A high stakes political drama involving a former Canadian prime minister gets underway in Ottawa Monday with the first witnesses taking the stand at hearings into the business relationship between former prime minister Brian Mulroney and German-Canadian businessman Karlheinz Schreiber. The witnesses include Bill McKnight, who served in Mulroney's cabinet and former Liberal Party cabinet minister Marc Lalonde. Mulroney's former chief of staff, Derek Burney, and Beth Moores, the widow of former Newfoundland and Labrador premier and Mulroney confidant Frank Moores, will testify on Tuesday.
Mulroney, who first demanded the inquiry to clear his name, had asked for it to be postponed. But a judge clarified the legal terms of the inquiry last week to allow the hearings to proceed.
The hearings will cast a wide legal net in assessing the business relations between Mulroney and Schreiber. But it won't make any conclusions on criminal or civil liability.
The focus of the enquiry is money Schreiber gave Mulroney. The former Conservative prime minister has admitted to a Parliamentary committee that Schreiber gave him Cdn$225,000 after he left office in June 1993. The told the ethics committee in 2007 that he received the money in three installment as payment for his work as an international lobbyist on behalf of Thyssen, a German company.
He further said he didn't declared the funds and pay tax on it until 1999, six years after he took the money.
Schreiber's story doesn't follow the script Mulroney presented in his defence. He told the Parliamentary committee he gave Mulroney Cdn$300,000 and that he and Mulroney made the in 1993 while Mulroney was still prime minister.
Schreiber told the ethics committee Mulroney did nothing to earn the money.
Mulroney initially denied ever receiving money from Schreiber and took the Liberal government to court after the government began a probe into Mulroney's business dealings, including his alleged corrupt involvement with Schreiber.
On Nov. 20, 1995 Mulroney filed a Cdn$50-million defamation suit against the federal government after a newspaper report linked Mulroney's name to a Justice Department probe into the sale of Airbus aircraft to Air Canada. Read the document.
In June 1997 The Department of Justice, the Solicitor General and Mulroney reached a settlement in the defamation suit.
The government apologized to Mulroney for the wording of the letter of request to the Swiss authorities in the Airbus probe, but not for investigation that had been launched by the Canadian national police force, the RCMP.
A judge ordered that the government pay Mulroney Cdn$1.4 million for legal expenses and $587,721 to cover public relations expenses as part of an out-of-court settlement. Read the ruling.
When news broke that Mulroney had in fact taken money from Schreiber, Canadians were outraged and demanded that he pay back the money he received from the government. But all through the various phases of the investigation Mulroney had insisted that all his dealings were above board and that he never did anything wrong.
Schreiber will have his day on April 14 to lay out the details of his side of the story. The businessman, who holds dual German-Canadian citizenship, is awaiting extradition to Germany on fraud, bribery and tax evasion charges.
He has been fighting the extradition and Mulroney's supporters have said Schreiber has 'garnished' the story to escape extradition. Schreiber has won a temporary reprieve that stays the extradition until the end of the hearings.
For a full background and timelines, go to cbcnews.ca and also check the cbc's fifth estate for its investigation into the Mulroney-Schreiber affair
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