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Apologetic Mulroney regrets poor record-keeping

In his first appearance at inquiry, former prime minister says lack of documentation on Schreiber transactions 'inappropriate'

From Wednesday's Globe and Mail

OTTAWA — In his highly anticipated first appearance at the Oliphant inquiry Tuesday, former prime minister Brian Mulroney insisted there was nothing illegal about the envelopes of cash he took from lobbyist Karlheinz Schreiber, but acknowledged that the lack of related records was “inappropriate” for a former public office holder.

Sometimes apologetic, more often indignant, Mr. Mulroney detailed for the public inquiry into his dealings with Mr. Schreiber how he took his first envelope of $75,000 in cash, placed it in a safe at his cottage, and then moved it to his mansion in Westmount, Que., after it was completed in 1994. He also denied, repeatedly, that the money had anything to do with more than $20-million in secret commissions that Mr. Schreiber got from European manufacturers for negotiating contracts with Mr. Mulroney's federal government, calling the notion “preposterous.”

“My business relationship with Mr. Schreiber was legal and involved no wrongdoing of any kind at any time on my part,” he said.

“I genuinely regret, however, that the circumstances surrounding these transactions for which I am largely responsible give rise to suspicions as to their propriety.

“And I certainly accept that inadequately documented arrangements are inappropriate for former public office holders and obviously should be avoided at all times.”

Although much of what Mr. Mulroney had to say Tuesday was a slightly more detailed version of his testimony to the House of Commons ethics committee more than a year ago, documents tabled Tuesday by commission lawyers show that he is in for some intense probing in the coming days.

As Mr. Mulroney began the first of an estimated four days of testimony, inquiry lawyers introduced reams of never-before-seen pages of Mr. Schreiber's diary. The notations reveal that there was a period in 1997 when the German-born lobbyist was preoccupied with something involving the former prime minister, former German chancellor Helmut Kohl and European manufacturer Airbus Industrie.

Over a two month-period in 1997, just shortly after Mr. Mulroney received an apology from the federal government and a $2.1-million settlement in connection with the Airbus affair, Mr. Schreiber made four entries in his agenda books related to “Kohl” and “Mulroney.” Twice he scribbled next to their names “AB” – his shorthand for Airbus, the part-German company that paid Mr. Schreiber about $20-million in secret commissions after Air Canada bought 34 of its airplanes.

On Jan. 14, 1997, just a week after justice minister Allan Rock apologized to the former prime minister over an RCMP letter that alleged he had received kickbacks on the Airbus sale, Mr. Schreiber wrote in his agenda book “Kohl” and “Mulroney” above the words “AB” and “Steuergeheimnis,” a German word meaning tax secrecy.

Mr. Mulroney was not asked about any of the scribblings, and spent the day being examined by his lawyer, Guy Pratte. It's not known what the entries mean.

The entries, including the years 1995 to 1999, show repeated reference to scheduled phone calls between Mr. Schreiber and Mr. Mulroney, usually noted as “Tel. Brian” – and, in one instance, “Tel. Brian and Mila.”

If “Kohl” does refer to the former German chancellor, it raises many possible questions. Mr. Kohl was forced to resign in 1999 after it was revealed that Mr. Schreiber had funnelled commissions to secret slush funds for his Christian Democratic Union party.

Mr. Schreiber is wanted in Germany on charges of tax evasion and corruption.

On Tuesday, Mr. Mulroney said his relationship with Mr. Schreiber was “essentially non-existent” when he entered public office. When shown a 1982 telegram in which he congratulated the Bavarian businessman on becoming a Canadian citizen, Mr. Mulroney said he had no recollection of it and must have sent it at the request of a mutual acquaintance.

He was also asked about a meeting in 1983 with Mr. Schreiber and Max Strauss, the son of the late Franz Josef Strauss, the chairman of Airbus. When Mr. Mulroney sued the federal government and the RCMP in 1995 over the Airbus kickback allegations, he testified that he didn't know any members of the Strauss family.

“You can be sure that's true,” he told Mr. Pratte, acknowledging that the meeting most likely happened, but that he has no memory of it.

He also described in more detail the job that Mr. Schreiber hired him to perform shortly after he left office. He said that at a meeting in a hotel in Mirabel, Que., Mr. Schreiber handed him two brochures featuring photographs of armoured vehicles made by his client Thyssen AG, including a tank with a United Nations insignia. Mr. Mulroney gave what he said were those brochures to Mr. Justice Jeffrey Oliphant.

“It was very clear to me that he was describing a watching brief … where I would, under very general conditions, do my very best to promote the interests of Mr. Schreiber internationally,” he said.

Mr. Schreiber handed him an envelope, which he didn't open, but determined was filled with cash, he said.

“When I expressed my body language – I would call it a hesitation – he said, ‘I'm an international businessman and I only deal in cash.' It was at that moment that I should have said, ‘This is something that I can do for you, but I'm going to require a cheque. Just give me a cheque.' I wish I had done that. If I had done that we wouldn't be here today.”

Witnesses close to both Mr. Mulroney and Mr. Schreiber have told the inquiry that they never knew that the lobbyist had hired the former prime minister.

On Tuesday, Mr. Mulroney tried to address the secrecy surrounding the payments, saying he believes gossip and rumour led the Mounties to send the 1995 letter stating that he had received kickbacks, and that it threatened to ruin his family's name.

That devastating experience “explains my conduct in trying to keep private the private commercial transaction I entered into with Mr. Schreiber after I left office, so as to avoid the same kinds of deceitful and false purveying of information that had led to the original Airbus matter in the first place.”

The RCMP's letter of request was sent in 1995. Mr. Mulroney received the cash from Mr. Schreiber in 1993 and 1994.

The 75-year-old lobbyist left Tuesday's inquiry in midmorning complaining of abdominal pain. A spokesperson said that he had surgery last night to remove an inflamed gallbladder. He is expected to be out of hospital by Friday.

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