Former prime minister Brian Mulroney has denied allegations he negotiated a lobbying deal with Karlheinz Schreiber while he was still in office, saying he promoted business on Schreiber's behalf only after stepping down.

Mulroney appeared before the federal ethics committee Thursday to face questions about his dealings with the German-Canadian businessman, notably the cash payments he received from Schreiber in hotel rooms between 1993 and 1994.

Former prime minister Brian Mulroney prepares to testify before the Commons ethics committee on Thursday.
(Sean Kilpatrick/Canadian Press)

The former prime minister flatly rejected claims outlined in a November affidavit filed by Schreiber that he received the money as part of a lobbying deal struck during a meeting at the prime ministerial retreat at Harrington Lake, Que., on June 23, 1993, two days before he left office. 

Mulroney said that meeting was arranged after he was told that Schreiber wanted to see him for a farewell courtesy visit, as many others had done, added the former prime minister.

"He did not ask or suggest he wanted me to play any role whatsoever, in my return to private life, in assisting him," Mulroney said. "Not a word was breathed at Harrington Lake about any future business arrangements with him.

"All of the allegations in the affidavit are completely false. He will say anything, sign anything and do anything to avoid extradition." 

Mulroney said Schreiber made it all up in order to create a media frenzy. "He's got what he wanted. He's sitting in his mansion over in Rockcliffe chuckling."

Thursday's appearance is the first time Mulroney has spoken publicly about his dealings with Schreiber, saying he didn't address the allegations earlier because it was a "private matter undertaken in the private sector."

No money from Airbus

Mulroney used his 20-minute opening statement to clear up what he said were misunderstandings about his testimony during his 1996 libel suit against the federal government, which had accused him of taking kickbacks from the 1988 sale of Airbus planes to Air Canada.

During that appearance in a Montreal courtroom, Mulroney was asked if he had ever discussed with Schreiber whether Schreiber had been paid substantial sums from Airbus Industries.

Mulroney's response to the question was: "The fact that Mr. Schreiber may or may not have had any business dealings was not my principal preoccupation. I had never had any dealings with him."

On Thursday, Mulroney said news organizations repeated the quote out of context and that his response was contained to the time he was prime minister and the Airbus affair. He cited Quebec law that, he said, limited his responses under examination to the allegations in his lawsuit.

"When I used the language 'I had never had any dealings with Mr. Schreiber,' I was clearly referring to the sale of Airbus aircraft and the time when I was in government," Mulroney said.

New Democratic MP Pat Martin dismissed Mulroney's explanation as "splitting hairs."
 
"I'm not calling you a liar Mr. Mulroney, but I want everyone here to know that I don't believe you," Martin said.

That exchange prompted an angry reaction from Mulroney's son Ben, who was advised by his sister to calm down, said CBC's Rosemary Barton, who was in the room.

Mulroney called the Airbus affair "a near-death experience," and said he never received "a cent from anyone" in connection with Air Canada's purchase of 34 Airbus planes in 1988.

He rejected an accusation that his former adviser Fred Doucet asked Schreiber to funnel money to Mulroney through a Swiss lawyer "for Airbus." Mulroney said he's never had a lawyer in Switzerland, except to defend himself against the 1995 allegations.

"This was immensely painful for both me and my family," he said. "Only a person who has gone through such an ordeal can fathom its impact. It was like a near-death experience."

Two affidavits

Mulroney, who testified in front of his wife Mila and their four children, said Schreiber first proposed they work together during a meeting at a Mirabel airport hotel on Aug. 27, 1993, after he returned to private legal practice in Montreal.

Schreiber suggested Mulroney use his status to internationally promote armoured vehicles on behalf of Schreiber's client Thyssen, something Mulroney said he felt he could do.

He said Schreiber confirms that time frame in sworn testimony from the 2004 Eurocopter case, in which Schreiber said he planned to hire Mulroney after he had stepped down as prime minister. The case involved allegations of secret commissions paid out after Eurocopter won a Canadian Coast Guard contract.

Schreiber included excerpts of his Eurocopter testimony in an affidavit filed with the Federal Court in March 2007, but didn't submit that affidavit to the ethics committee, Mulroney said.

"You don't have this one. Take a look at it, it's interesting," Mulroney said, holding up the two affidavits. "Which one is perjury? … They can't both be true."

Mulroney quoted from Schreiber's past court filings and media interviews throughout his testimony, using them to support his allegations that Schreiber had lied and to support his own statements.

MPs asked Mulroney how they were supposed to know which ones to believe.

"If you can figure that out, you're going to heaven," said Mulroney, drawing laughs from the packed room.

Taxes paid in full

Mulroney said he received three retainer payments of $75,000, for a total of $225,000, not three payments of $100,000 totalling $300,000.

When asked why he accepted cash from Schreiber during those meetings in hotel rooms, Mulroney said Schreiber told him he was an international businessman who only dealt in cash.

"I realize I made a serious error in judgment in receiving the payment in cash for this assignment, even though it was decidedly not illegal," Mulroney said. "That mistake in judgment was mine alone. I apologize and I accept full responsibility for it."

Mulroney said he should have declined the offer and insist the payment be in a more transparent manner.

"By not doing so, I inadvertently created an impression of impropriety that I hope will not reflect adversely on the high office I was privileged to hold," Mulroney said.

Mulroney said he kept the money in safety-deposit boxes in Montreal and New York and used some of it to pay for expenses incurred while promoting Thyssen interests during business visits to China, Russia, Europe and the U.S.

Mulroney said he briefed Schreiber in New York on his efforts, however, in his testimony, Schreiber said he wasn't aware of any work Mulroney did on his behalf.

Mulroney didn't explain why he used safety-deposit boxes, which are not traceable, instead of bank accounts. He also said he has since "disposed" of documents related to how the money was handled.

Mulroney said he declared the full amount as income in 1999 after Schreiber was arrested in Toronto on German fraud, bribery and tax evasion charges, a development he characterized as "stunning."

"I thought the best way to deal with this situation was to declare the entire amount as income," he said.

"I instructed my advisors to contact the income tax authorities and to ensure that the full amount received in this private transaction was declared by me as income and all applicable taxes paid."

Meeting Schreiber 'biggest mistake'

Mulroney said he now regrets his relationship with Schreiber, but at the time of the meetings, he only knew Schreiber as a successful businessman and chairman of Thyssen, a company with thousands of employees.

"My second-biggest mistake in life, for which I have no one to blame but myself, is having accepted payments in cash from Karlheinz Schreiber, for a mandate he gave me after I left office," Mulroney said.

"My biggest mistake in life was ever agreeing to be introduced to Karlheinz Schreiber in the first place."

Schreiber has also claimed that Mulroney attempted to cover up the cash payments. He alleged to the CBC's The Fifth Estate that Mulroney wanted Schreiber 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 Mulroney denied that, saying that the request related "to the allegations and the money that went through the system on the Airbus deal from which I received not a cent."

Mulroney also said he never raised the issue of Schreiber's extradition troubles with Prime Minister Stephen Harper, saying "he has had nothing to do directly or indirectly with this in any way."

He also said he didn't solicit a letter of exoneration from Schreiber, through former cabinet minister Elmer MacKay, in 2006.

Mulroney said he hasn't spoken to Schreiber since 2000 or responded to any of the letters he received from him, which included proposals to help fight the obesity epidemic with the help of Microsoft billionaire Bill Gates and an assurance that Mulroney would one day win a Nobel prize.

Mulroney answered questions in the packed committee room for four hours. The committee said it would likely recall Mulroney in the new year.

Schreiber is suing Mulroney to recoup $300,000 he says Mulroney owes him. Mulroney said Thursday that matter would be resolved by the courts.

Schreiber, who is out on bail while he fights extradition to Germany to face fraud and bribery charges, contends that Mulroney did not provide the services. The allegations haven't been proven in court.

With files from Canadian Press