Mulroney-Schreiber financial dealings 'inappropriate,' inquiry concludes

Ottawa -

A public inquiry that examined Brian Mulroney's relationship to a shady German arms dealer has found a mess of lies, contradictions, calculated concealment and unresolved questions.

But the report that cuts to "the heart of the integrity of government" could do no better - or worse - than find that the former Conservative prime minister breached his own ethics code.

That breach didn't even involve the hundreds of thousands of dollars in secret cash payments that Mulroney received from Karlheinz Schreiber.

While Mulroney received one more - perhaps final - public shaming from Justice Jeffrey Oliphant, those seeking definitive answers about his business relationship with Schreiber were left largely disappointed.

The inquiry could find no work Mulroney did to justify the payments, nor could it even determine whether he received $225,000 (Mulroney's version) or $300,000, as stated by Schreiber.

Perhaps most alarming, Oliphant found the same suspect dealings could happen in 2010.

"Put bluntly, if the events that prompted this commission of inquiry were to occur today, I am not persuaded that the Conflict of Interest and Ethics Commissioner would learn about them, because there is no process or procedure in place that would allow her to detect them," Oliphant said in a wrap-up statement.

He recommended a number of amendments to the current Conflict of Interest Act, including making it illegal for former public office holders to fail to properly disclose their business dealings.

Mulroney did not agree to media interviews, but issued a statement after the report became public.

"I genuinely regret that my conduct after I left office gave rise to suspicions about the propriety of my personal business affairs as a private citizen," he said in a statement.

"I will leave it to others to assess the full impact of these events."

Oliphant's report will do nothing to dampen the critical assessments and rampant speculation that have swirled around Mulroney almost from the day he left office in 1993.

He found Mulroney did not enter into his paying deal with Schreiber until the very day Schreiber arrived at a Montreal airport meeting laden with $1,000 bills. That was after Mulroney had stepped down as prime minister but was still an MP.

He also found Mulroney's job, albeit never conducted, was to lobby abroad, not in Canada as Schreiber claimed.

Mulroney expressed his satisfaction at these findings, which backed up the former prime minister's version of events.

They were small victories.

Oliphant noted how "keenly aware" he was of the potential damage to reputations from his report, and frequently pulled his punches. Nonetheless, his repeated references to Mulroney's veracity were impossible to overlook.

"I found Mr. Mulroney's evidence on this issue to be troubling at best," he said at one point. "I must view with skepticism Mr. Mulroney's claim ...," he said at another.

"I confess to having a considerable problem with that explanation ...."

As for the discrepancies between the sworn testimony of Mulroney and Schreiber about how much money was involved, "I have decided not to accept the evidence of either of them," Oliphant said.

Richard Wolson, the hard-hitting but respectful lead counsel for the inquiry, said no credible explanation for Mulroney and Schreiber's cash relationship was ever heard.

"I can't get into the minds of people except that it's pretty clear that both - for some reason, for their own reason - didn't want to document this transaction," Wolson said at a news conference.

"Whether it's a sinister reason, whether it's a reason for income taxes, I don't know what the reason is. But the finding is pretty clear that it was intended to conceal.

"Now, you could dream up all kinds of sinister reasons."

Schreiber is currently serving eight years in a German prison for tax evasion.

One thing the inquiry was not permitted to do was to examine any links to allegations of kickbacks related to the sale of Airbus jet liners to Air Canada during the Mulroney government's tenure.

Thanks to the terms of reference crafted by the Conservative government, Oliphant was precluded from making any findings of criminal or civil liability. He was specifically barred from revisiting allegations Mulroney and Schreiber were involved in a kickback scheme at the time of Air Canada's $1.8-billion Airbus purchase in 1988.

Nor was he allowed to revisit the $2.1-million libel settlement Mulroney won from the federal government in 1997 as a result of the RCMP's Airbus investigation - all the while insisting he barely knew Schreiber.

"We could only go where our mandate took us," said Wolson.

Nonetheless, Oliphant's report strayed into the Airbus matter.

He found the most likely source of the funds paid to Mulroney was, in fact, a Swiss bank account that held commissions paid on the Airbus sale.

He called it "patently absurd" Mulroney justified never revealing his long relationship with Schreiber during an Airbus court hearing by claiming the proper question wasn't asked.

And the inquiry learned Fred Doucet, a Mulroney insider turned lobbyist, had written to Schreiber about the Airbus sale on the same day Schreiber handed the ex-prime minister his first cash payment.

Oliphant was not given a mandate to connect the dots, and he did not.

"The only way to link Mr. Mulroney to the Airbus matter is to speculate or to endorse the concept of guilt by association," said the commissioner.

"Based on my sense of fairness and my experience as a trial judge for 25 years, I am not prepared to indulge in either."

Others showed no such reticence.

"Based on Justice Oliphant's findings, Democracy Watch believes that Mr. Mulroney should return the money that was paid to him in a settlement by the federal government in the mid 1990s," said Duff Conacher, who runs the advocacy organization.

Conacher argued that Oliphant's findings provide grist for a full public inquiry into the Airbus matter.

"There are two big gaps here. What was (Mulroney) actually doing for Mr. Schreiber, and also, where is the rest of the Airbus money?"

But Wolson suggested it is time to let the matter go.

The RCMP investigated Airbus with up to 23 officers for a period of eight years and never laid charges, he noted.

"Quite frankly, at some point in an investigation ... I think we all have a right as Canadians to have finality," said the lead counsel from Winnipeg.

"I think after eight years, people are entitled to some amount of finality."

Wolson, however, said the Oliphant inquiry was a necessary exercise.

"Whenever you have a prime minister of a country, just shortly after leaving office and still while an MP, enter into a private arrangement which there was no documentation, I think it's the heart of the integrity of government."