Airbus and the Ghost of Brian Mulroney

A blast from the past. A German-Canadian huckster. A former Progressive Conservative cabinet minister. A dodgy prime minister. A European aircraft giant with a reputation for handing out easy money.  Karl Heinz Schreiber, Elmer MacKay, Brian Mulroney and Airbus.

Schreiber went into a German jail cell. Elmer, late father of Peter, took his secrets to the grave. Brian went to a coffee shop to collect envelopes stuffed with cash. And Airbus - well it's still at it.

Airbus, Europe’s largest aerospace multinational, is to pay a record £3bn in penalties after admitting it had paid huge bribes on an “endemic” basis to land contracts in 20 countries. 

Anti-corruption investigators hailed the result as the largest ever corporate fine for bribery in the world after judges declared that the corruption was “grave, pervasive and pernicious”. 

The planemaker agreed to pay the penalties on Friday after reaching settlements with investigators in the UK, France and the US to end inquiries that started four years ago.

Like that horrible TV show where they're constantly trying to recover pirate treasure from Nova Scotia's Oak Island, the 'commission' Airbus admits it paid to cinch the Air Canada deal but never divulged to whom remains a deeply buried secret.

So Many Questions - Unasked, Unanswered

Calling a court hearing in the middle of a summer holiday long weekend is the judicial equivalent of a midnight raid by the police. There's always a taint of skulduggery to it, of business transacted in the dark.

Yet the government of the day chose this past Sunday to get an Ontario judge to finally send Karlheinz Schreiber winging his way back to his native Germany. Regardless of the obvious merits of the extradition, the question that has not been asked and remains unanswered is "why Sunday?" Why not Tuesday when everyone is back at work and it's business as usual in the courts? What was so critical that this had to be sprung in the middle of a holiday weekend? What's that smell?

Former Mulroney aide Norman Spector writing in today's Globe & Mail recites a litany of questions unasked, unanswered that may now be buried with Schreiber's imprisonment in Germany:

http://www.theglobeandmail.com/blogs/spector-vision/harpers-gamble/article1239972/

Jeffrey Oliphant's Herculean Chore

Stephen Harper as Eurystheus. Brian Mulroney as the sly King Augeas. Jeffrey Oliphant as Hercules, charged by Eurystheus to clean the stables befouled by Augeas' cattle.

Oliphant's task is Herculean. He has to listen to one of the most powerful prime ministers in Canadian history describe a course of shady dealings and then decide how much of what he hears can be believed. He has a lot of crap to shovel his way through. It's dirty and it smells.

Nobody can avoid noticing how furiously Mulroney, under examination by inquiry counsel, is spinning his evidence. Time after time when asked a direct, simple question, Mulroney uses it as an opportunity to slip into a repetitive churning over of facts and allegations that he claims exonerate him of all wrongdoing. It's positively tiresome. It's as though he's waving his arms at Oliphant and yelling, "no, don't look over there, look over here, over here."

I think Mulroney has tripped himself up over his account of how he treated the cash, or at least as much of it as he admits having received from Schreiber.

If there's one thing that fledgling lawyers have drummed into their pointy little heads, it's the concept of trusts and retainers. Clients are normally required to give counsel money in the form of retainers, essentially security against fees and expenses to be incurred. Lawyers have to treat those retainers according to very specific rules. Those rules govern how the money is received, how it is held and how it is eventually disbursed and accounted for to the client.

Mulroney couldn't give a straight answer about how he received, how he held or how he disbursed the Schreiber money. His tax lawyer told the Canadian Revenue Agency in his 'voluntary disclosure' that the money was earned by Mulroney in 1993, 1994 and 1995. However that's not what Mulroney told Oliphant.

Mulroney's version is that the retainer was an ongoing matter until 1998, the last year he did any work for Schreiber, apparently on some pasta project. It was only when Schreiber was charged in Germany with tax evasion that Mulroney ended the retainer at which point he took his payment, i.e. all the money. Mulroney insisted that, prior to that point, he didn't touch the money because it wasn't his.

The inquiry counsel, Richard Wolson, asked a telling question. Why, if Mulroney believed he hadn't earned the income until 1999, didn't he just declare it as income in that year instead of retaining a senior tax lawyer to tell the tax authorities that it was undeclared income from 1993 to 1995? Mulroney almost suggested that his tax lawyer simply made up the timing of the income in his voluntary disclosure.

This is a glaring inconsistency that Oliphant is going to have to resolve. He's going to have to make some interesting findings on questions of credibility.

In the greater scheme of things, how Mulroney dealt with the taxes on his Schreiber money may appear inconsequential but this is a case full of undocumented agreements, dead witnesses, false statements, inconsistencies and conflicting claims. To sort through that Oliphant is going to have to read tea leaves, the indirect evidence. You have to weigh how witnesses performed under questioning. Where they forthright and candid or were they evasive and incredible? You look at what is clear from whatever hard evidence you do have, what is unclear or inconsistent and what is missing that ought to be there. That is what Mr. Wolson has been doing, putting together a picture piece by piece. He doesn't have any real smoking gun here. This is going to come down to questions of credibility and, as far as I can tell, on that score Mulroney has done himself no favours.

Mulroney Ancient History? Hardly

You have to be pretty green sapwood to consider something very much ongoing 'ancient history' even if its origins do go back about 20-years. That's especially true when the revelations about the matter keep emerging, stripping away one layer of obfuscation after another.

Brian Mulroney desperately wants you to dismiss the Mulroney/Schreiber/Moores/Airbus business as ancient history. Nothing would make Stephen Harper and his caucus happier either. Harper dodged demands for an inquiry into Mulroney/Schreiber before he was forced to relent, causing his to sever his newfound friendship with his latter-day mentor. The Tories laughably claimed Mulroney was exonerated during last year's Commons ethics committee hearings.

Mulroney has seemed to slip off the hook several times over the years. He thought it was all dead and buried after the Liberal government settled his lawsuit. The former prime minister had, after all, given sworn testimony that his only dealings with Schreiber after he left office were just a few get togethers over cups of coffee. No money ever changed hands. And that seemed to be an end to it. Mulroney was exonerated, the Liberal government said so. It even paid him a tidy two million dollars, the cheque pinned to its letter of apology.

In the course of his victory, Mulroney made an enormous mistake. He disparaged his former friend, Karlheinz Schreiber. It appears that was entirely gratuitous, the sort of hubris that brings down so many highly placed people. It was easy to take a swipe at Schreiber. The German government was pursuing extradition proceedings against the man for bribery charges. Who are you going to believe, a guy who's on the run from the law in Germany or a former prime minister of impeccable character?

It's entirely likely Schreiber would have remained mute had he not been slammed by Mulroney. This mistake, however, revealed how Schreiber could retaliate. Armed with a trove of documents, Schreiber has played his hand brilliantly. He's released documents frugally and with calculated timing. In the process he's achieved two things. He's drawn in his fair weather friends and he's kept the process alive and moving in the direction of his choosing.

And oh how they've lied and lied and lied, the entire lot of them, each in his turn. Mulroney swore he'd had no business dealings with Schreiber. Then he scurries off to file a 'voluntary disclosure' with Revenue Canada when Schreiber hands The Fifth Estate his Swiss banking records. Those documents also seem to implicate Mulroney friend, former Newfoundland premier and Ottawa lobbyist Frank Moores who for some strange reason sees fit to make his own 'voluntary disclosure' to Revenue Canada.

The Fifth Estate and the Globe & Mail keep the story alive and churning to the annoyance and embarrassment of Stephen Harper who had embraced Mulroney as a mentor, a prime ministerial Big Brother. Harper's minority government was suddenly on the hook. It couldn't prevent the Commons ethics committee from holding hearings into the matter (atrociously amateurish in any case). Nor was he able to long resist demands for an official inquiry into Schreiber/Mulroney.

Two important things happened during the ethics committee hearings. Mulroney school chum, confidante and aide to the former prime minister, Fred Doucet, told the committee, unequivocally and under oath, that he'd never had anything to do with Airbus. The most important thing, however, was largely overlooked. It was Schreiber telling the committee that focusing on his dealings with Mulroney was missing the point, looking in the wrong direction. That statement confirmed my suspicions that the Airbus story wasn't about Mulroney and Schreiber. It was about Mulroney and Moores.

In the months following the ethics committee hearings, Schreiber has fed a trickle of documents to reporters that may be highly probative. First came documents from Mulroney's PMO aide Fred Doucet making enquiries about the very thing Doucet had sworn he'd had nothing to do with - Airbus.

Tonight, according to the latest Globe & Mail, The Fifth Estate, will air further revelations from a former Airbus official and a former employee of Frank Moores' lobbying firm, GCI.

In the years since Mr. Moores's 2005 death, documents have emerged, and a number of sources have come forward, that contradict his assertion that neither he nor his lobbying firm, Government Consultants International, was involved in the Airbus sale.

Interviews and notes written by Mr. Moores, as well as memos written by his former staffers, show the firm was intimately involved with the Airbus deal: making overseas trips to promote the European manufacturer to Canadian diplomats, strategizing on how to approach federal officials, as well as approaching officials in Air Canada, a Crown corporation at the time.

...In interviews with CBC's The Fifth Estate, which is airing a documentary tonight about the Airbus sale, two former salesmen for Airbus in the United States have said that Mr. Moores was lobbying on behalf of the European manufacturer.

Anthony Lawler, who was based out of Airbus's Virginia office, told the program he was in a meeting with an Air Canada official when he realized the manufacturer had an additional, unannounced campaign going on behind the scenes.

Mr. Lawler told the program that, in the middle of the meeting, which took place in the mid-1980s, the Air Canada official was beckoned out of his office by his secretary because of a telephone call.

“He came back and said ‘Oh, that was Frank Moores and he wanted to know which aircraft we were looking at,'” Mr. Lawler said. “It didn't mean anything to me at the time ... only after I learned he was in Ottawa and was a lobbyist.”

A former GCI lobbyist, who spoke to The Globe and Mail on condition that he not be identified, has said that staffers at Mr. Moores's firm were told to cloak their work for Airbus in secrecy, and were warned: “If anybody asks, we're not working for Airbus. Don't tell anyone we're working for Airbus.”

Mr. Moores's history of denials dates back to 1985, which is when Mr. Mulroney appointed him to the board of Air Canada.

The Oliphant inquiry's mandate is to examine only Schreiber's dealings with Mulroney not Mulroney/Moores or Moores/Airbus. Schreiber's biggest challenge yet may be to force Harper to widen the investigation.

Where There's Smoke - There's More Smoke

A fascinating account in today's Globe & Mail about Frank Moores, Gerry and Fred Doucet, Government Consultants International, Thyssen, KarlHeinz Schreiber and the never to be Bear Head armoured vehicle plant.

http://www.theglobeandmail.com/servlet/story/RTGAM.20080314.wpayments14/BNStory/mulroney/home

The story has an interesting account about a certain "letter of intent", money that flowed from Germany and some interesting accounts that were then rendered:

"After the document was signed, one of the first invoices to arrive for Mr. Schreiber was from Fred Doucet, whose new company was Fred Doucet Consulting International.

It was dated Nov. 2, 1988, which was less than three months after Mr. Doucet left his government job and about a month after the document was signed. His invoice was for $90,000.
Other invoices started rolling in. The law firm of Gerry Doucet, Mr. Doucet's brother, also billed for $90,000. Gary Ouellet's consulting company billed for a further $90,000. Frank Moores sent his $90,000 invoice and his lobby firm, Government Consultants International, issued an invoice for $250,000.

All of the invoices used similar language to describe the work that was performed: “professional services,” “services rendered” and “consulting services.”

And sure enough, over a period of 20 days, money started winding its way from Germany back to the lobbyists. Thyssen sent $2-million to one of Mr. Schreiber's Liechtenstein shell companies. That was transferred to another shell company, which in turn sent $1-million to one of Mr. Schreiber's Swiss bank accounts. Then, $610,000 was transferred out of the Swiss bank account – codenamed “Frankfurt” – the same day Fred Doucet invoiced Mr. Schreiber.

After the money made its way through another Liechtenstein company, Mr. Schreiber paid all of the parties – a total of $610,000 – on Nov. 15, 1988, from one of his Calgary companies, Bitucan."

Maybe it's just coincidence. Maybe Fred Doucet and maybe Gerry Doucet and maybe Frank Moores each really did do work costing exactly, to the penny, $90,000.00. But we may never know. Frank, of course, is long dead and neither Fred nor Gerry seem to want to talk about it.

Wait, I know. We should just ask KarlHeinz. He paid them.

Schreiber/Mulroney Dog & Pony Show Proceeds

Having dodged a bullet at the Commons ethics committee, Brian Mulroney was praying that the public inquiry into his nefarious dealings with KH Schreiber might somehow be called off.

Sorry, dude, it's on. Justice min Nicholson says it's going ahead and, better yet, Schreiber gets to stay here until it's finished.

Jeebus I wonder what you have to do to get intervenor status at that thing?

The Commons ethics committee didn't get very far but it did expose a whole pile of raw nerves , issues that the inquiry is going to look completely rigged if it chooses to avoid. That, I think, would be more damaging to the Tories than if they had called the whole thing off.

Enquiring minds want to know. Now where's that guy, Hladun?

The Ethics Committee's Ethical Quandry

Brian Mulroney has sent his stooges to Ottawa to tell the Commons ethics committee that he'd rather not face any more questions into his shady dealings with Karheinz Schreiber. That's entirely understandable from his perspective. He's spun so many tales that he's cornered and, for BMPM, it can only get worse.

The committee could subpoena Mulroney to attend and even have him brought before them forcibly if he resists. Now wouldn't that be a sight. But it seems the committee doesn't have the appetite for subpoenaing a former prime minister, even one of Mulroney's shabby stature.

I think the committee should just put the Mulroney issue on hold - for now. There are several other witnesses who should be called to testify including one Robert Hladun, Schreiber's former lawyer. It was Hladun who basically confirmed author William Kaplan's hunch that it was Schreiber who leaked the RCMP letter that led to the National Spot article that served as the launching pad for Mulroney's lawsuit against the federal government. I'd like to hear that from his own mouth.

Then there's the phone calls - two of them - Hladun supposedly received; one from Mulroney's lawyer, the other from the lawyer and Mulroney himself. Schreiber's narrative has these calls being placed to Hladun to get a letter or an affidavit from Schreiber claiming that no monies had ever changed hands between Schreiber and Mulroney. This was back when CBC's Fifth Estate revealed it had copies of Schreiber's Swiss bank records and - here's the kicker - before Mulroney's "voluntary disclosure" to Revenue Canada.

If Hladun corroborates Schreiber's account of these calls, it's over for Mulroney, he's suborned perjury, and that goes directly to his credibility when he gave a grossly misleading answer about his dealings with Schreiber in his sworn evidence in the lawsuit itself. Cheque please, Mr. Mulroney - and don't forget the interest.

The committee may not have the spine for a showdown with Brian Mulroney but there's no excuse for not getting Hladun's sworn evidence on these points.

The Lobbyist Who Never Was

Brian Mulroney was in a spot. He needed to explain why he received cash-stuffed envelopes from Karlheinz Schreiber, money about which he kept very quiet until Schreiber's bank records became public sending Mulroney racing off to Revenue Canada to file a belated, "voluntary disclosure."

The answer? He was retained by Schreiber to lobby foreign governments on behalf of Schreiber's German customers, outfits like Thyssen. Now you would have expected that Thyssen would be delighted to have a former Canadian prime minister working to flog its products to new customers and it might have - if it had ever known about it. But, it seems, this was a secret Mulroney kept from everyone, even the companies he was supposedly earning hundreds of thousands of dollars to promote. From the Globe & Mail:

"In interviews with The Globe and Mail and CBC, a former Thyssen executive and a spokeswoman for the company, which has changed names after merging with another company in 1999, said they are not aware of the lobbying that the former prime minister says he did for Thyssen in China, Russia and France between 1993 and 1994.

"He never worked for Thyssen," Winfried Haastert, a former Thyssen executive, said in a phone interview.

"I cannot imagine how he could expect to sell something like this to Russia or even to China. It's absolute nonsense. Maybe he tried to support us. I don't know."

Anja Gerber, a spokeswoman for ThyssenKrupp Technologies, also said that Mr. Mulroney had "no official business with Thyssen."

So that means that there's just one person who can substantiate Mulroney's bizarre claims - Karlheinz Schreiber - who vociferously disputes Mulroney's story.

Since When Does a Prime Minister Lobby for a Lobbyist?

Karlheinz Schreiber may be a sideshow in the financial affairs of Brian Mulroney. It was always thought that Schreiber received the $20-million in Schmiergelder, or grease (bribe) money, paid out by Airbus Industries in the course of the Air Canada deal. Schreiber says that money went, instead, to GCI (Government Consultants International), a lobby firm owned by Mulroney croney, the late Frank Moores.

GCI is gone and Frank Moores is dead so getting to the bottom of this is going to be more difficult than it otherwise might. That said, the records of Air Canada and its board during the Mulroney years do exist and might shed a lot of light on what happened.

Why did Mulroney sack some 15-Air Canada directors and why did he include among the replacements he appointed Frank Moores? Why did Frank Moores hurriedly resign this directorship? Why did Moores repeatedly deny claims that he and GCI acted for Airbus on the sale (although correspondence has emerged plainly showing just that)? Why did Moores run off in lockstep with Mulroney to make his own "voluntary disclosure" to Revenue Canada when Schreiber's Swiss bank records became public?

One thing, however, stands out. It's been reported that Mulroney repeatedly pressured the Air Canada board to pay GCI a $5-million fee of some sort related to the Airbus purchase. Did Mulroney, while prime minister, really lobby for the lobbyist and, if so, why and what did he get out of it? Why would Air Canada pay a fee to GCI if it was acting as lobbyist for Airbus? Did any money pass from Air Canada to GCI or Frank Moores and, if so, how much and for what?

Norman Spector did ponder what the Commons ethics committee might have learned had it held the current enquiry back in 2002 while Moores was still alive. It's too bad he was never asked to expand on that thought.

Brian Mulroney's Cash Fetish

Whenever Brian Mulroney falls into controversy it always seems to involve cash. Long before he started pocketing envelopes of the stuff from Karlheinz Schreiber, Mulroney was awash in good, old fashion, paper currency - bundles of it.

The Commons ethics committee is planning on calling two men who can shed some light on this. One is Mulroney's former Chief of Staff, Norman Spector, and the other is the Mulroney's private chef, Francois Martin. From the Toronto Star:

"Spector, chief of staff to Mulroney in the early 1990s, wrote about the payments in a forward to Toronto lawyer and author William Kaplan's book about Mulroney's relationship with Schreiber.

He describes Mulroney's networking with wealthy and powerful people. He writes also of Mila Mulroney's "expensive lifestyle."

"Mulroney was not a rich man. Party funds were being drawn, and one of our staff was assigned to pore through personal expenses to determine if some might be reimbursed. Every month I cashed a cheque at a local bank and remitted the funds to Mila," Spector wrote.

The committee also expects to hear from François Martin, Mulroney's former chef, who has told of transporting thick envelopes of cash for the family.

In Stevie Cameron's 1994 On the Take, Martin tells of visiting Mulroney aide Fred Doucet in the Prime Minister's Office to pick up thick envelopes of cash and deliver them to Mila Mulroney.

"Cash came in like it was falling from the sky," he said in the book."

Author Stevie Cameron quotes Martin as telling her Mulroney kept a large safe in the basement of 24 Sussex Drive to hold the cash. She also claims that when Mulroney bought his $1.7-million retirement home in Montreal, he and Mila had it extensively renovated. The renos, she claims, cost close to $1-million and much of the cost was paid - in cash.

Mulroney Waterboy Runs to the Rescue

Phil Mathias, former "investigative" reporter for the National Spot, has come out swinging (or at least fanning the air) in defence of the guy he never wanted to investigate, Brian Mulroney.

A whole little PR sturm und drang has been unleashed just in time for the resumption of the Commons ethics committee investigation into the dealings between Brian Mulroney and his long time buddy, Karlheinz Schreiber.

One of Muldoon's lawyers has sent a whining gripe note to committee chairman, Paul Szabo, complaining that the grand old bullshitter himself hasn't been treated with kid gloves by the committee members. Lawyer Guy Pratte had a right proper hissie, claiming the committee had treated Mulroney unfairly and with disrespect. Oh dear me!

The whole thing seems to have erupted just as there's talk the committee may subpoena Mulroney's tax records to see if they will shed any light on the cash-stuffed envelopes that Schreiber passed to our former Conservative prime minister.

Then Phil Mathias waded in with an opinion piece condemning all and sundry for subjecting Mulroney to a witch hunt.

"... the campaign against Mr. Mulroney is what academics call a "mobbing," a process that is most visible on politically correct university campuses. An unpopular member of faculty is targeted by an accusation and then subjected to an inquisition, which eventually leads to his expulsion in disgrace. Very often, the accusation is trivial or false, and the disciplinary process is abused. This is what has happened to Mr. Mulroney."

"The grudge most Canadians hold against Mr. Mulroney is that he introduced the hated Goods and Services Tax in 1989, a measure that was nevertheless applauded by economists, and later by Liberals. His image suffered a serious blow in 1995, when publisher Seal Books (subsequently absorbed by Random House Canada) decided the best way to excite interest in a book by Stevie Cameron was to feature Mr. Mulroney on the cover dressed opulently in a tuxedo next to the words On the Take, even though the book contained no hard evidence that he has ever taken a bribe."

"...During his libel action against the government, Mr. Mulroney was asked by government lawyers if he had ever had any dealings with Mr. Schreiber. In his answer, Mr. Mulroney failed to mention a $225,000-$300,000 deal he had made with Mr. Schreiber for work that he would do after he left office. (Mr. Mulroney and Mr. Schreiber disagree on the amount paid.) Mr. Mulroney's political savvy probably told him that if he revealed the Schreiber deal, the roof would cave in on him, as it has since done. Mr. Mulroney is now condemned for not revealing this arrangement, even though it had nothing to do with the issue in the libel case."

Hey Phil, if the question wasn't relevant Mulroney, a lawyer accompanied by senior counsel, could have objected to answering it. He didn't. Instead he went off on a detailed description of meeting Schreiber a few times for a cup of coffee. Sorry, Phil, but the guy's under oath and he's giving a deliberately misleading (ie "false") answer. He was "savvy" enough to know that if he told the truth, "the roof would cave in on him?" I think that's called perjury, Phil. He chose to answer the question, he was under oath, what you now think of the question itself is irrelevant, Phil.

"The ethics committee now wants to examine Mr. Mulroney's tax records relating to the $225,000-$300,000 payment, even though Mr. Mulroney received most of the money while he was a private citizen for work that he would do as a private citizen. The Canada Revenue Agency has apparently accepted Mr. Mulroney's submissions, so why are the tax records of this private citizen a matter of Parliamentary ethics? When a mobbing is in progress, such questions are put aside."

You see, Phil, there you go again. He received "most" of the money while he was a private citizen. That's like saying we don't need to worry about the fact that this transaction was put into effect while BM was a key figure in the government of the day, the former prime minister. Sorry, you've got a few spots on your logic Phil and I think they're grease.


"...By the time the ethics committee and the commission of inquiry have finished with Mr. Mulroney, their inquiries will have added another year or two to the 15 years that this witch hunt has already been going on. And whatever their ultimate findings, the mere process of investigation may destroy the last shreds of Mr. Mulroney's reputation and make the disgrace of this former Canadian prime minister complete."

Phil, Phil, Phil - If Mulroney's reputation is destroyed and his disgrace complete, that's his doing and no one else's. If only we could get into GCI and Frank Moores and where that $20-million of Airbus money went and whether any of it found its way into Brian's pockets but that's a long shot and Mulroney knows it. CGI is long gone and, fortunately for Mulroney, so is Moores. That's one thing the Commons committee has clarified. That money - that illicit money - didn't go to Schreiber but to Frank Moores, the same guy Mulroney appointed to the board of Air Canada just in time for the Airbus deal.

For a supposed "investigative reporter", Mathias has gone well out of his way for years to avoid investigating this one. Mathias broke the story of the RCMP letter of request, the publication of which created the basis for Mulroney's defamation suit. It was during a Fifth Estate interview with Mathias in his office at the Spot that a CBC cameraman filmed a letter on his desk that turned out to be the English translation of the "smoking gun" letter. From the Fifth Estate web site:

"Mathias' former colleague at the National Post, Andrew Coyne, says the leaking of the letter was the act which actually constituted the libel.

"What made it a libel was that it was printed in the Financial Post and everyone could read it there," Andrew Coyne told the fifth estate. "Obviously Mr. Mulroney would be very concerned about his reputation ... but for the police to be passing back and forth allegations to each other on its own it seems to me is not terribly blameworthy."

Schreiber has long been suspected as source of the Letter of Request that wound up with Mathias. Those suspicions grew when it was revealed by CBC reporter Neil MacDonald that the document in Mathias' possession was the same translation of the letter Mulroney's lawyers had filed in court the day they launched their lawsuit.

Mathias had obtained a translation of the justice department letter prepared for Mulroney by Schreiber's lawyers in Switzerland.

"So how could a private document prepared for Mulroney by his own lawyers find its way into the hands of the reporter who broke the story?"

Caught with the translation - not the actual RCMP letter but the translation prepared by Schreiber's Swiss lawyers - investigative reporter Mathias refused to explain the obvious - how this wound up in his hands, the very reporter who "broke" the story? Was this whole thing - the letter, its publication in the Spot contrived? If so, there was no libel of Brian Mulroney, at least none for which the federal government could be help responsible. We deserve our two million back plus a whole pile of cash-stuffed envelopes in accrued interest.

I hope the committee issues one more subpoena - to Phil Mathias. He has a lot of questions to answer.

Dropping the Hot Potato, David Johnston Style

There were always doubts whether David Johnston would be able to keep his Conservative ties out of his proposed enquiry into Brian Mulroney's dealings with Karlheinz Schreiber and those doubts have now been confirmed.

The Globe & Mail reports that Johnston, who was supposed to advise Harper on the terms and scope of such an enquiry, has instead gone straight for the political levers, informing Harper that he need not stage - or stagemanage - the promised enquiry if he (Harper) is satisfied with the Commons ethics committee enquiry.

If that's Johnston's attitude before an enquiry can even be commenced, it's pretty clear he's more than willing to carry water for Stephen Harper's political agenda should the hearings go ahead. You can't pretend to be objective and unbiased if you launch yourself into this proceeding with political jockeying of this sort.

Is Mulroney Circling the Wagons?

Luc Lavoie says he is no longer Brian Mulroney's spokesman:

"Mr. Mulroney is fighting for his integrity and the integrity of his family, and I'm fully sympathetic to what he's going through and I wish him the best, believe me, and I still consider him a dear friend and always will."

"I wish him the best, believe me." Why wouldn't we believe that and why does Lavoie think he needs to ask us to believe him? So, he'll always be Mulroney's dear friend - does that mean he'll stay loyal even if Mulroney hangs Lavoie out to dry for the apparent admissions Luc has already made?

Lavoie has given yoeman service to Mulroney for fifteen years, so why would he bail out on the guy now in his moment of greatest need?

As I said earlier, I don't believe that Lavoie's resignation or the timing of it are haphazard. I don't believe these things aren't integrated into the next round of posturing we'll see from Brian Mulroney. I suspect (and I am guessing here) that Mulroney wants time to distance himself from Lavoie and you can probably expect a total information lockdown from the Mulroney camp until he testifies. He may be planning to dodge the ethics committee by saying he'll give his evidence to the public inquiry next year. We'll just have to watch how this unfolds.

So what is Mulroney going to say when it becomes his turn to talk? Believe it or not, I don't think he knows just yet. Schreiber is supposed to be back for two more days of testimony before the committee. Documents should begin appearing at some point. And then there are other potential witnesses such as Robert Hladun whose evidence, if reports are credible, could be damning to Mulroney's credibility.

Mulroney factum filed this week. From Canada.com:

"Mr. Schreiber does not say in his 7 November 2007 affidavit that his previous statements were inaccurate or untrue," the factum filed by Mulroney states. "He does not say that his letter of 20 July 2006 is inaccurate or untrue. He does not say that his statements to Mr. (William) Kaplan (the book author) or others were inaccurate or untrue. He makes no effort to explain the inconsistencies between his 7 November 2007 statement and his previous statements."

It adds: "Mr. Schreiber's evidence in prior proceedings was accepted by the court" - a reference to the Eurocopter fraud case where an Ottawa judge denied the Crown's request to have Schreiber declared a hostile witness and found his account credible.

Mulroney's latest court filing deliberately does not deal with two other new and damaging allegations Schreiber made in his most recent affidavit: namely that in 1998 he spoke to the former prime minister in Zurich about transferring money to his Geneva lawyer "related to the Airbus deal;" and that he hoped Mulroney would take his 2006 letter to Harper to secure his help avoiding extradition.

"For the most part, the matters to which Mr. Schreiber deposes have nothing to do with this motion, and will not be responded to," Mulroney's jurisdiction motion states.

Notice this factum gives absolutely nothing away. It is all about Schreiber and his inconsistencies. Nothing more.

I think you can expect to see that approach figure strongly in any public testimony Mulroney may give. Attack your accuser. Draw on Schreiber's inconsistencies, paint him as an abject liar and then say nothing that comes from Schreiber warrants rebuttal. The second approach is to slice and dice the facts and challenge as many as possible as irrelevant. Narrow the case you have to meet on relevance and credibility.

That's not to say that Mulroney still doesn't have a lot of explaining to do. He does. But it's far easier to explain away one set of facts than two.

The Walls Close In on Brian Mulroney

How is he going to talk his way out of this one?

Until today I figured Mulroney was going to claim he earned the $300,000 he received from Karlheinz Schreiber by promoting the Thyssen/Bear Head armoured vehicle project. The story about Schreiber's pasta business seems to have turned into a pile of damp semolina, so the weapons plant seemed to be the last refuge.

Except the door on that one seems to have been slammed shut by Mulroney's own former top aide, Norman Spector. In a Canadian Press interview, Spector confirmed that Mulroney did indeed intervene to support the project to build light-armoured vehicles in Nova Scotia. The only problem is that, if he got paid by Schreiber for his services, this was long before Mulroney stepped down as Prime Minister.

Spector has added to the record being instructed by Mulroney to make Bear Head a reality. With that, Mulroney was transforming the proposal from a bureaucratic issue into a political matter. Spector also said that the sun set on the Bear Head deal when he informed Mulroney that the project would cost the government $100-million.

The ever dutiful scribe, Spector was even able to tell Canadian Press the date of the final discussion 16 December, 1990, and Mulroney's response: "In that case, the project is dead."

This seems to suggest that the Bear Head business was over, as far as Mulroney was concerned, in late 1990, while he was still prime minister.

If Bear Head is ruled out and the pasta story is just that, a story, what's left? Don't look at me, I'm not even going to say that.

If It Walks Like a Duck

Trying to uncover what actually transpired between two suspect individuals is rarely easy and the outcome is even more rarely tidy. Counsel trying to unravel questionable dealings don't count on finding the great smoking gun. It does happen, but rarely. Instead, they usually have to be content with uncovering a fabric of little lies, half truths and inconsistencies. It's the way they point when they're all put together that settles the issue.

How does one go about that? There are techniques that can be pretty effective. One of these is to steer clear of the principals at the outset. Leave them be while you pursue paper trails and get the evidence of knowledgeable third parties. There'll usually be some credible individuals out on the periphery of any suspect deal - lawyers, bankers, managers, clerical staff - the sort of people involved in any legitimate deal. Individually they may not have the big picture but it can be astonishing how much they know about key parts of the scheme.

What you get, or hope to get, from this approach of working from the periphery toward the centre are building blocks of evidence. They may seem almost useless until you find something else with which they fit and, gradually, you may get to something that becomes recongizable. One makes sense of something else or corroborates part of the emerging picture.

Slowly what develops will become more focused and directed. That's when you can tuck your documents, facts and analyses into your pocket and start talking to the principals.

Let's say somebody claims to have been involved in a particular venture or project. If they're telling the truth there ought to be documentary evidence to corroborate their claims. What if there's not? Then it depends whether the venture looks suspicious. If it looks like a duck and waddles like a duck and quacks like a duck, the court is entitled to suspect that it is indeed a duck. Having come to that suspicion, the court is then properly entitled to call upon the people who claim it isn't and never was a duck to come up with corroboration.

Enter Koop v. Smith, a 1915 decision of the Supreme Court of Canada. The case involved a fraudulent conveyance but is useful for its wider discussion of badges of fraud and shifting onus of proof:

"Suspicious circumstances coupled with the close relationship between the transferee and the debtor make a sufficient prima facie case of fraud. From that point, the burden of producing credible evidence substantiating the transaction is upon those who set it up. If substantial valuable consideration is truly given for a transfer of lands, there must be better evidence of it than the recitals in the deed and the land transfer tax affidavit."

I think that this principle should apply to the Mulroney-Schreiber dealings. There was a close relationship going back to Mulroney's leadership bid. There are plenty of suspicious circumstances to be found in the record of both men. Mulroney's story has changed at least twice and his current position directly contradicts his sworn testimony many years ago. Schreiber too has changed his story when that has suited him.

I think there is an abundance of suspicious circumstances in this scandal to place a clear onus on Brian Mulroney to come up with "credible evidence substantiating the transaction" as he now alleges it. At the very least, Brian Mulroney has to come up with $300,000 worth of corroboration and that's a lot of paper and a lot of witnesses. And if he somehow manages to do just that? Well then he needs to explain why he said something entirely different at the outset.

Mulroney's Achilles Heel

It's reported that the Commons Ethics Committee will have government lawyers open the questioning of Karlheinz Schreiber when and if he appears before them tomorrow.

If it was up to me, my first question would be to ask Schreiber if he would release his former lawyer, Robert Hladun, from his privilege restrictions concerning any communications between Hladun, Brian Mulroney and Mulroney's lawyer, Gerard Tremblay, during October, 1999, pertaining to funds that passed from Schreiber to Mulroney or Frank Moores.

Why focus on this? The answer is contained in this account from the Fifth Estate of events said to have transpired on October 17, 1999:

October 17, 1999

"Mulroney contacts Schreiber's lawyer Robert Hladun and asks him to ask Schreiber for a written statement indicating that at no time did Mulroney solicit or receive compensation from Karlheinz Schreiber.

Gerard Tremblay phones Robert Hladun and asks for a letter to keep on file from Schreiber, which is not to be disseminated, so that he can send a letter to the CBC which "would in his opinion shut down the airing of the fifth estate story on the "Airbus"—October 20th.

Mulroney contacts Hladun and tells him he has instructed Tremblay to send a letter to the fifth estate "indicating that if there was the slightest implication that Mr. Schreiber, Mr. Moores and Brian Mulroney were involved in any way then there would be terrible consequences.

He would issue the letter but first wanted an assurance or comfort in writing from Mr. Schreiber saying that he would confirm what he had publicly on many occasions, that at no time did Brian Mulroney solicit or receive of any kind from Schreiber. Mulroney called Hladun again that day, at which time Mulroney was told "I was no sure whether or not a letter would be forthcoming."


These events, to my mind, could be the most troublesome for Mulroney because of what they say if they're true and because they can be confirmed or denied by a person whose integrity is not questioned, Robert Hladun.

If Hladun corroborates this account it would put Mulroney in the spot of having to explain why he personally contacted Schreiber's lawyer asking for a letter from Schreiber denying payments that even Mulroney himself now acknowledges he received. It would also make it vastly more difficult for Mulroney to lay on the blarney about what he said under oath in his lawsuit and why he forgot to declare this income for tax purposes until it was disclosed in the media. In other words, any guy who would try to pull this stunt has just kissed goodbye the benefit of the doubt.

If these events didn't happen I think Hladun would be eager to set the record straight, if only to extricate himself from the controversy.

Mulroney's Colossal Mistakes

According to Mulroney mouthpiece, Luc Lavoie, the former PM made a "colossal mistake" in accepting money from Karlheinz Schreiber. Funny he would look at it that way.

Mulroney's problems aren't with taking the cash-stuffed envelopes in coffee shops and hotel rooms. It's what he did afterwards that amounted to colossal mistakes - plural.

It's why he omitted any mention of getting the Schreiber schmiergelder money in his sworn evidence in his law suit. It's why he seemingly waited until after Schreiber's bank records came out to admit receiving the money and then running off to Revenue Canada to make an "anything but voluntary" disclosure. Those are colossal mistakes and there may be more, who knows?

Mulroney is furiously slicing and dicing what's left of his reputation with utterly far-fetched explanations. Like why he didn't disclose his business relationship in his testimony. Why? Because he wasn't asked. He's right, the government's counsel didn't put that specific question to him but Mulroney answered it anyway. He volunteered that he had no dealings with Schreiber other than to meet the guy for coffee a couple of times. That's Mulroney's statement. It's on the record, given under oath. And it wasn't remotely true.

Mulroney's last-ditch defence is tantamount to saying that, since you didn't ask the specific question, I was entitled to give an utterly false and misleading statement of my own and if you were deceived by that, hey, it's your problem. Sorry, Brian, doesn't work that way. You're bound by your voluntary statements, regardless of the question asked, because you made them under oath. There's no special law for Brian Mulroney. Just the same one the rest of us have to live by. Oh yeah, Brian, you're a lawyer and nobody knows that better than someone from your profession.

Bear in mind that Mulroney hasn't said these things himself. Luc Lavoie has said them, the boss's mouthpiece. Lavoie has said a lot of things that weren't exactly true but they were his statements, not Mulroney's, and Lavoie is free to say pretty much anything he pleases. He's free to test one tall tale after another in a hunt to find the one that will fly best for the boss. So far he's not gotten anywhere but, hey, you have to give him full points for trying.

He had it all. A good life, every advantage, even some of his reputation back. But that wasn't enough for Brian Mulroney. He had to come back into the public eye as Stephen Harper's mentor and he brought all the old arrogance along with him. If he'd just laid low until after Schreiber was cooling his heels in a German jail cell, he might have dodged this bullet but life in the public eye was too enticing. Oh well.

Mulroney's fortunes took another hit yesterday when Jean Chretien told an interviewer that he'd discussed the latest information with Allan Rock, the former justice minister who handled the Mulroney lawsuit settlement. Chretien got out his trusty mallet and wooden stake and said the two agreed that, had they known of the Schreiber payments, there wouldn't have been a settlement, there wouldn't have been an apology. Payback is a bitch, Brian.