International News

By David Ljunggren

OTTAWA (Reuters) - The top aide to Canadian Prime Minister Stephen Harper abruptly resigned on Sunday over his role in an mounting expenses scandal which is threatening to undermine the Conservative government.

Nigel Wright, Harper's chief of staff, quit after secretly giving a C$90,000 ($87,000) check in February to Mike Duffy, a member of the upper Senate chamber, to help him cover living expenses he had improperly claimed. News of the gift leaked late on Tuesday.

Opposition legislators said the large check broke ethics rules forbidding senators from taking presents and made a mockery of the government's repeated promises to increase accountability in Ottawa. Duffy, a former national television journalist, resigned from the Conservative caucus on Thursday.

Wright's departure reflects the pressure Harper is under. Officials told reporters on Friday that the chief of staff - who says he did not tell Harper about the check - would be staying.

"In light of the controversy surrounding my handling of matters involving Senator Duffy, the prime minister has accepted my resignation," Wright said in a statement.

"I regret the impact of this matter on the government, our caucus, and all of my colleagues," added Wright, a businessman who had been on secondment to Harper's office from private equity firm Onex Corp. He started work on Jan 1, 2011.

The expenses affairs is one of the biggest crises to hit the Conservatives since they took power in early 2006 promising to clean up government after a series of scandals helped bring down the previous Liberal administration.

Pamela Wallin, another Conservative senator whose expenses have been questioned, quit the caucus late on Friday. Wallin is also a former television journalist.

Opinion polls show the Conservatives trailing the Liberals, who have steadily grown more popular since Justin Trudeau - the telegenic son of former Liberal prime minister Pierre Trudeau - was elected leader last month.

Harper said he had accepted Wright's resignation with great regret.

"I accept that Nigel believed he was acting in the public interest but I understand the decision he has taken to resign," he said in a separate statement.

A federal election is not due until October 2015 and the Conservatives have a comfortable majority in the House of Commons.

But Harper could be in for a tough two years in parliament if he doesn't move quickly to draw a line under the matter.

Canada's federal ethics commissioner is examining whether Wright broke government rules about giving gifts.

Duffy was named to the unelected Senate in December 2008 and was a popular and effective fund-raiser for the party.

The Conservatives initially said he had shown leadership by accepting the check rather than leaving taxpayers on the hook for the C$90,000.

They quickly changed their tune amid media reports that Duffy had claimed daily living expenses from the Senate while actually campaigning for the Conservatives ahead of a federal election in May 2011.

Opposition parties are demanding a probe into the allegations.

($1=$1.03 Canadian)

(Reporting by David Ljunggren; Editing by Paul Simao)