Stephen Harper’s trusted aide Ray Novak knew of Mike Duffy payment scheme, court hears

WATCH ABOVE: Despite repeated denials, it turns out Stephen Harper’s current chief-of-staff, Ray Novak, did know about Nigel Wright’s secret $90,000 payment to Mike Duffy. As the Duffy trial continues, there’s more evidence about how Harper’s staff tried to interfere with the senate audit. Mike Le Couteur has the details.

OTTAWA – Stephen Harper’s current chief  of staff Ray Novak knew Mike Duffy wasn’t using his own money to repay dubious expenses, court heard Tuesday, contradicting recent public statements from Harper and the Conservative party.

Nigel Wright, Harper’s former chief of staff, wrote a personal cheque for $90,000 to cover money Duffy was said to owe in housing and living expenses. Ever since that was revealed more than two years ago, questions regarding who knew what, and when, have swirled around Harper and Ray Novak, the prime minister’s most trusted aide.

While Wright left the Prime Minister’s Office once his cheque to Duffy became public, Novak was promoted to chief of staff.

Harper has said repeatedly that Duffy and Wright are the only people responsible for the ensuing scandal.

But evidence read in court suggests Novak participated in a conference call a Conservative party spokesman said last week he wasn’t on.

LIVE COVERAGE: Cross examination of Nigel Wright continues at Duffy trial

The revelation Novak knew of the payment scheme came from the transcript of an RCMP interview with Benjamin Perrin, who was a lawyer within the Prime Minister’s Office at the time.

Defence lawyer Donald Bayne read a portion of the transcript aloud to the court Tuesday in which Perrin told police he looked over to Novak to see his reaction when, during a March 2013 conference call, Wright told Duffy’s counsel he planned to offer his funds for repayment.

Novak’s attendance on that call has been questioned in court for days; though emails suggest he was expected to be on the call, Conservative Party spokesman Kory Teneyke said last week Novak was pulled away from the call before Wright announced his intentions.

WATCH: Global’s Laura Stone provides an update on Day 6 of the Mike Duffy trial

Another set of emails entered into evidence last week showed Novak was explicitly told Wright would be giving money to Duffy to repay.

But Teneycke told reporters Novak had simply not seen that specific email.

Wright stared straight ahead, saying nothing, while Bayne read from the transcript. Wright had earlier told the court he and Novak had been in touch as recently as two weeks ago – around the time the writ dropped in the 42nd general election and shortly before Wright took the stand in Ottawa.

Wright said the two exchanged a series of messages through their BlackBerrys, though he has no copies of their discussion. Bayne did not ask what the two discussed.

PMO received “strictly confidential” information

The scope and planning of the audit into Mike Duffy’s dubious expenses may have been marked “confidential,” but that didn’t stop the prime minister’s top staff from obtaining details, the judge in the beleaguered senator’s trial heard.

For much of Tuesday’s testimony, Bayne moved the court’s attention to the flurries of emails between senior staff in the Prime Minister’s Office in regard to an outside audit Deloitte was performing into Duffy’s housing and living expenses

Through his aggressive cross-examination of Stephen Harper’s former chief of staff Nigel Wright, Bayne has suggested that Wright and the prime minister’s other top aides did their best to meddle in the Deloitte report, exhausting several avenues before deciding to pivot and shift damage-control strategies.

One of those avenues, Bayne said, included having Conservative Sen. Irving Gerstein get in touch with some personal contacts at the auditing firm in an effort to convince the auditors to refrain from deciding on where Duffy’s primary and secondary residences were – arguably the central question in the scandal plaguing the senator.

The argument was that, if Duffy repaid any questionable funds (as he had publicly stated he would the month prior) there would be no reason to make such a determination, as the question was now moot.

READ MORE: Duffy trial cheat sheet – Everything you wanted to know but were afraid to ask

Wright, however, flatly rejected Bayne’s suggestions, testifying he only asked Gerstein to use his contacts to ensure the firm was in touch with the Senate committee that had contracted them.

Duffy’s lawyer at the time, in March 2013, had presented several conditions before Duffy went on television to tell Canadians he would repay. Those included no admission of guilt or having erred in any way, and being dropped from the external audit.

A March 21 email from the prime minister’s parliamentary affairs manager, Patrick Rogers, to Wright and other senior staffers, however, conveyed information Rogers apparently gleaned from Gerstein.

“Just heard from Gerstein. Here’s the latest and most useful information yet from Deloitte,” the email read, before offering five bullet points. Among them: Any repayments will not change Deloitte’s conclusion because they were asked to “opine on residency,” and that they won’t be able to reach a conclusion on residency in any event, because Duffy’s lawyer “has not provided them anything.”

“You got a leak of confidential information,” Bayne said to Wright, reminding the courtroom of the wide “confidential” stamps printed diagonally across each page of the terms of contract with Deloitte.

“We were not meddling with any audit,” Wright said. All he wanted to know was whether Deloitte would consider not offering an opinion on residency, he said.

The conversation with Gerstein, as passed on through Rogers, told Wright they weren’t.

“So now I could move on to the next step,” he said, which was to have Duffy and his lawyer no longer include this as a condition for repayment.

The embattled P.E.I. senator is on trial for a total of 31 charges of breach of trust, bribery and fraud. He has pleaded not guilty to all charges.

The Crown has made the case that it was Duffy who was an “equal partner” or “instigator” of a scheme that would allow him to tell everyone he had repaid the money when, in truth, he’d managed to get someone else to.

Duffy’s defence says it was the other way around — that he was coerced into admitting he had improperly collected expenses, even though he firmly believed he had done nothing wrong.