' -

Prosecutor Mark Holmes said Duffy was also either an "equal partner or the instigator" of a failed scheme involving the prime minister's staff and the Senate leadership to cover up Duffy's allegedly illicit spending.

But defense lawyer Donald Bayne retorted that "seldom has an extorted person been called an equal partner," painting Duffy instead as a victim of "political conspirators" led by the prime minister's chief of staff.

Duffy himself has said the cover-up was meant to quell a public uproar over Senate spending and make a political situation embarrassing to Harper's base go away.

He said the prime minister's office came up with the plan that led to his criminal prosecution.

But federal police have described the scheme as a "monstrous fraud" that began with Duffy's demands for money.

Nigel Wright, meanwhile, was forced to resign after it was revealed that he wrote Duffy a cheque to help the lawmaker repay housing and travel expenses that he claimed were Senate expenses.

Wright will be called to testify at the trial.

Court documents state there is no direct evidence Harper knew about the payment or that he was involved. Harper himself has denied any knowledge of the scheme.

But the opposition has raised questions about an email from Wright to others about repaying Duffy's expenses, in which Wright says he was "good to go from the PM."

Bayne also alleged that Harper was certainly in the loop.

The defense, he said, will argue that the Senate expense rules were not clear, and that Senator Duffy's claimed expenses were for "perfectly normal" government business.

He asked the judge to put aside "common sense" in this case and render a decision based on the actual Senate spending rules, which are arguably muddled and arcane.

The trial is scheduled to wrap up mid-June.