PM calls for public inquiry into Mulroney-Schreiber affair

The federal government will launch a public inquiry into former prime minister Brian Mulroney's business dealings with Karlheinz Schreiber, Prime Minister Stephen Harper announced Friday.

But Harper said the inquiry will only be held after a federal ethics committee finishes its own hearings into the hundreds of thousands of dollars Mulroney received from Schreiber, a German-Canadian businessman, in the 1990s.

The ethics committee has not said when it will wrap up its probe, but it likely won't be for several months.

Opposition MPs were quick to accuse Harper of purposely delaying an inquiry that could be damaging to his government. The opposition speculated that Harper is expecting that a federal election will be called in the interim, derailing the inquiry altogether.

"It's a minority government. He knows he'll get to an election before this inquiry ever gets on its feet," said Nova Scotia Liberal Robert Thibault.

But Harper said it is important to let the committee finish its work.

"This will ensure that the public inquiry will usefully build on any testimony heard by the ethics committee," Harper said in a news release, explaining that he has not yet set the exact parameters for the inquiry.

Mulroney made little comment about the announcement Friday, except to say he had taken note of the call for an inquiry. Schreiber said the inquiry is "a good start" and a step "in the right direction."

Government should do 'cost-benefit analysis'

Harper made his call for an inquiry after reviewing a report from University of Waterloo president David Johnston, who was asked to advise the government on the scope an inquiry into the Mulroney-Schreiber affair should have.

The 28-page report, which was delivered to Harper on Wednesday, says that an inquiry should be focused on unanswered questions that are of true interest to the Canadian public.

An inquiry should not be open-ended, rehashing the details probed extensively in the RCMP investigations and lawsuits that have examined the 25-year history between the two men, the report says.

"They should not be permitted to become expensive, lengthy, unfocused reviews of vague allegations or of issues driven by partisan politics rather than public interest," the report says. "The government must make a 'cost-benefit analysis' to determine how wide-ranging the public inquiry should be."

The report states specifically that there should be no further examination of the Airbus affair. The RCMP spent eight years investigating allegations that Mulroney accepted kickbacks from Air Canada's 1988 purchase of Airbus planes.

The RCMP never laid any charges and Mulroney launched a defamation lawsuit against the federal government. He got a formal apology and a $2.1 million settlement in 1997.

The money is of most interest: report

The report suggests that the matter of most interest is the money Mulroney received from Schreiber, who is facing extradition to face tax, bribery and fraud charges in Germany.

He was scheduled to be sent out of Canada on Dec. 1, but received a delay to testify in the expected inquiry. He is currently out on bail and trying to launch a last-ditch appeal to the Supreme Court of Canada.

"I have concluded that the concerns of many Canadians arose from the fact that a former prime minister took large cash payments from someone now implicated in questionable transactions, and whose extradition for various charges has been sought," Johnston says in the report.

However, Johnston notes that when he was asked to serve as an adviser to the government in November, Mulroney had not yet testified before the ethics committee and had never publicly explained why he took money from Schreiber.

Now that Mulroney has testified, perhaps an inquiry isn't even needed, Johnson says in the report, although he notes that he was only asked to provide parameters for an inquiry, he was not asked to probe whether an inquiry should be held or not.

"The landscape has changed. Whether the government would call an inquiry today and whether Canadians would see the pressing need for such an inquiry are questions that naturally arise by reason of this changed landscape."

Mulroney told the ethics committee in December that he received cash payments from Schreiber after he left office in June 1993. He said he was paid $225,000 in three instalments, and that the money was payment for his efforts as an international lobbyist on behalf of Thyssen, a German armoured vehicle company.

He has acknowledged waiting until 1999 to pay tax on the money.

Schreiber has argued that the total was $300,000, and that the arrangement was reached while Mulroney was serving his last days as prime minister in 1993. Schreiber, who appeared before the ethics committee on four separate occasions, said Mulroney did nothing to earn the money.

19 terms of reference

The report recommends 19 specific terms of reference for the inquiry. It says the inquiry would not find criminal or civil liability.

Fourteen of the terms include questions about the cash payments between Mulroney and Schreiber and the nature of their business relationships.

Among the questions:

• Was there an agreement reached by Mr. Mulroney while still a sitting prime minister? If so, what was that agreement, and when and where was it made?
• What payments were made, when and how and why? What services were rendered for them?
• Why were the payments made and accepted in cash? What happened to the cash?
• Were the business dealings appropriate considering Mulroney's position?
• Was there appropriate disclosure and reporting of the dealings and payments?

Five of the recommended terms probe reports that Schreiber wrote more than 700 pages of letters to Harper detailing his dealings with Mulroney between June 2006 and September 2007. Civil servants at the Privy Council Office, which advises and supports the prime minister and his cabinet, never passed those letters on to Harper.

The report suggests the inquiry should probe why the letters weren't passed on and whether the the Privy Council Office should have adopted different procedures.

Request made to expedite final terms of reference

Harper said he has asked Johnston to finalize his terms of reference for the public inquiry on "an expedited basis" once the ethics committee has completed its work.

"I am pleased that he has agreed to do so," Harper said of Johnston.

Harper suggested in November that he would call a public inquiry into the affairs between the two men, but since then some politicians and analysts have said an inquiry isn't necessary since both men testified before the federal ethics committee late last year.