A Senate committee report released Thursday recommends that Liberal Senator Mac Harb and Independent Senator Patrick Brazeau repay housing and mileage claims for the past two years, and that their expenses should be monitored for the next year.

Harb resigned from the Liberal caucus Thursday and is mounting a legal challenge to have the report's conclusions about him quashed.

The report recommends that Harb must repay $51,000 for housing and mileage claims dating from April 2011, and Brazeau must repay $48,000. As well, Harb's expense claims will be audited for a seven-year period before 2011.

The report also noted that Conservative Senator Mike Duffy has already repaid money for housing expenses he submitted based on his claim that his primary residence is in P.E.I. The report explained that Duffy had written to the head of the Senate committee stating he "may have made a mistake" in filling out his expense forms. Duffy's claims will also be monitored for the next year.

Senator Mac Harb resigned from the Liberal caucus Thursday after he was ordered to repay $51,000 in housing and mileage claims by a Senate committee looking into claims by Harb and fellow senators Patrick Brazeau and Mike Duffy. (Fred Chartrand/Canadian Press)

Harb, Brazeau and Duffy claimed tens of thousands of dollars in housing allowance claims in recent years.

Brazeau, a former Conservative who now sits as an Independent, is currently suspended from the Senate over a criminal charge in a separate matter.

Harb announced immediately after the report was released that he has retained a lawyer. In a press release Thursday afternoon, Harb challenged the committee's assertion that he spent more days in Ottawa than in what he deemed his primary residence in Pembroke, and that, therefore, his principal residence is in Ottawa.

"This [criterion] is not found in Senate regulations or guidelines and has never been communicated to senators or implemented by financial officers," Harb's statement said.

In fact, the independent audit, done by the accounting firm Deloitte, says, "There is a lack of clarity in the terminology used for the different residences mentioned or discussed in the applicable regulations and guidelines."

The Senate committee on internal economy, which monitors senators' expenses, made its recommendations based on the Deloitte audit.

Rules for expense claims to change

The committee also recommends that rules around claiming per diems should change. The section that stated that senators operate on an honour system for purposes of filling out expense claims will be deleted.

Senators currently can claim a per diem for any day that they are in Ottawa, whether the Senate is sitting or not. That will change, so that per diems can only be claimed if the senators are in Ottawa for Senate business (when the Senate is sitting or to attend committee meetings for example), plus 20 extra days if they are in Ottawa for other activities related to Senate work.

Other areas where the rules will be tightened up include mileage and taxi claims. Receipts will now be required for all taxi use; previously, senators could claim $30 without a receipt.

It was the housing allowance claims being made by senators that first prompted the Senate to launch the review.

Since 2010, Harb has been claiming his primary residence is outside the capital, even though he had lived in Ottawa for decades before that time and owns several properties in the city. However, he says that he moved to a bungalow near Pembroke, Ont., about 145 kilometres from Ottawa and has been claiming expenses for maintaining what he says is a secondary residence near Parliament Hill he needs when he attends Senate sittings.

Senators who live more than 100 kilometres from Ottawa are allowed to claim housing expenses of up to $22,000 a year.

Harb's home near Pembroke is now for sale. He says he is selling the property because he has lost his right to privacy. He listed it about two weeks ago.

Senator Brazeau is also being audited by Deloitte, because he claimed his primary residence is in his father's apartment in Maniwaki, Que.

Conservative Senator Mike Duffy, pictured at a dinner in Halifax in February, has repaid $90,000 in expenses. (Devaan Ingraham/Canadian Press)

Brazeau, however, also lives in a house in Gatineau, Que., just across the river from Ottawa.

Duffy charged per diems for Florida visit

Before the Deloitte audit was finished, Duffy had voluntarily repaid the Senate $90,000 for claiming a house in P.E.I. as his primary residence even though he has been a longtime homeowner in Ottawa.

In a statement issued Thursday, Duffy said he and his wife "came to the conclusion that repaying the $90,000 was the right thing to do, regardless of the outcome of the audit that was to come. It was the right decision then, and it is the right decision now."

However, the Deloitte audit found that Duffy improperly claimed expenses for a Florida trip. "Included in these claims were twelve (12) days of per diems during the period where Senator Duffy appears to be located in Florida, United States, for a total amount of $1,050.60 (12 days at $87.55 per day)," the audit said.

Deloitte said it determined Duffy was in Florida through his phone records. The accounting firm notes it was not able to speak with Duffy nor obtain any documentation from him while the audit was being conducted.

However, the audit relates that Duffy voluntarily repaid the $1,050.60, once he realized — according to a letter to the Senate committee leader reproduced in the audit — that temporary staff in his office had made a mistake.

In question period Thursday, Opposition Leader Tom Mulcair dismissed the Senate's response to the issue as a "fraud."

"Even the bogus investigation by his handpicked cronies in the Senate found that Mike Duffy does not maintain a primary residence on Prince Edward Island," Mulcair said in a question to Prime Minister Stephen Harper.

"The auditor has concluded that the rules in place were not clear, however, the Senate itself has decided it expects better judgment from the senators," Harper replied. "Senator Duffy has some months ago repaid the money and the Senate has decided that other senators will be expected to similarly repay those amounts."

A fourth senator, Pamela Wallin, is also being audited by Deloitte, but the firm has asked for more time to complete its report on her travel expenses between Ottawa and Saskatchewan.

'This was a crisis, pure and simple'

Late Thursday Conservative Senator David Tkachuk, the head of the Senate committee that stickhandled the audit and wrote the Senate report, put out a statement, saying: "The process that we have gone through has raised serious questions in the media and among Canadians about our institution and our ability to govern our own activities. This was a crisis, pure and simple."

Tkachuk went on to say that didn't enjoy judging his colleagues, but added, "As a non-elected democratic institution, the ones we govern do not have the ability to 'throw the rascals out'.

"We are protected by parliamentary privilege and by constitutional requirement. We therefore have a higher obligation," he said.

He noted that Duffy had already repaid his expenses, and that the matter was closed, adding that Harb and Brazeau would have to "immediately repay". Tkachuk also said that the changes to rules about expense claims would be adopted late Thursday by the full Senate.

Liberal Senate House leader Jim Cowan told reporters that he was disappointed that the Senate committee had not recommended disciplinary action against the three senators other than reimbursement of funds inappropriately claimed.

And in a statement, Cowan said, "If further action is deemed necessary by the police, they will take that action. That is a decision for the police, not for the Senate."

The RCMP told CBC News late Thursday that it has received no complaint or referral in regards to the Senate audit. The Mounties could launch their own investigation into potentially criminal matters, but in such cases the RCMP does not confirm if an investigation has begun.