Schreiber gets 8 years for tax evasion

German-Canadian arms-industry lobbyist Karlheinz Schreiber has been sentenced to eight years in prison after being found guilty of evading taxes in Germany.

Lobbyist was extradited to Germany from Canada

German-Canadian arms-industry lobbyist Karlheinz Schreiber has been sentenced to eight years in prison after being found guilty of tax evasion in Germany.

German-Canadian businessman Karlheinz Schreiber waits for the judgment in a courtroom in Augsburg, southern Germany, on Wednesday. ((Kerstin Joensson/Associated Press))

Schreiber, whose dealings with Brian Mulroney saw the former prime minister defend himself at a public inquiry was convicted of not declaring commissions after his company, International Aircraft Leasing, sold tanks to Saudi Arabia in the 1990s. As a result, he evaded paying almost $10 million in taxes, the court found.

During the trial, Schreiber insisted he was not the owner of IAL — one of many claims the court rejected.

"It was notable that the accused sought refuge in red herrings and was consistently silent on the really decisive questions," Judge Rudolph Weigell of the Augsberg state court said in handing down the sentence.

Prosecutors had asked for 9½ years in prison. 

Schreiber's lawyer, Jan Olaf Leisner, had called for an acquittal, saying the prosecution had "lost all sense of proportion" in seeking that sentence.

Schreiber plans to appeal his case to Germany's Supreme Court, according to freelance reporter Conny Neumann.

Schreiber, who has German and Canadian citizenships, was arrested in Canada in 1999 under a German warrant. He was sent to Germany in August for trial after losing a 10-year battle against extradition.

Schreiber, 76, also allegedly gave a cash donation in 1991 to the former treasurer of Helmut Kohl's Christian Democratic Union party, Walther Leisler Kiep. That allegation triggered a scandal that only deepened with then-chancellor Kohl's 1999 admission that he had personally accepted off-the-books — and therefore illegal — donations from supporters.

A criminal investigation into Kohl's affairs began in 1990. It ended in 2001 when prosecutors in Bonn closed the case after he agreed to pay hefty fines. Kohl served as chancellor from 1982 to 1998.

Schreiber was indicted initially on charges of tax evasion, bribery and of being an accessory to breach of trust and fraud.

The court only considered the tax evasion charge after finding that the statute of limitations had expired on a bribery charge, while charges of accessory to breach of trust and fraud were not included in the extradition order.

Mulroney report due soon

Similar allegations swirled around Schreiber during his scandal-plagued stay in Canada, during which his dealings with Mulroney became the subject of a public inquiry last year.

Mulroney admitted taking $225,000 in cash from Schreiber but said he broke no laws or ethical guidelines. He argued that he had merely tried to line up support from political leaders in Russia, China and France for a proposed UN purchase of  vehicles for peacekeeping work.   

Schreiber said the payments totalled $300,000, not the $225,000 Mulroney later declared for tax purposes. He also maintained the ex-prime minister was supposed to lobby Canadian officials, not foreign leaders.

Following testimony from both Schreiber and Mulroney during public hearings in 2009 in Ottawa, Justice Jeffrey Oliphant is to present his report on their dealings by May 31. The probe was ordered by Prime Minister Stephen Harper.

With files from The Canadian Press