Ottawa has reached a $10-million settlement with Maher Arar over Canada's role in a U.S. decision to deport him to Syria, where he was jailed and tortured.

Prime Minister Stephen Harper is scheduled to make the settlement announcement on Friday afternoon, when he will also issue a formal apology to Arar on behalf of Canadians.Sources told the CBC the government will also pick up Arar's legal fees.

Arar, a Canadian citizen born in Syria, had originally sought $37-million in compensation and an official government apology. In previous comments, Harper said that any apology would accompany a settlement.

The apology is expected to highlight that Arar and his family suffered extensively.

Arar, who now lives in Kamloops, B.C., will be in Ottawa on Friday andplans tospeak to the media after Harper's announcement.

In 2002, the engineer was living in Ottawa andcoming back from a vacation when he was arrested during a stopover at New York's JFK Airport.

U.S. authorities deported him to Syria, where he was tortured.

Ottawa set up a judicial inquiry into the case led by Justice Dennis O'Connor after Arar returned to Canada more than a year later.

O'Connor released his report in September 2006, concluding that Arar had no links toterrorist organizations or militants. He alsoconcluded the RCMP had given misleading information to U.S. authorities, which may have been the reason he was sent to Syria.

"I also recommend that the government assess Mr. Arar's claim for compensation in light of the findings made in this report," O'Connor wrote.

Arar received a unanimous apology from the House of Commons after the report's release. However, the Conservative government later drew a distinction between a parliamentary apology and an official government apology, calling it the former.

At the time, the prime minister acknowledged that Arar had suffered a "tremendous injustice."

Earlier this week, U.S. Ambassador David Wilkins criticized Ottawa's efforts to haveArar removed from a United States security watch list, sayingWashington alone will decide who to let into the country.

Speaking in Edmonton after meeting with new Alberta Premier Ed Stelmach, Wilkins warned Public Safety Minister Stockwell Day to back off because a U.S. review determined Arar should remain on the watch list.

"It's a little presumptuous for him [Day] to say who the United States can and cannot allow into our country," Wilkins told reporters Wednesday.

The ambassador reiterated that the U.S. found its own reasons to keep Arar on the watch list.

Day said in a visit last week to Washington that he has seen the information and found nothing new to suggest Arar is a safety risk.