Knowledge of Schreiber payments would have affected Mulroney settlement: Rock

Former federal justice minister Allan Rock suggested  Brian Mulroney would not have been paid $2.1 million to settle his lawsuit over the Airbus affair had the government known about the cash payments from Karlheinz Schreiber.

Rock made the comment while appearing before a parliamentary committee examining the business dealings between Mulroney and the German-Canadian lobbyist.

"If you assume that the cash payments had been disclosed, I do not believe that the recommendation would have been to settle on those terms which does not mean it might not have settled on some other terms," Rock told the committee. "But I don't believe the recommendation would have been to settle on those terms in the face of the facts we now know."

Mulroney sued the Liberal government in the mid-1990s after the Justice Department sent a letter to Swiss authorities implicating him in an alleged Airbus kickback scheme.

The government eventually settled the lawsuit by paying Mulroney $2.1 million out of court.

But in his 1996 libel suit against the federal government, Mulroney suggested he had no dealings with Schreiber.

Rock said that based on Mulroney's testimony during the trial, the government concluded Mulroney had no dealings with Schreiber. Rock also said he was very surprised when he learned that there had been payments from Schreiber to Mulroney.

Mulroney has said Schreiber paid him $225,000 in cash for consultancy work he carried out on behalf of Schreiber's client, a German armoured car company that had wanted to build a manufacturing plant in Bear Head, N.S.

Schreiber, who is fighting extradition to Germany where he faces fraud and other charges, says he paid Mulroney $300,000, but maintains the former prime minister didn't do any work for him.

"Had there been disclosure at the time of the cash payments by Mr. Schreiber to Mr. Mulroney and the circumstances in which they were made, it would have had a dramatic effect on that litigation, it would have had a profound effect," Rock told the committee.

$100,000 for meetings and events

Earlier, Mulroney's former chief of staff Norman Spector testified that Mulroney was reimbursed for more than $100,000 in personal expenses from his party while he was at 24 Sussex Drive.

But when asked about the payments, Spector said he didn't believe there was anything unethical about the transactions.

"Obviously I have no problems with the ethics of the cash transactions … I have been very forthcoming about that and I have no problem, particularly because I was told that they had passed muster with [the Canada Revenue Agency]," he said in Ottawa.

Spector brought along three sets of documents for his testimony, which came an hour after Mulroney released documents explaining how the old Progressive Conservative party put in place a system to pay his expenses after he was elected in 1984.

Spector said the first set of documents revealed Mulroney received $5,000 a month from the PC Party of Canada Fund for "expenses incurred as party leader."

He added: "Sometimes we would give this money to Mrs. Mulroney in cash, and sometimes we would send a cheque to [Mulroney's Montreal accountant]."

Spector said Mulroney received "personal expenses" from the fund totalling $100,000, between October 1986 and June 1987.

The documents Mulroney released included an old note on the official letterhead of the Prime Minister's Office, saying the party would pay expenses for caucus meetings, constituency visits, party fundraisers and private events.

Also included is a photocopy of a 1987 cheque for $211,796.18 to the PC Canada fund from Mulroney associate Alain Paris.

"Brian had impressed upon me to issue this cheque as soon as possible after a meeting I had with him in Quebec," says an accompanying letter from Paris.

Spector also testified that another former Mulroney chief of staff, Fred Doucet, maintained extraordinary access to the prime minister's office even after he became a lobbyist for Schreiber.

Spector criticized Prime Minister Stephen Harper, saying he has done nothing to limit the power of lobbyists despite promises to clean up government. He said the influence of lobbyists hasn't changed much since Mulroney was in office.

Much of Spector's testimony has been published in the afterword of William Kaplan's book: A Secret Trial: Brian Mulroney, Stevie Cameron and the Public Trust.

Spector testified before the House of Commons ethics committee probing cash transactions between Mulroney and Schreiber during the early 1990s.

An axe to grind?

Spector says he has no connections to Mulroney and that the two are no longer friends.

Mulroney loyalists argue Spector simply has an axe to grind, and lawyers for the former prime minister have already objected to Spector's testimony. In a letter last week, lawyer Guy Pratte said Spector's testimony should be ruled "out of bounds."

Harper has said a public inquiry into the matter will start when the committee finishes its hearings. Opposition parties are keen to get an inquiry underway, fearing it could be derailed if a federal election is called before the probe can begin.

An independent government adviser has recommended the public inquiry be limited in scope to the cash payments Schreiber gave to Mulroney.

None of the allegations against Mulroney has been proven in court.