OTTAWA -- Conservative cabinet minister Peter Penashue has resigned his seat in the House of Commons and repaid $30,000 in "ineligible" campaign donations from the 2011 election campaign.
The intergovernmental affairs minister says he'll be seeking re-election in a byelection now that he's cleared the air.
Penashue says an "inexperienced volunteer" in his organization -- his official agent -- was responsible for accepting the illegal donations.
The campaign manager, Reginald Bowers, was subsequently appointed by the federal government to the Canada-Newfoundland and Labrador Offshore Petroleum Board, which regulates the oil sector.
Bowers resigned from the board late Thursday afternoon, effective immediately, according to a board spokesman.
"Although I was unaware of the inaccuracies in the return, I believe I must be accountable to the people who elected me and therefore I am stepping down as the member of Parliament for Labrador and will seek re-election through a byelection," Penashue said in release.
"I will also be stepping down as minister of intergovernmental affairs and president of the Queen's Privy Council for Canada."
Penashue is the second member of Prime Minister Stephen Harper's cabinet to leave in the last month.
John Duncan resigned as aboriginal affairs minister after improperly lobbying a tax court judge on behalf of a constituent. Duncan, who was succeeded in his cabinet portfolio by Bernard Valcourt, remains an MP.
A curt news release from the Prime Minister's Office said Transport Minister Denis Lebel would take over Penashue's duties at intergovernmental affairs. Lebel has acknowledged he previously held a party membership with the separatist Bloc Quebecois in the 1990s.
"I would like to thank Mr. Penashue for his service as a minister and to the people of Labrador," Harper said in the release.
A PMO spokesman said "a byelection will be called in due course," while a Conservative party official confirmed Penashue will be the party's candidate, suggesting he need not seek the nomination.
The party also said the Receiver General has been reimbursed $30,000.
Penashue won his seat by just 79 votes in an upset over Liberal incumbent Todd Russell in 2011. An Elections Canada review subsequently showed Penashue spent $4,000 over his limit of just under $84,500.
He also appeared to have accepted thousands of dollars in free flights across his expansive, remote riding -- which would amount to a corporate donation.
Liberals are also demanding to know whether a $25,000 loan Penashue received from the Innu Development Limited Partnership came with a commercial rate of interest, as is required under the rules.
-- The Canadian Press