German-Canadian arms dealer Karlheinz Schreiber chuckles while testifying at the Oliphant Commission in Ottawa April 15, 2009. The commission is probing Schreiber's business dealings with former Canadian Prime Minister Brian Mulroney. (Blair Gable/Reuters)

The lead commission counsel of a federal inquiry grilled Karlheinz Schreiber on Wednesday over why he continued to pay Brian Mulroney hundreds of thousands of dollars when the former prime minister had nothing to show for his lobbying efforts on behalf of the German-Canadian businessman.

Richard Wolson discussed the cash payments of $100,000 Schreiber said he made to Mulroney on Dec. 18, 1993, at the Queen Elizabeth Hotel in Montreal and Dec. 8, 1994, at New York's Pierre Hotel. Schreiber has said those payments were for Mulroney to lobby on behalf of a light-armoured vehicle plant known as the Bear Head project to be set up in Montreal.

Wolson asked Schreiber why, during that year between 1993 and 1994, he never once asked Mulroney for a progress update.

"Did you call Mr. Mulroney and say 'Brian, where are we at, what are you doing for me, give me an update, tell me what's happening.'"

Schreiber said no, arguing that Mulroney was hamstrung because he needed approval from the federal Defence Department to make the Bear Head deal, something he couldn't get.

Schreiber said that even though the Liberals were in power and the Conservatives had been reduced to two seats, he believed Mulroney could work "behind the curtain" because he still had influence with some Liberals.

But Wolson continued to ask Schreiber why he never asked for updates.

"You stood to gain, if everything went your way, $1.8 billion and you don't call the man [who is] working for you, who you're paying, and say to him 'Brian, come on, what's happening, give me something, tell me what you're doing, you don't do that.'"

Schreiber explained again that they needed a deal with the federal government before Mulroney could do anything and that he "hoped he could do something."

"[Mulroney] was more or less waiting for his moment to do something," Schreiber said, adding that Mulroney could also be helpful on the provincial level.

"I was convinced I would need him sooner or later."

Schreiber said he hoped Mulroney might then be helpful in lobbying the Quebec Liberal government of Robert Bourassa, with whom he had close ties. But by the fall of 1994, the separatist Parti Québécois had taken power.

Yet Schreiber said he continued to deliver cash to Mulroney, without asking Mulroney for an accounting of his actions.

"My oh my, Mr. Schreiber, you answer in circles because it seems to me that if you hired the man to lobby for you, you'd want to ask him what he's doing for you, but you don't," Wolson said.

"It depends on how you look at the situation and you must allow me that I have my own thoughts about my business," Schreiber said.

Makes accusation

Earlier in the day, Wolson accused Schreiber of lying under oath about his meeting with Brian Mulroney at his official Harrington Lake retreat in 1993 as a witness in a 2004 fraud case.

Wolson said that during the Eurocopter trial — a case which involved Eurocopter and two German businessmen who had been charged in Canada with fraud — he failed to disclose two important meetings with Mulroney.

It was at one meeting at Harrington Lake in June 1993 that Schreiber said he and Mulroney — who was then the Conservative prime minister — came to an agreement in principle under which Mulroney would lobby on behalf of the Bear Head project once Mulroney left office. At an August 1993 meeting, he hired Mulroney.

Wolson said Schreiber only mentioned that he had hired Mulroney to lobby for him on behalf of Schreiber's pasta business.

"Why didn't you tell the prosecutor that you hired Mr. Mulroney for Bear Head," Wolson said, his voice raising.

Schreiber said that deal dealt with German aircraft manufacturer MBB (Messerschmitt Bolkow-Blohm) and "I thought there was no need for me to say that."

"My suggestion to you is you weren't telling the truth at this hearing at Eurocopter when you were under oath," Wolson charged. "What do you say to that?"

"No," Schreiber replied.

On Tuesday, Wolson said Schreiber was hiding his ties to Mulroney when giving testimony during that case. But on Wednesday, he suggested Schreiber committed perjury, although he didn't use the word.

The probe, headed by Justice Jeffrey Oliphant, aims to get to the bottom of the hundreds of thousands of dollars in cash that Schreiber gave to Mulroney between 1993 and 1994, shortly after Mulroney left office.

Schreiber previously testified before a Commons committee that he gave Mulroney $300,000 to lobby on behalf of the Bear Head project.

In testimony to the federal ethics committee in 2007, Mulroney said he received cash payments from Schreiber after he left office in June 1993.

Mulroney said he was paid $225,000 in three instalments, and that the money was payment for his efforts as an international lobbyist on behalf of the German company Thyssen.

With files from The Canadian Press