German prosecutors seek 9 1/2 years for Cdn-German arms lobbyist Schreiber

The Associated Press ~ staff The News
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Augsburg, Germany -

A German-Canadian arms lobbyist whose business dealings with Brian Mulroney led to the spectacle of a former prime minister defending himself at a public inquiry should spend 9 1/2 years in prison for evading taxes in Germany, prosecutors said today.
The recommended sentence came during closing arguments at the trial of Karlheinz Schreiber, who's facing tax evasion charges in the country of his birth related to a financing scandal surrounding former Chancellor Helmut Kohl.
Schreiber is accused of failing to declare millions of dollars he allegedly received as kickbacks for the sale of helicopters to the Canadian Coast Guard, Airbus planes to Thailand and Canada, and tanks to Saudi Arabia in the 1990s.
Schreiber also allegedly gave a cash donation in 1991 to the former treasurer of Kohl's Christian Democratic Union, Walther Leisler Kiep. The scandal deepened with Kohl's 1999 admission that he had personally accepted off-the-books - and therefore illegal - donations from supporters.
Schreiber, a dual national, was arrested in Canada in 1999 and sent to Germany in August after losing a 10-year battle against extradition.
He was indicted initially on charges of tax evasion, bribery and of being an accessory to breach of trust and fraud. He has denied the accusations.
The court is only considering the tax evasion charge, however, after finding that the statute of limitations has expired on a bribery charge, while charges of accessory to breach of trust and fraud were not included in the extradition order.
Schreiber's lawyer Jan Olaf Leisner called for an acquittal, saying the prosecution had "lost all sense of proportion" in asking for 9 1/2 years for his client. Tax evasion carries a 10- year maximum sentence.
A verdict is expected Wednesday.
Schreiber faced similar allegations during his scandal-plagued stay in Canada, during which his dealings with Mulroney became the subject of a public inquiry last year.
A main focus of the inquiry was on the so-called Bear Head project, in which the German firm Thyssen AG was to set up a plant in Canada to build German-designed light-armoured vehicles. Schreiber hired Mulroney to promote the sale of the military vehicles after Mulroney left office in 1993.
Mulroney has admitted taking $225,000 in cash from Schreiber but said he broke no laws or ethical guidelines. He argued that he had merely tried to line up support from political leaders in Russia, China and France for a proposed UN purchase of the vehicles for peacekeeping work.
Schreiber said the payments totalled $300,000, not the $225,000 Mulroney later declared for tax purposes. He also maintained the former prime minister was supposed to lobby Canadian officials, not foreign leaders.
The final report from the inquiry has not yet been released.
The decision by Prime Minister Stephen Harper's Conservative government to hold the inquiry opened a rift within the party between Harper and Mulroney supporters.
The affair also raised questions about whether current ethics rules, especially those that govern politicians once they leave office, should be strengthened to head off similar controversies in the future.
In an interview with the CBC last September, Mulroney said he didn't believe the Schreiber affair would tarnish his political legacy.
"I don't think that I've ever done anything knowingly wrong in my life," he said.
"Do you think I'm proud of what happened? Of course not, not at all - and if I had to do it all over again, believe me, I'd do it differently."

Organizations: Kohl's, Canadian Coast Guard, Airbus Christian Democratic Union Thyssen AG UN CBC

Geographic location: Germany, Canada, Thailand Saudi Arabia Russia China France

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