Canada's Harper says 'very sorry' about expenses scandal

By Mitra Taj

LIMA (Reuters) - Canadian Prime Minister Stephen Harper on Wednesday said for the first time that he was "very sorry" about a growing expenses scandal that threatens to derail his Conservative government after seven years in power.

Harper is under heavy pressure to explain how he could not have known that Nigel Wright, his chief of staff, had written a personal check for C$90,000 ($87,000) to a senator to help him repay expenses he had improperly claimed.

Wright resigned on Sunday amid howls of protest from opposition legislators who said the secret deal broke ethics rules and made a mockery of the Conservatives' promises to boost accountability in government. The senator, Mike Duffy, resigned from the Conservative caucus on Thursday.

"Obviously, I'm very sorry ... I'm sorry and feel a range of emotions. I'm sorry, frustrated and extremely angry about it," Harper said in his first comments to reporters since the scandal broke on May 14. Harper, who is on a trade mission, spoke at a joint news conference with Peruvian President Ollanta Humala.

Harper had prompted fresh protests from critics and commentators on Tuesday when he told a meeting of Conservative legislators that the affair was a distraction. He said at the time that he was "very upset" with legislators and with his own office but he stopped short of an apology.

The scandal has become one of the biggest crises to hit the Conservatives since they took power in early 2006, promising to clean up Ottawa after a series of ethical problems helped bring down the Liberal government.

Although the next election is not due until October 2015, polls show the Conservatives trailing the Liberals.

When Harper issued a statement on Sunday accepting Wright's resignation, he did not address the issue of whether he had known of or approved of his top aide's actions, but for the first time he was explicit on the issue in his news conference.

"I think we've been very clear that I did not know. ... I learned of this after stories appeared in the media last week speculating on the source of Mr. Duffy's repayments," he said, noting that he accepted the resignation after looking into it.

"I think what's more important about this is that not simply that did I not know, but that I was not consulted, I was not asked to sign off on any such thing, and had I, obviously, been consulted or known I would not have agreed with it, and it is obviously for those reasons that I accepted Mr. Wright's resignation."

Harper named Duffy, a former national television reporter, to the Senate in late 2008. He was popular at fund-raising events but the party has now shunned him.

After Duffy repaid the C$90,000, a Senate committee looking into possible expense violations by members closed his case. Late on Tuesday, the committee decided to reopen the probe.

Duffy took his place in the Senate on Wednesday and released a statement expressing confidence that "my actions regarding expenses do not merit criticism."

The Senate is an unelected chamber with 105 members. It is designed to review legislation passed by elected members of Parliament in the House of Commons lower chamber.

Senators, who are chosen by prime ministers, can serve until the age of 75, when they are obliged to retire.

Harper, who has long complained the Senate is unaccountable, wants to bring in changes to have elections of senators to serve a maximum term of eight years.

The official opposition New Democrats on Wednesday repeated calls for the institution to be abolished.

($1=$1.04 Canadian)

(Writing by David Ljunggren and Randall Palmer in Ottawa; editing by Jackie Frank)