OTTAWA Brian Mulroney never asked Karlheinz Schreiber for any money, but when it came in the form of three cash instalments he didn't treat it like the rest of his revenue because he had no "support staff," the former prime minister testified yesterday.
In his second straight day of cross-examination by the Oliphant inquiry's lead lawyer, Mr. Mulroney was forced to explain why he stored the three payments, totalling at least $225,000, in safes and a safety deposit box instead of bank accounts, and why he never asked Mr. Schreiber for a cheque.
Mr. Mulroney, also the former president of the Iron Ore Company of Canada, said that he would have gladly done everything by the book had the first transaction occurred a few months later in time, when he was installed as a partner at his law firm.
Unfortunately, he said, the German-born lobbyist made his first payment at a Quebec hotel in August of 1993 without any notice, and before Mr. Mulroney had established his business practice.
"I was in the process of trying to get started again, trying to get back into private life, doing a number of things. I didn't have any support staff whatsoever," Mr. Mulroney testified.
"If he had come to me, for example, at the time when I was installed in my legal firm with an assistant and secretary and so on I would have said, 'Look, we are here during business hours and what have you, can you give me a cheque to begin this relationship.'"
Mr. Mulroney said he didn't expect any of the three cash payments that he received, given that there had been no preliminary discussions on a deal with Mr. Schreiber and no clear understanding on the amounts involved.
"I never asked him for a nickel in my life," Mr. Mulroney said.
Most of the day was spent by Richard Wolson, the inquiry lawyer, combing through the finest details of the cash that Mr. Mulroney received, right down to the size of the envelope that held the money. (It was a legal-sized envelope.) The inquiry, which is chaired by Mr. Justice Jeffrey Oliphant, has been given the task of getting to the bottom of three cash payments.
Mr. Schreiber was paid more than $20-million in secret commissions by European manufacturers to help them secure contracts with the Mulroney government. Both men deny that those commissions had anything to do with the cash payments, and say the money was for legitimate work.
Mr. Mulroney has already testified that Mr. Schreiber hired him to promote armoured vehicles to members of the United Nations security council for peacekeeping missions. However, yesterday he added a variation on his assignment, saying he would have been delighted to try to sell the vehicles to the countries themselves if such an opportunity came along.
"Look, if I had gone to, say, [China], or Russia, France and, even though it was not my intention, I was not there on a sales mission if someone had said, a decision maker in those countries, look, 'I'm happy you came along. It happens that we need 250 or 500 vehicles right now, can you do anything to help us?" I would have called Mr. Doucet to get a hold of Mr. Schreiber immediately and said, 'Hey, the Chinese would be interested, or the French, or whomever.'"
Mr. Wolson quickly inquired, given that Mr. Schreiber's dream of an armoured vehicle factory in Canada was never realized, "Where were the vehicles supposed to come from?"
"Well, they would come from Thyssen," Mr. Mulroney replied.
"Where? In Germany?" Mr. Wolson responded.
"I suppose so. But I didn't know because I didn't anticipate that."
Mr. Mulroney also testified that when he took his first payment, Mr. Schreiber told him that he was "an international businessman" and that he did all of his business in cash. The former prime minister said that, at the time, he was "generally aware" that some major European companies have different business practices.
It wasn't until he joined the boards of several major multinational companies that he discovered just how different, he testified.
"I, quite frankly, was surprised to learn as the years went by that international companies operating in Europe were indeed operating in ways inconsistent with Canadian laws, because they were making either political contributions or bribes, and writing them off on their taxes," Mr. Mulroney said.
Asked why he didn't put the money in the bank or his consulting business to create a paper trail, Mr. Mulroney said the relationship got off on a cash footing, and stayed that way.
"I had begun the process like that and I maintained it like that," Mr. Mulroney said. "I didn't make a strategic determination [to maintain it as a cash deal]. I brought it home and put it in the safe where it remained."
Mr. Wolson charged that Mr. Mulroney's handling of the money leaves many unanswered questions and could be seen by some to represent a payment for past services or favours.
"Some Canadians may say, it does sound a little sinister, not just meeting in hotel rooms, but dealing in cash, in $1,000 bills, for a former prime minister to be meeting a fellow who he has been working with, in terms of the fellow trying to sell him something over a many-year period," Mr. Wolson said.
Mr. Mulroney responded that he had never helped Mr. Schreiber while in office, declaring that he was the reason the lobbyist's factory was never built.