OTTAWA — Karlheinz Schreiber's assertion yesterday before the House of Commons ethics committee that it was "nonsense" that former prime minister Brian Mulroney was paid $300,000 in cash to help promote a pasta business contradicts the original explanation that Mr. Mulroney offered the public when the cash payments first came to light four years ago.
In 2003, when author William Kaplan was trying to get to the bottom of why Mr. Mulroney accepted cash from Mr. Schreiber, Mr. Mulroney's spokesman Luc Lavoie told the author that Mr. Mulroney was hired to "to assist Schreiber with his pasta business and to arrange a number of introductions and meetings with international business executives."
However, Mr. Schreiber pointed out yesterday to the committee that at the time he gave his first two $100,000 cash instalments to Mr. Mulroney - August, 1993, and December, 1993 - he hadn't started his pasta business yet. "It had nothing to do with any pasta business, didn't simply exist," Mr. Schreiber told the committee.
It wasn't until the summer of 1994 that Mr. Schreiber started his company Spaghettismo, a pasta-making machine that was designed for home use and was later used in a restaurant chain. Mr. Schreiber's last $100,000 cash payment to Mr. Mulroney came on Dec. 7, 1994, at The Pierre, a luxury hotel in New York, so it is possible that final payment was to help promote the pasta company. Mr. Lavoie didn't respond yesterday to requests for comment.
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One of the main reasons that Mr. Schreiber says that he gave Mr. Mulroney the cash was to enlist his help in establishing a light-armoured vehicle factory for one of Mr. Schreiber's European clients, Thyssen AG.
The factory project, which was officially known and incorporated as Bear Head Industries, was a 10-year dream of Mr. Schreiber's that never came to fruition - but not due to lack of effort on his part.
In the mid- and late-1980s, Mr. Schreiber was a constant presence on Parliament Hill, always seeking an audience with anyone who could push the factory forward. He had enough influence with Mr. Mulroney's government to force Privy Council Clerk Paul Tellier to write numerous briefings on the proposed project.
The plan was to build the factory in the town of Port Hawkesbury, N.S., at the time an economically depressed industrial area of Cape Breton.
The downsides were costly, however. The federal and Nova Scotia government were expected to kick in $27-million in funding and it later emerged that Thyssen expected a $425-million untendered contract to supply light-armoured vehicles to the Canadian Forces. Jewish lobby groups also fought hard against the project because they feared that it was Thyssen's intention to sell the vehicles to Arab countries that were hostile to Israel.
Mr. Schreiber persisted, hired Mr. Mulroney's former aide Fred Doucet as a lobbyist, and managed to finagle himself into more meetings with bureaucrats. By 1990, four years later, Mr. Mulroney was still thinking about the file and he tasked his chief of staff at the time, Norman Spector, to see if he could make the factory happen, Mr. Spector says.
Mr. Spector later wrote about his dealings with the Bear Head project in the afterword of one of Mr. Kaplan's books about the Mulroney-Schreiber affair, A Secret Trial. During a limousine ride to a speech on Dec. 16, 1990, Mr. Spector says he advised Mr. Mulroney that after looking into it, he had concluded that the project was going to cost the government about $100-million. According to Mr. Spector's afterword in A Secret Trial, Mr. Mulroney responded, "In that case, the project is dead."
Mr. Spector later told the same story to RCMP investigators when they came calling in the mid-1990s. The Mounties cited his version of events when the force sent a letter to the Swiss government in 1995 seeking access to Mr. Schreiber's bank records.
When the letter became public, Mr. Schreiber said he was shocked because he had been dealing with Mr. Mulroney on the expectation that the project was still a possibility.
Mr. Schreiber told the committee yesterday that in 1993 he transferred $500,000 in cash to a Swiss bank account earmarked for Mr. Mulroney in return for help with a project that the former prime minister had declared "dead" three years earlier.
