Brian Mulroney's former spokesman said Thursday that he didn't know about cash payments to the former prime minister from Karlheinz Schreiber until years later.

Speaking before the Commons ethics committee probing the financial dealings between Mulroney and the German-Canadian businessman, Luc Lavoie also said he knew of no wrongdoings by his boss while in office.

Luc Lavoie, former spokesman for Brian Mulroney, responds to questions at the Commons ethics committee, in Ottawa on Thursday.
(Tom Hanson/Canadian Press)

Lavoie said he learned about the cash payments in the spring of 2000 from one of Mulroney's lawyers, Gerald Tremblay, who referred to them as a cash retainer involving three payments of tens of thousands of dollars.

He didn't learn about the specific amount from Mulroney until much later — shortly before the former prime minister testified before the committee, he said.

Mulroney has acknowledged that Schreiber paid him $225,000 in cash in the 1990s for consultancy work done for Schreiber's client, a German armoured car company that had wanted to build a manufacturing plant in Bear Head, N.S.

Schreiber, who is fighting extradition to Germany, where he faces fraud and other charges, says he paid Mulroney $300,000 and maintains the former prime minister didn't do any work for him.

Committee members quizzed Lavoie on why he referred to the amount paid as $300,000 when speaking to the media in the fall of 2007.

"The number $300,000 was a figure that came out of the media. It came out of the Globe and Mail. He never denied it and then it became the truth, or perceived as being the truth, and I never tried to fight back and I never asked if it was the exact amount," said Lavoie.

Mulroney contacted him that evening, correcting the amount, Lavoie said.

He said the two decided to let the former prime minister correct the amount when he appeared before the committee, with the reasoning that "in the media climate at the time, everything was blown out of proportion."

The only time between the spring of 2000 and February 2008 that Lavoie said he ever brought up the payments with Mulroney was in a phone call the evening before Mulroney testified to the committee.

Lavoie calls letter 'horrendous libel'

Lavoie served as assistant chief of staff to Mulroney during his time in office and was later hired as his public relations consultant.

He suddenly stepped down as Mulroney's spokesman in late November after years in the post, saying he was too busy with his job as vice-president of media giant Quebecor Inc.

Committee members also asked Lavoie for reaction to former federal justice minister Allan Rock's suggestion to them earlier in the week that Mulroney would not have been paid $2.1 million to settle his lawsuit over the Airbus affair had the government known about the cash payments from Schreiber.

Mulroney sued the Liberal government in the mid-1990s after the Justice Department sent a letter to Swiss authorities implicating Mulroney in an alleged Airbus kickback scheme.

Lavoie said the $225,000 that changed hands between Mulroney and Schreiber is a "completely different story" and doesn't change the fact that the letter was wrong.

"He never had anything to do with this transaction, as confirmed by your star witness," said Lavoie, adding that he also never had a bank account in Switzerland.

"So the letter was a horrendous libel and I maintain it," said Lavoie.

Schreiber letter contradicts Mulroney testimony

Schreiber sent a letter to the ethics committee saying the money he paid Mulroney was to lobby the Canadian government, not lobby foreign governments to buy military vehicles, as Mulroney has suggested.

The difference is critical because it would be improper for an MP to accept money to lobby his own government while in office.

Schreiber has claimed the financial deal was arranged between himself and Mulroney on June 23, 1993, two days before Mulroney stepped down as prime minister. Mulroney said that while he did meet with Schreiber on June 23 in Harrington Lake, Que., no deals were discussed.

In the letter, Schreiber said he paid Mulroney to lobby the federal government to build a light-armoured vehicle plant.

"I never hired Brian Mulroney to promote the TH495 Armoured Fighting Vehicle internationally," Schreiber wrote in the letter, dated Feb. 3, 2008.

"I hired Brian Mulroney on August 27, 1993, in Mirabel, as agreed upon on June 23, 1993, at Harrington Lake, to lobby the activities of Thyssen Bear Head Industries Inc. to establish production facilities for Thyssen Bear Head Industries Inc. at the City of Montreal East, or another place if requested by the government."

Spokespeople for Mulroney rebuffed the allegations, saying Schreiber's letter contradicts his own testimony. They referred to a transcript from Schreiber's appearance before the committee late last year in which he was asked repeatedly whether he had hired Mulroney to lobby the Canadian government.

According to the transcript, Schreiber said he had not.

Mulroney has said he didn't declare the money on his taxes for six years because he spent it all on travel to places like Russia, France, and China while working for Schreiber.

But Schreiber said that's impossible because strict rules on arms exports in Canada and Germany would have made it illegal to ship to what he described as "communist" countries like China and Russia.

With files from the Canadian Press