NDP Leader Jack Layton is backing Liberal demands for a judicial inquiry into allegations about former prime minister Brian Mulroney and his dealings with German-Canadian businessman Karlheinz Schreiber.

"We need a judge to take a look at this," Layton told CBC News on Monday, two days after Liberal Leader Stéphane Dion made a similar plea. "It's important that we get to the bottom of this very soon because otherwise it's a stain on the democratic process.

"And in the end does anybody believe a judge won't have to take a look at this? I think it's clear that's going to happen."

Prime Minister Stephen Harper announced Friday that he would appoint an as-yet-unnamed person to take an independent look into allegations about Mulroney and advise the government on how to proceed. Harper also said he had not ruled out the possibility of an inquiry.

Harper said the appointee would be asked to consider the allegation that Schreiber negotiated a $300,000 lobbying deal with Mulroney on June 23, 1993 — two days before Mulroney stepped down as prime minister.

The person would also consider the allegation that a Mulroney adviser asked Schreiber to transfer funds in connection with Air Canada's 1988 purchase of Airbus planes to a Mulroney lawyer based in Switzerland.

The latter allegation is similar to the accusations that sparked Mulroney's 1995 lawsuit against the federal government, and resulted in the former prime minister receiving an apology and a settlement of $2.1 million in 1997.

Schreiber outlined both allegations in an affidavit he filed Thursday in Ontario's Superior Court of Justice.

Harper said Friday that his government "can't ignore" the allegations because they relate to Mulroney's term in office and they must "always protect the office of the prime minister."

Should have appointed special prosecutor: Layton

Layton said Harper should have first had a special prosecutor examine the allegations, a role defined in the Conservative Accountability Act that became law in December 2006.

"That person could have already [been] hard at work to get to the bottom of this, and we could be moving on with a judicial inquiry now," he said.

Layton said he would bring up the need for a judicial inquiry when the House of Commons resumes on Tuesday, but he does not want the scandal to eclipse what he considers more important issues, such as the environment and the widening gap between the rich and the poor.

Liberal Leader Stéphane Dion first made his call for a judicial inquiry on Saturday, stating that the current Conservative government is too close to Mulroney, himself a Tory, to objectively assess the allegations.

On Monday, Liberal MP Mark Holland echoed Dion's concerns and said the judicial inquiry is the only way to objectively uncover the true details about the allegations. It would also be able to probe whether Harper tried to cover up the allegations, as Holland and other Liberals have suggested.

Schreiber first sent his allegations to the government's Privy Council Office in March 2007, but the Prime Minister's Office has said they were never forwarded on to Harper. Harper only learned of the allegations when they were filed Thursday in court, the Prime Minister's Office maintains.

Holland said an inquiry needs to delve into the government's side of the story.

"It makes no sense whatsoever that something this explosive would come into the prime minister's office … and that it would not have made it to him," Holland told CBC News. "We need truth to be revealed on this."

Holland said if the allegations prove to be true, the government should re-examine the $2.1-million settlement it reached with Mulroney.

None of the allegations have been proven in court. Schreiber is scheduled to be deported to Germany on Wednesday to face bribery and fraud charges.