'Nothing to do with me,' Mulroney says of tax deal struck on his behalf
Lawyer negotiated agreement to tax only half of amount received from Schreiber
Last Updated: Tuesday, May 19, 2009 | 1:13 PM ET
CBC News
Former prime minister Brian Mulroney, right, waits to be questioned by lead commission counsel Richard Wolson at the Oliphant commission in Ottawa on Tuesday. (Sean Kilpatrick/Canadian Press)Former prime minister Brian Mulroney received "a pretty good deal" by having to pay income tax on only half of the $225,000 he received from German-Canadian lobbyist and businessman Karlheinz Schreiber, the head of a federal inquiry into dealings between the two men said on Tuesday.
Mulonrey said his tax lawyer dealt with the issue and that he had no involvement in the arrangement his attorney made with tax officials.
The agreement reached between Mulroney’s tax lawyers and federal and Quebec tax authorities meant Mulroney, under a procedure called voluntary disclosure, paid taxes owed on $112,500.
"It had really nothing to do with me, if I may. I had no involvement in this whatsoever," Mulroney said. "I understand my name was not even mentioned in any circumstances. This was an anonymous taxpayer."
Mulroney said he just paid the taxes he was told to pay.
"Pretty good deal, you’d agree with that?” Justice Jeffrey Oliphant later asked Mulroney.
“Well, he’s a pretty good lawyer,” Mulroney said.
Mulroney’s lawyer, Guy Pratte, pointed out that the tax authorities were not aware on whose behalf the deal was being negotiated and that any other person might have received the same terms.
“There’s no question about that,” Oliphant said. “But the point that was made was that instead of paying income tax on $75,000 in each of the three years, despite the fact that the tax people were aware of it, tax was paid on $37,500 in each of the three years, and the taxation authorities were probably so happy to get the money, they agreed to that.”
The Oliphant inquiry is looking into three cash payments Mulroney received from Schreiber at three hotels in Montreal and New York between 1993 and 1994.
Mulroney said he considered the money a retainer and that according to his understanding of tax laws, he did not have to pay taxes until that income was declared.
Mulroney waited until 1999 to pay the taxes because he said he had ended the retainer with Schreiber after Schreiber was charged in Germany with tax evasion, fraud and bribery.
Schreiber has said he paid Mulroney $300,000 to lobby domestically on behalf of Thyssen Industries, a German company that wanted to build a light-armoured vehicle plant in Bear Head, N.S., and obtain a contract to sell military vehicles to the Canadian government.
But Mulroney has said he was paid $225,000 in three installments and that the money was payment for his efforts to promote the vehicles internationally. He has denied it was for any domestic lobbying work, which would have violated Canadian lobbying rules.
Lead inquiry counsel Richard Wolson said Mulroney’s tax lawyer declared $75,000 for each of the taxation years of 1993, 1994 and 1995.
Wolson asked where the lawyer got those dates if the retainer was supposedly open-ended.
“He wasn’t dealing with this as if this were an ongoing retainer,” Wolson said.
Mulroney again stated that he was not involved in the negotiations of his tax bill.
"I think if you do the calculations, sir, it’s very simple. It’s not a mystery novel. [Schreiber] retains me in 1993, work is done in 1993, 1994, and ’95," Mulroney said.
He said that in 1995, allegations surfaced that he had received kickbacks from the sale of Airbus airplanes to Air Canada and that his "world was blown apart" for three years, meaning nothing was done on the file in that period.
Mulroney questioned on Kaplan allegations
But Wolson pressed Mulroney on the tax issue, suggesting that had Mulroney declared his income in 1996 or 1997, he would have had to pay roughly half of the $225,000 he earned, according to tax rates.
“I just don’t know the answer. That’s a highly technical question," Mulroney said.
At that point, Mulroney’s lawyer interrupted, arguing Wolson was asking hypothetical questions about tax law.
Earlier, Mulroney was asked questions about author William Kaplan, who wrote about Mulroney's dealings with Schreiber in the Globe and Mail and in a book entitled A Secret Trial: Brian Mulroney, Stevie Cameron and the Public Trust. Mulroney admitted he did not want Kaplan to go public with information that he had a business relationship with Schreiber but denied he called him specifically to ask him to keep the information quiet.
Kaplan had interviewed Mulroney for three articles he wrote for the Globe and Mail in 2003, in which Kaplan revealed that Mulroney had received $300,000 in cash payments from Schreiber. But Kaplan, writing in A Secret Trial, suggested Mulroney tried to pressure him not to include that information.
“Mulroney’s unrelenting campaign to persuade me not to publish the story about the money for one reason only, to protect his reputation, was brutal, heavy-handed and extremely wearing,” Kaplan wrote.
Mulroney told Wolson that he had tried to persuade Kaplan not to include that information in his articles because he was concerned that some in the media would use the information, in the context of the Airbus affair, “to try and get back at me and me and my family again.”
“Did you call him attempting to convince him not to write about the legal, commercial relationship that you had with Mr. Schreiber?” Wolson asked.
“I have no recollection of calling him for that specific objective,” Mulroney said.
“He would call me from time to time. When I had a chance, I would call him. Various subjects in which he was interested would come up in various conversations about his book and the areas of interest he wanted to talk about, and obviously, this was one of them.”
In his book Presumed Guilty: Brian Mulroney, the Airbus Affair, and the Government of Canada, Kaplan wrote that Mulroney had unfairly been the victim of unfounded allegations related to the Airbus sale. Mulroney, who sued the federal government for libel after the allegations were leaked, received a $2.1-million settlement.
But in his second book about Mulroney, Kaplan criticized the former prime minister for not being forthcoming with him about his relationship with Schreiber.
