The judge heading the inquiry into business dealings between former prime minister Brian Mulroney and German-Canadian businessman Karlheinz Schreiber says he's been granted a six-month extension.

That means Justice Jeffrey Oliphant's report won't be submitted until the end of the year — 25 months after Prime Minister Stephen Harper called for the probe.

Justice Jeffrey Oliphant sits in a courtroom in Winnipeg on May 7, 2008. (Phil Hossack/Canadian Press)

Oliphant said difficulties with document disclosure and technological problems with the computer system used by the inquiry make it impossible to meet the earlier deadline of June 2009.

"I therefore sought from the government an extension of the mandate of the inquiry," Oliphant informed lawyers for all sides. "I have been advised that the extension I sought has been granted, and the inquiry's mandate will now terminate on Dec. 31."

Oliphant said he still hopes to wrap up hearings by June but will need time after that to write his report — hence the six-month delay until year's end.

Harper appointed Oliphant, the associate chief justice of Manitoba's Court of Queen's Bench, last spring. He was appointed to the bench in 1985 by then prime minister Brian Mulroney.

The inquiry's mandate will be based on recommendations made by David Johnston, who had been asked to advise the Conservative government on what shape a public inquiry into the Mulroney-Schreiber affair should take.

Johnston said the inquiry should be limited and possibly include closed-door hearings.

Hearings into legal standards underway

News of the latest postponement came as hearings got underway Wednesday into the question of the legal standards that should guide the commission in its work.

Brian Mulroney appears before the House of Commons ethics committee in 2007. (CBC)

Mulroney's lawyers contend that the only yardstick for measuring the former prime minister's conduct should be the 1985 ethics code that Mulroney himself put in place to guide cabinet members and senior federal officials.

Counsel for Schreiber and for the federal Justice Department are urging Oliphant to take a broader view.

They say a range of statutes, including the Income Tax Act, the Parliament of Canada Act and even the Criminal Code, should be taken into account in defining ethical conduct.

Oliphant has no power to find anyone criminally or civilly liable, but he does have the authority to make more general findings of misconduct. The judge said he's sensitive to that distinction but wants to ensure that all participants understand the fine points before he starts hearing witnesses.

Testified at ethics probe

Harper called the inquiry last January after a federal ethics committee looking into the dealings between the two men.

Karlheinz Schreiber appeared before the ethics committee on several occasions. (CBC)

In testimony to a parliamentary ethics committee in Ottawa last year, Mulroney said he received money between 1993 and 1994 to lobby internationally on behalf of Schreiber's client, Thyssen, a German armoured-vehicle company.

Mulroney said he was paid $225,000 cash in envelopes at three meetings with Schreiber and insisted the arrangement was struck after he left office in June 1993.

While saying that accepting cash payments was one of the biggest mistakes of his life, Mulroney has said he did nothing illegal.

Schreiber testified that the total was $300,000, and that the arrangement was reached while Mulroney was serving his last days as prime minister in 1993, something that could have put him in violation of federal ethics rules.

With files from the Canadian Press