Mulroney tried to cover up cash payments he received in hotel rooms: Schreiber

Last Updated: Wednesday, October 31, 2007 | 10:19 AM ET

CBC News

Former prime minister Brian Mulroney attempted to cover up cash payments of $300,000 he received from a secret account, Karlheinz Schreiber told CBC's The Fifth Estate.

Karlheinz Schreiber claims former prime minister Brian Mulroney attempted to cover up $300,000 in payments he received.
(Aaron Harris/Canadian Press)

Mulroney wanted Schreiber, a German businessman, to provide a statement that the former prime minister at no time solicited or received compensation of any kind from the German businessman, Schreiber said. But Schreiber did not provide Mulroney with it.

Schreiber is currently in a Toronto jail, awaiting extradition to face possible imprisonment in Germany where he is accused of bribery fraud and tax evasion — charges he denies.

But for the first time, Schreiber has revealed details of what he says was an attempted coverup to save Mulroney's reputation after he made $300,000 in cash payments to the former prime minister.

Schreiber, who is currently suing Mulroney over the money, has said the payments, handed out in hotel rooms between 1993 and 1994, were intended to enlist his help in establishing an arms factory in Quebec and, later, a pasta business in Ontario.

But in 1999, a scandal emerged in Germany over payments Schreiber had made from bank accounts from Switzerland to prominent people there.

Now Schreiber says his lawyers received a flurry of calls from Mulroney's team as details about the secret accounts, and Mulroney's connection to one of them, were about to be made public.

Schreiber said that Mulroney, himself a lawyer, was requesting a written statement from Schreiber that "at no time did he ever solicit or receive" money from Schreiber.

The request ended up on the desk of high-profile Toronto lawyer Edward Greenspan, who was representing Schreiber.

"[Greenspan] only said to me if you ever sign any affidavits or any documents or whatever without my permission, as long as I'm your lawyer, I cut your hands off or you look for a new lawyer," Schreiber said. "He's a very humorous guy."

"When I asked [Greenspan] that there was a request that I should give such a declaration, he said under no circumstances. End of story."

Schreiber got the message.
 
"I was not prepared to do that because it was a clear request for, towards me to commit perjury. And why would I do that?" said Schreiber.

When Schreiber refused to provide the statement, Mulroney reversed course and made a "voluntary disclosure" of the income to Revenue Canada, Schreiber said.

'Cataclysmic event'

According to a letter from an unnamed intermediary of Mulroney's, which was received Tuesday night by the Globe and Mail, the former prime minister delayed paying taxes because of the "cataclysmic event" that disrupted his life on Nov. 2, 1995 — when he learned the RCMP was investigating allegations that he accepted kickbacks from Schreiber for the purchase of a large order of Airbus jets when he was still in office.

"As such, it is understandable that until all these matters were resolved — as they eventually were with his total vindication — he could not resume normal functioning and attend to normal day-to-day affairs," the letter said, according to the Globe.

However, the Globe said that if Schreiber gave $200,000 to Mulroney in 1993, the taxes owed on that payment would have been due May 2, 1994 — 18 months before November 1995.

Taxes on the additional $100,000 Schreiber says he gave Mulroney in 1994 would have been due May 1,1995, six months before Mulroney says he learned about the RCMP investigation.

The letter, which does not specify when Mulroney made his voluntary disclosure, states that it is "understandable" that Mulroney waited until he was vindicated in his legal battle with the federal government and the RCMP to finalize his tax matters.

Mulroney sued for libel over the so-called "Airbus affair," and under oath, denied any dealings with Schreiber. Mulroney received a government apology and a $2.1-million settlement in 1997.

The letter also raises other questions about timing, according to the Globe.

One key stipulation for making a voluntary disclosure is that the income has to be declared without any hint of an investigation by the Canada Revenue Agency, the agency told the Globe. In addition, a person who is the subject to a criminal investigation, and is aware of it, must be completely upfront about everything in order to file a voluntary disclosure.

'Imagine you are my lawyer'

The Globe notes that if Mulroney made his disclosure any time after Nov. 2, 1995, he would have been aware he was the subject of an RCMP investigation, one that focused on his relationship with Schreiber, the very person who provided him with the income.

Schreiber said after Mulroney changed course, from wanting a denial of payments to choosing to make a voluntary disclosure, Mulroney's team requested that he say the payments were for vaguely described legal services.

"Imagine you are my lawyer and I tell you we need an affidavit from Schreiber that he never received, that he never gave any money to me," Schreiber said.

"Two days later I tell you, 'You know what, call Revenue Canada, the two of us have to go there. I have to make a voluntary disclosure.' I mean how in the name of God can you do this?"

Schreiber said a document he received from Mulroney's team, which has been seen by The Fifth Estate, lists services to be rendered by Mulroney described as:

• "To provide a watching brief."
• To "develop economic opportunities."
• For "travelling abroad."
• For "new markets."
• For "Canadian-made peace keeping."

Schreiber also told The Fifth Estate that a year earlier, in 1998, he had met with Mulroney at the Savoy Hotel in Zurich Switzerland, where Mulroney expressed concerns about their dealings.

"And then I found a very nervous, very nervous Brian Mulroney and the reason for his, for his visit was more or less to find out whether there would be any evidence that he received any money," Schreiber said.

'I thought he was somehow in good shape'

Schreiber said he told him not to worry because the cash was untraceable.

"If [Mulroney] would have said 'I never received from him $300,000, I would have had no way to prove that he got $300,000 from me," Schreiber said.

"So when he left, I thought he was somehow in good shape."

The cash arrangement between Mulroney and Schreiber began in June 1993, after Schreiber said he had been approached by former Mulroney chief of staff Fred Doucet. According to Schreiber, Doucet told him Mulroney was not financially well off and needed some help.

Schreiber agreed to assist Mulroney.

From 1993 to 1994, Schreiber said he met with Mulroney three times in hotel rooms in Montreal and New York and handed over envelopes stuffed with cash. The money, according to Schreiber, had come from a secret account he had created in Zurich, under the codename BRITAN.

There is no evidence Mulroney knew where the money was coming from.

RCMP shut down investigation

Documents obtained by CBC News show that the Justice Department looked into whether or not it could attempt to recover the $2.1 million-settlement Mulroney received after revelations Mulroney had accepted cash payments from Schreiber.

But the RCMP shut down the investigation into Mulroney, even saying he'd never be charged again, without confirming whether or not Mulroney even got the money or what it might have been used for.

Mulroney himself declined to be interviewed by the RCMP about the $300,000.

Mulroney refused repeated requests by the CBC for an interview. As for Schreiber's lawsuit, none of the allegations have been proven in court and Mulroney's legal team has said their client doesn't owe Schreiber anything.