Mulroney embroiled in money scandal

CANADA: Ask Canadians under 30 about the name Mulroney, and chances are they will think not of the long-serving former prime…

CANADA:Ask Canadians under 30 about the name Mulroney, and chances are they will think not of the long-serving former prime minister, Brian Mulroney, but of his son, Ben, host of TV show Canadian Idol. But that was before the elder Mulroney came storming back into the national spotlight in a scandal befitting prime-time television.

Details including cash-stuffed envelopes, a foreign lobbyist and deep political intrigue are still emerging from testimony before parliamentary panels in Ottawa.

At the centre of it all is Canada's former prime minister of nine years, who left office in 1993 as one of the most unpopular leaders in Canadian history.

His reputation had been on the rebound in recent years. But now outrage over the financial scandal is so intense that the current prime minister and Mr Mulroney's fellow conservative, Stephen Harper, head of Canada's shaky minority government, last month announced a public investigation by an independent adviser. The probe is to follow ethics hearings already under way in Canada's House of Commons.

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At issue are Mr Mulroney's dealings with Karlheinz Schreiber, a German Canadian businessman and arms lobbyist. Mr Schreiber is fighting extradition back to Germany to face bribery, fraud and tax evasion charges.

In the early 1990s, allegations swirled that Mr Schreiber had paid kickbacks to Mr Mulroney while he was in office in connection with the Canadian $1.8 billion (€1.2 billion) purchase by Air Canada of jets from the European consortium Airbus in the 1980s.

Mr Mulroney steadfastly denied the allegations. After Canadian investigators made official inquiries into the matter in the 1990s, Mr Mulroney sued the government for libel - and won a settlement that offered him not only an apology, but an award of Canadian $2.1 million.

Last year, a new Schreiber affair began. In papers filed in Canadian courts, the businessman asserted that in a meeting two days before the end of Mr Mulroney's term, the two men reached a deal in which Mr Mulroney would work as a private citizen to smooth the way for construction of an armoured tank factory in Quebec. It was a project of one of Mr Schreiber's clients, German manufacturer Thyssen AG.

After Mr Mulroney left office, Mr Schreiber said he paid Mr Mulroney Canadian $300,000 in cash.

In November, Toronto's Globe and Mail newspaper and the Canadian Broadcasting Corporation reported that Mr Mulroney had tried to cover up payments from Mr Schreiber and had paid taxes on them only after Mr Schreiber was indicted in Germany on bribery charges several years later.

In December, Mr Mulroney appeared before a parliamentary committee, admitting after years of broad denials that he had, in fact, taken cash from Mr Schreiber.

He said the amount had been $225,000 and that it had been paid out in $1,000 bills in envelopes on two occasions in Quebec and once in New York city, in 1993 and 1994.