25 years ago – Chretien’s apology | A short-lived victory

Brian Mulroney’s autobiography, Memoirs, has more than 1300 pages. Hundreds of names are in the index at the end. But one would look in vain for that of Karlheinz Schreiber. This German businessman is however at the center of a controversy which, for nearly 20 years, has tarnished the reputation of the former prime minister.

Mr. Mulroney was completely cleared of suspicion of interventions concerning a mega-contract between Air Canada and Airbus. But a backlash was quick. After an incredible legal saga, the former prime minister was finally blamed for having agreed to be paid by Mr. Schreiber for lobbying interventions, after leaving his post as prime minister in 1993.

In October 1997, 25 years ago, the Chrétien government awarded Brian Mulroney $2 million in compensation for defamatory information relating to the contract for the purchase by Air Canada of 34 A320 aircraft in 1988, a contract for 1, 8 billion.

In September 1995, the Royal Canadian Mounted Police (RCMP) had transmitted to the Swiss police a letter from the Federal Ministry of Justice in which it evoked suspicions of bribes against Mr. Mulroney.

Confidential, the missive was leaked to the media a few weeks later. Sources of this alleged influence peddling, a German businessman, Karlheinz Schreiber, and Frank Moores, a friend of Brian Mulroney, who became a lobbyist the day after the victory of the Conservatives in September 1984. Pierre Jeanniot, president of Air Canada at the time always maintained that the decision was made without political intervention.

No evidence of collusion

Mr. Mulroney is appalled by these allegations, says his longtime friend Yves Fortier, in the biography of the former prime minister published by Guy Gendron. “How am I going to explain this to our children?” How am I going to explain this to my mother! I saw an injured man. He couldn’t believe this was happening to him. It was a very emotional situation,” says Mr. Fortier.

Canadian Ambassador to Paris, Benoît Bouchard told the press about his meeting with Mr. Mulroney at the beginning of 1996: “He was completely devastated. In ten years, I had rarely seen him in this state”, especially since he was refused the right to meet the investigators to defend himself.

Brian Mulroney went on the attack and sued the Chrétien government for damage to his reputation, damages he assessed at 50 million. Two years later, an amicable agreement was reached, the government presented him with an official apology and, following a decision by judge Alan B. Gold, paid 2.1 million to the former prime minister, essentially for pay his bill for lawyers and public relations.

The Chrétien government acknowledges that it has found no evidence of collusion between MM. Mulroney and Schreiber. This finding is based in particular on a sworn statement by the former Prime Minister that he had no formal business relationship with the German in the specific case of Airbus.

He later explained that he had not been asked specific questions about the existence of a business relationship with Mr. Schreiber. Minister of Justice at the time, Allan Rock will argue that if the government had known about these relations, the whole affair would have ended otherwise.

Mr. Mulroney has always maintained that the Chrétien government knowingly wanted to embarrass him. “I had no involvement in the RCMP investigation into the alleged Airbus scandal. […]wrote however Jean Chrétien in his memoirs, political passion. It was not I who ordered the investigation,” continued Mr. Chrétien, deploring “an unfortunate lacuna” in the letter from the RCMP, which did not speak of simple “allegations” by mentioning Mr. Mulroney.

Schreiber’s return

But as in the films where the villain who was thought to have been struck down reappears by surprise, Karlheinz Schreiber is prosecuted by the tax authorities in Germany and makes explosive statements in 1999, hoping to escape extradition. He claims to have personally handed over large sums, in cash, to Brian Mulroney to lobby for his projects.

Mr. Mulroney denies everything. However, as we will find out later, he did indeed receive $225,000, in denominations of $1,000, on three occasions, from Mr. Schreiber. The latter speaks more of $300,000. No invoice, no receipt for this amount. Understanding that this information is likely to become public, Mr. Mulroney makes a voluntary disclosure to the taxman, and will discharge the tax, six years after these transactions. The page is turned… or so he hopes.

An event confirms him in this sense: in April 2003, the head of the RCMP, Giuliano Zaccardelli, sends him a letter assuring that “after an exhaustive investigation in Canada and abroad”, no allegation against him could be substantiated and that, therefore, “no charges will be laid” against him.

Very short respite, because six months later, William Kaplan – the lawyer of Mr. Mulroney, who had defended him and had denounced the tactics of the Chrétien government – revealed in a text to the Globe and Mail that Mr. Schreiber did pay the money to Brian Mulroney. A first meeting allegedly took place on June 23, 1993, at the Prime Minister’s summer residence at Lake Harrington.

The story becomes incredible: Mr. Schreiber, while fighting to avoid his extradition, sues Mr. Mulroney to recover his money. He won in the first instance, but was later dismissed.

“Monumental error in judgment”

We are no longer talking about Airbus. Mr. Schreiber reveals that he wants to obtain the support of Mr. Mulroney for other contracts, the sale of armored vehicles, and even a pasta factory! A minority, Stephen Harper’s government gets a rough ride in the Commons; opposition parties are demanding a formal commission of inquiry. In June 2008, Ottawa appointed Jeffrey Oliphant to lead such a survey, based on a grid of 17 questions. The Airbus contract is not discussed.

In August 2009, the conclusions fell: MM. Mulroney and Schreiber had a verbal agreement from August 23, 1993. Mr. Mulroney had not been Prime Minister for two months. Nothing illegal, then, but a clear breach of ethics. The report deplores that Mr. Schreiber had “inappropriate and excessive access” to one who had just left office.

By not disclosing his transactions with Mr. Schreiber and by not declaring the payments received from the latter, Mr. Mulroney “acted in an unacceptable manner”, slice Jeffrey Oliphant. He was even contravening the provisions of the code of ethics for public office holders that he himself had put in place in 1985.

Brian Mulroney will plead “a monumental error of judgment”. Mr. Oliphant is not convinced. “An error in judgment cannot excuse behavior that can reasonably be described as questionable, if it occurs on three separate occasions. All transactions were in cash, because MM. Schreiber and Mulroney “wanted to conceal the fact that the transactions had taken place”.

In his biography, Guy Gendron observes that Brian Mulroney “knows that this affair will forever remain as a shadow over his government and his person. […]. He admits that he was not up to it. He should have been more vigilant, seeing that his friends were enriching themselves thanks to their proximity to the decision-makers. “I should have been more committed to it, smarter than I was, less tolerant of certain friendships,” Mr. Mulroney admitted.