Former Liberal senator Mac Harb, who resigned at the height of the Senate expenses scandal while dogged by accusations of criminal wrongdoing, said Monday he's been vindicated after settling a dispute with RBC Royal Bank over claims of mortgage fraud.

In an exclusive interview with CBC News, Harb said he has reached a monetary settlement with the bank over its actions in the RCMP's probe of his financial affairs — a probe that was triggered by allegations the senator defrauded taxpayers by claiming expenses to which he was not entitled.

Harb and his lawyer, Ottawa-based attorney Lawrence Greenspon, are keeping the details of the settlement confidential.

The Crown ultimately withdrew all criminal charges against Harb after a judge found Independent P.E.I. Sen. Mike Duffy not guilty of fraud and breach of trust following a highly publicized trial. Justice Vaillancourt ruled the Senate's rules on living and travel expenses were vague.

While free of the threat of a trial, Harb said he wanted RBC to acknowledge it supplied inaccurate information to the police — information that was then widely publicized and, he said, used to tarnish his reputation.

"If you were to Google my name you'll still be able to see, according to the internet, I have in fact done something wrong in terms of the Royal Bank and my mortgage arrangement with them. It was bothering me quite a bit," he said.

Harb said he was prepared to sue RBC for negligence and breach of fiduciary duty and hired Greenspon to help press his claim in court. The dispute recently was settled to his satisfaction, he said.

"I am pleased, finally, the bank has recognized there was nothing wrong and they came to an agreement and the record now will be corrected," he said.

'There never was any mortgage fraud — ever'

In a letter from RBC to Harb, and subsequently shared with CBC News, the bank blamed media reports for spreading information its own mortgage fraud specialist, Sheila Wilson, provided to police.

"You have been a client in good standing and all obligations are up to date. RBC does not ascribe to the past allegations reported in the media re: mortgage fraud," reads the letter signed by Courtney Anderson, a private banker in Ottawa.

Greenspon, who also is representing Duffy as he pursues a legal challenge against the Senate and the RCMP, said the affair left the bank with egg on its face.

"What the Royal Bank has finally acknowledged is that there never was any mortgage fraud — ever. Sen. Harb has done nothing wrong," he said, adding he had to drag the bank "kicking and screaming" to the point where it released a letter conceding it does not believe Harb is a mortgage fraudster.

In 2007, Harb transferred 99.99 per cent of his ownership stake in a Cobden, Ont. property to a diplomat from Brunei, Magdalene Teo.

Magdalene Teo, who was stationed as a diplomat in Ottawa 2004 to 2007, owned 99.99 per cent of a home former senator Mac Harb claimed as his primary residence. (asean-china-center.org)

Harb then subsequently bought a house in nearby Westmeath, Ont., in 2010 and took out another mortgage from RBC for $240,000. He listed the Cobden home as an asset to support his loan, according to court documents.

Harb has always maintained the mortgages were fully secured as he continued to make payments on the Cobden property even after Teo took a hefty ownership stake in the home. The Cobden property was subsequently sold.

Harb did not get into specifics when asked by CBC News why he transferred ownership to Teo, saying only that there was nothing illegal about the transaction. "I'm a private citizen," he said.

Harb said he was simply following the financial advice he received from advisers at the bank, adding there was nothing untoward about his financial dealings with Teo — who has since left Canada for a posting in Asia. Teo has described Harb as a friend.

"Absolutely, unequivocally, I did nothing wrong. All the time I conducted myself as the bank asked me to do so. I was a private client, I pay $125 a month to the bank, so they get to know their clients [and] obviously they knew me very well and provided me with all the advice and I have acted all along according to their instructions," Harb said.

At the time, RBC told police they were unaware of the transfer and that they had reason to believe the senator had acted inappropriately by transferring the Cobden property to Teo and then applying for financing on the Westmeath home — actions the bank claimed put mortgages on the two properties "at risk," according to court documents.

Cpl. Horton, the lead RCMP investigator on the Senate expenses file, published RBC's claims in a document known as an Information to Obtain — an ITO, or production order — which lays out the basis for criminal allegations and requests a court order to produce evidence held by somebody other than the subject of the investigation.

He said Wilson, the RBC fraud specialist, "viewed the misrepresentation of Sen. Harb's ownership of the Cobden property as a fraud."

Greenspon said the bank overstepped.

"There was a transfer and it was done in a way the bank recommended," he said. "Unfortunately, by providing incorrect information to the RCMP, which found its way into this ITO, the media then accessed that document and that became the story ... it was all founded on what the Royal Bank subsequently acknowledged to be incorrect information," Greenspon said.

In response to questions from CBC News, RBC replied in an email Wednesday that it would have no further comment on the matter, referring back to the letter it sent Harb disavowing the mortgage fraud allegations.

In February 2014, the Mounties said there wasn't enough evidence to charge Harb with mortgage fraud but pushed ahead with the other fraud and breach of trust charges against him — which were eventually withdrawn when Duffy's not-guilty verdict came down.

'Rotten apples'

The police investigation was launched after questions were raised about Harb's designation of the Cobden property as his primary residence.

Senate rules allow senators to claim expenses for two homes if their primary residence is more than 100 kilometres from Parliament Hill. Harb's Cobden home was 123 kilometres away from the Red Chamber and thus he was entitled to about $20,000 a year in support.

The Senate committee charged with oversight of spending — which was then dominated by Conservative senators under former prime minister Stephen Harper — ordered outside auditors from Deloitte to review spending by Harb and Independent Quebec Sen. Patrick Brazeau. The auditors argued the spending rules were unclear, making it difficult to tell if they'd been broken.

Harb blames the Tory-dominated internal economy committee — which he alleges was "hijacked" by political operatives in the former prime minister's office — for his whole ordeal.

I didn't want to serve with a bunch of Conservative senators who are ruthless, spineless and have no principles whatsoever. There's some rotten apples there. - Former senator Mac Harb

He said there is nothing in the Senate rules preventing him from claiming the Cobden and Westmeath properties as his primary residences at different times.

"The Senate knew, all the officials knew all along — everyone, from the clerk to the bureaucrats," he said. "There was nothing sinister about that and everything was above board.

"Obviously, I wasn't it in for the money. I was in it for public service, to serve the public. And in the end ... no, I don't regret a thing. I believe I have done the proper thing all along," he said, adding he qualified for his Senate pension in 2007 and thus did not have to keep working to collect a cheque.

Harb ultimately repaid all $231,649.07 in living expenses claimed since 2005 and then resigned early from the upper house.

"I didn't want to serve with a bunch of Conservative senators who are ruthless, spineless and have no principles whatsoever. There's some rotten apples there," Harb said of his decision to step away some 16 years before his mandatory retirement date.

CBC News was not able to reach Conservative Sen. David Tkachuk, who was chair of the internal economy committee when it requested the forensic audits of living expenses, for comment in time for this story.

However, in a letter to CBC News after this story appeared, Tkachuk said the Prime Minister's Office had "nothing to do" with the Senate's investigation of the expense claims, including Harb's.

"It is worth pointing out ... that [Harb's] mortgage problems with the Royal Bank were of little or no interest to the internal economy committee. We were only interested in whether the house involved was his primary residence or not for the purpose of collecting living expenses. Our concern was that Sen. Harb invoiced the Senate for a home outside of Ottawa that he did not live in," the Saskatchewan senator said.