Karlheinz Schreiber's bid to remain in Canada will go unchallenged by the Justice Department, all but assuring the controversial figure will avoid deportation to his native Germany — at least for the time being.

German businessman Karlheinz Schreiber, shown in 2002, will be permitted to change from his orange jail jumpsuit into business clothing and access personal papers from his Ottawa home before testifying.
(Kevin Frayer/Canadian Press)

Schreiber, the German-Canadian arms broker behind the corruption allegations dogging former prime minister Brian Mulroney, was scheduled for extradition Saturday to face bribery and tax evasion charges in Germany.

But the Justice Department consented on Wednesday night to a judicial stay of surrender to give him time to appeal his case to the Supreme Court of Canada.

"I am prepared to consent on strict terms to a judicial stay of the surrender order, pending the outcome of your application for leave," senior counsel for the Justice Department Nancy Denison wrote in a letter to the Supreme Court of Canada.

The letter was sent on the eve of Schreiber's highly-anticipated testimony scheduled on Thursday before a parliamentary committee.

Schreiber arrives in Ottawa

Schreiber's lawyers will be in an Ontario court on Friday, where the official stay is now almost certain to be granted.

Denison's letter also instructs Schreiber's lawyer, Edward Greenspan, to file "all the materials in support of your leave application on an expedited basis" before Dec. 10.

Justice Minister Rob Nicholson has previously said he could not interfere with the federal extradition order.

Schreiber, in handcuffs and shackles and wearing an orange prison jumpsuit, arrived at the Ottawa-Carleton Detention Centre in a van on Wednesday. He will testify on Thursday before the federal ethics committee on his affairs with Mulroney.

Earlier Wednesday, Pat Martin, vice-chair of the committee, said there were no further legal obstacles blocking Schreiber from appearing.

Martin told CBC News that a rare Speaker's warrant, issued Tuesday, overrides Schreiber's extradition order and compels him to testify.

"We don't know of any other barriers that could get in the way, except, it's been hinted at today, Mr. Schreiber might not be willing to talk under these circumstances," said Martin.

Schreiber a hostile witness?

Schreiber will be permitted to change from his orange jail jumpsuit — after he arrives on Parliament Hill — into business clothing and access personal papers from his Ottawa home, said Martin.

Schreiber, who must change back into the prison garb after he's finished testifying, will stay at the Ottawa-Carleton Detention Centre until the committee has completed its questioning, said Martin.

"These are terms he's not exactly thrilled about," he said. "He doesn't have any choice about whether he's coming and that is happening. Whether he's a hostile witness remains to be seen."

Schreiber will have the chance to make an opening statement when he testifies.

Paul Szabo, chair of the committee, said he hopes to get directly to the point when Schreiber testifies, giving parliamentary lawyers the opportunity to question him first.

Opposition politicians have promised to focus on getting answers and prevent the appearance from degenerating into a circus-like atmosphere of partisan bickering.

Opposition challenges justice minister

Attempts to confirm Schreiber's appearance in front of the committee increased in recent days as Saturday's deadline for his extradition to Germany approached.

Martin said the committee has "vetoed the minister's right" to deport Schreiber until it's finished with him.

"It's our belief our Speaker's warrant has primacy over the extradition warrant. We believe that trumps the extradition order," he said.

"If the minister of justice tried to execute it, he'd be in contempt of Parliament."

A Speaker's warrant is similar to a subpoena and ignoring it could result in a jail sentence.

On Tuesday, Nicholson said he doesn't have the authority to delay Schreiber's extradition.

Szabo and parliamentary legal counsel Rob Walsh disagreed with the minister, saying he has the authority to amend the deportation order.

In an e-mail to CBC News on Tuesday, Greenspan accused the justice minister of working against his client.

"The minister of justice is doing everything in his power to have him removed (from Canada) as soon as possible," he wrote.

During question period Wednesday, NDP Leader Jack Layton accused Nicholson of misleading the ethics committee and called on the minister to apologize.

Nicholson quickly rejected the request.

"I will do no such thing. We all get legal advice on such matters," he said.

Committee to question former PM

The ethics committee is also expected to call Mulroney as early as Dec. 4. He has been slated for three days of testimony.

The committee's probe will include a review of Mulroney's $2.1-million settlement from the federal government in 1997 over his libel suit regarding the so-called Airbus affair — in which millions of dollars in secret commissions were paid in the sale of jets to Air Canada.

The committee will also review new allegations that have come to light in the wake of a lawsuit Schreiber has launched against Mulroney.

Schreiber is suing Mulroney to recoup $300,000 in cash payments he handed out to the former Tory prime minister to enlist his help in establishing a pasta business and a light armoured vehicle factory. Schreiber contends that Mulroney did not provide the services, something Mulroney disputes.

Schreiber alleges in an affidavit that the deal was struck two days before Mulroney left office as prime minister in 1993.

Schreiber also alleges that a Mulroney adviser asked Schreiber to transfer money in connection with Air Canada's 1988 purchase of Airbus planes to a Mulroney lawyer based in Switzerland.

None of the allegations against Mulroney has been proven in court, but they spurred Prime Minister Stephen Harper to call a public inquiry.

Tuesday's Speaker's warrant is the first issued since 1913 when a Montreal businessman was called to explain $41,000 in heating contracts.

With files from the Canadian Press