May 31, 2010 / 8:18 PM / in 7 years

Inquiry says Mulroney acted inappropriately

VANCOUVER (Reuters) - Former Prime Minister Brian Mulroney had inappropriate business dealings with German-Canadian arms dealer Karlheinz Schreiber that included secret cash payments, a inquiry reported on Monday.

<p>Commissioner Jeffrey Oliphant delivers a statement about his report on the dealings between former Prime Minister Brian Mulroney and German-Canadian arms dealer Karlheinz Schreiber in Ottawa, May 31, 2010. REUTERS/Chris Wattie</p>

The two men tried to hide their business relationship by having Schreiber pay Mulroney in cash, leaving no paper trail, according to the inquiry, which was launched by the Conservative federal government in 2007.

Mulroney told the inquiry last year there was nothing illegal about the secret cash payments.

“I find, applying Mr. Mulroney’s own test, that his business dealings with Mr. Schreiber were not appropriate,” Inquiry Commissioner Jeffrey Oliphant, a former judge, said in his report.

Oliphant told an Ottawa news conference that he did not accept Mulroney’s claims that his decision to accept cash from Schreiber at hotels in Montreal and New York was simply “an error in judgment”.

“In my view, an error in judgment cannot excuse conduct that can reasonably be described as questionable if that conduct, as is the case here, occurred on three distinct occasions,” Oliphant said.

The business relationship began after Mulroney stepped down as prime minister in 1993, but while he was still in Parliament, which would violate government ethics rules, Oliphant said.

Schreiber said he paid Mulroney C$300,000, but Mulroney said it was C$225,000. Oliphant could not determine which man was telling the truth.

Mulroney said he was paid to lobby world leaders on behalf of German firm Thyssen AG’s light armored vehicles, but Oliphant said it unclear if he actually did that.


<p>Former Canadian Prime Minister Brian Mulroney testifies at the Oliphant Commission in Ottawa May 20, 2009. REUTERS/Chris Wattie</p>

Mulroney said he was pleased that the inquiry found that his dealings with Schreiber began after he was prime minister, and that he did not lobby Canadian officials on Schreiber’s behalf.

“I genuinely regret that my conduct after I left office gave rise to suspicions about the propriety of my personal business affairs as a private citizen. I will leave it to others to assess the full impact of these events,” he said.

Mulroney led the Progressive Conservative Party to the biggest parliamentary majority in Canadian history in 1984, but he was unpopular at the end of his nine years in office and the party was reduced to just two of the 295 seats in the House of Commons in the 1993 election after he retired as leader.

Oliphant did not have the authority to say if any criminal laws were broken, but said Mulroney acted inappropriately in court during a lawsuit he filed against government.

Oliphant said Mulroney failed to disclose the cash payments during the case, which ended in the government paying him a multimillion-dollar settlement over the suggestion that he had been involved in a kickback scheme related to the 1988 purchase by Air Canada of Airbus airliners.

Oliphant found no evidence to dispute the men’s claims that their business relationship had nothing to do with the Airbus deal. But he said he accepted experts’ findings that the cash came from a bank account that could be traced back to commission payments made to an Airbus-related company.

New Democratic lawmaker Pat Martin said unanswered questions of where the money came from and what Mulroney did to earn it were like an “elephant in the room”.

“I don’t think there is a person in Canada that doesn’t believe those bags of cash aren’t connected to Airbus,” Martin said.

Oliphant said Schreiber had a “remarkable degree of access” to the prime minister’s office.

Schreiber was sentenced this month by a German court to eight years in prison on tax evasion charges. He was arrested in Toronto in 1999, but successfully fought extradition for 10 years.

Reporting Allan Dowd, editing by Peter Galloway

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