Karlheinz Schreiber wrapped up more than two hours of testimony before a Commons committee Thursday, saying Brian Mulroney was only paid $300,000 of a $500,000 business deal because the former prime minister did not hold up his end of the bargain.

Karlheinz Schreiber said early in a hearing before the ethics committee Thursday that he could not testify until he had time to review his personal papers and prepare. But he later elaborated on allegations against Brian Mulroney.
(CBC)

The German-Canadian businessman appeared before a federal ethics committee to testify about his dealings with the former Tory prime minister. Schreiber said he made an arrangement with Mulroney to help establish a military vehicle factory in Nova Scotia. The project, known as Bear Head, was on behalf of Schreiber's client, German industrial company Thyssen Industries.

"Since he didn't perform, he didn't get the $500,000. Simple as that," said Schreiber.

When asked what work Mulroney did in exchange for the money, Schreiber said he couldn't comment on that because he is suing the former prime minister to recoup the $300,000 and the matter is before the courts.

Mulroney has said the agreement was made after he left office and that it was for assistance with a pasta business and business contacts, something Schreiber said wasn't true.

"It had nothing to do with any pasta business. It simply didn't exist," he said.

Schreiber told the committee he made the deal with Mulroney on June 23 at the prime minister's retreat at Harrington Lake, Que. He didn't mention a year but he has previously said it was in 1993 — two days before Mulroney stepped down as prime minister.

When asked why he gave him the cash, Schreiber said former Mulroney adviser Fred Doucet told him the former prime minister was in "desperate" financial shape at the time.

Schreiber refused to provide any further details about the $500,000.

MPs later agreed to recall Schreiber for further questioning on Dec. 4 and were trying to have him placed under house arrest while he's in Ottawa, instead of being kept at the Ottawa-Carleton Detention Centre.

Schreiber wants access to papers

Schreiber brought up the deal despite having told MPs repeatedly that he didn't want to testify until he had time to review his personal papers, a collection of some 35,000 documents he said are in Ottawa, Toronto and Switzerland.

"I have not been given the opportunity to go home, or retrieve papers or review what I have available in order to properly prepare myself," said Schreiber, who was being held in a Toronto jail awaiting deportation to Germany to face fraud and other charges.

"I have nothing more to say now. I've made it clear, I wish to speak, but not in circumstances that are calculated to be degrading and humiliating."

He said he was upset he had to travel to Ottawa in handcuffs, leg irons and an orange prison jumpsuit, and added he has been out on bail for more than eight years and hasn't been deemed a flight risk.

MPs acknowledged that the Speaker's warrant, a rare parliamentary subpoena used to bring Schreiber to Ottawa to testify, allowed him access to his papers.

Schreiber also demanded he be told how long his stay of extradition will last.

Karlheinz Schreiber arrives at Parliament Hill on Thursday morning, escorted by Ottawa police.
(CBC)

Schreiber's lawyers will appear before the Ontario Court of Appeal Friday to hear a ruling on whether he can remain in Canada until the Supreme Court considers his latest appeal, which could take several months. The federal Justice Department has said it won't oppose the move.

During Thursday's testimony, Schreiber said his lawyer Edward Greenspan is very busy and will require the maximum amount of time allowed — until mid-January — to file the paperwork with the top court.

Schreiber defers questions

MPs voted to proceed with questioning after defeating a Conservative motion to delay the meeting by several hours and give Schreiber time to review some of his papers. MPs spent more than 40 minutes debating the motion.

Schreiber initially responded "I defer" to most questions, saying: "I rest on my statement and I have nothing more to say at this time."

As the meeting continued, however, he provided answers to some members.

Schreiber repeated his claim that former Conservative cabinet minister Elmer MacKay helped him draft a letter to the former prime minister.

"I hate to say this, because he's one of the nicest people I know and a hell of a good friend," said Schreiber of MacKay, who is the father of Defence Minister Peter MacKay.

Schreiber said Mulroney, through Elmer MacKay, had pledged he'd try to convince Prime Minister Stephen Harper to end Schreiber's extradition troubles in return.

The letter, which Schreiber sent to Mulroney, apologizes for what it claimed was a misleading characterization of Schreiber's business dealings with Mulroney as depicted in a report by CBC's The Fifth Estate. The letter claims Schreiber was misled by the producers.

Mulroney said he needed the letter to prove to Harper that he and Schreiber were "in good standing" with one another following The Fifth Estate broadcast, Schreiber claimed.

Schreiber alleged that after Mulroney met with Harper in the summer of 2006 at Harrington Lake — the official country retreat of the prime minister — Mulroney said the "message was very well received."

But Harper has said that Mulroney never raised the issue of Schreiber's extradition with him at their meeting.

"It was a shock for me when Prime Minister Harper said publicy on television Mr. Mulroney never spoke with him about me or my letter," Schreiber.

Committee to question Mulroney

The committee is looking into $300,000 in cash Mulroney accepted from Schreiber after he left office in 1993.

It's also reviewing 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.

Schreiber is suing Mulroney to recoup $300,000 in cash payments he gave to the former Tory prime minister. Before Thursday's hearing, it was reported the money was allegedly paid for Mulroney to help establish a pasta business and a light-armoured vehicle factory, and that the services weren't provided.

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

Schreiber also alleged in the affidavit 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 into the affair.

With files from the Canadian Press