mr. nafta has always seemed like one of our slimiest prime ministers

Mulroney-Schreiber probe finally going public

Updated Mon. Mar. 30 2009 11:14 AM ET

CTV.ca News Staff

An inquiry began Monday into the questionable business dealings between German arms dealer Karlheinz Schreiber and former prime minister Brian Mulroney.

The Ottawa inquiry began with Bill McKnight, Mulroney's former defence minister, as the first witness scheduled to appear before the hearing led by Justice Jeffrey Oliphant.

Marc Lalonde, a former Liberal minister, will follow. Lalonde became a friend and business associate of Schreiber and posted $100,000 in bail for him while he fought extradition proceedings.

Many have complained that the inquiry, estimated to cost $14 million, is an expensive process that will reveal few new details about the relationship.

However, CTV's Ottawa Bureau Chief Robert Fife said the inquiry, which is led by a judge who has subpoena powers, should finally put to rest lingering questions about their relations.

It will focus on hundreds of thousands in payments made by Schreiber to Mulroney after he left the PMO but was still an MP, and whether laws were broken in that exchange.

Mulroney claims he was paid $225,000 in 1993 -- after he left office -- to lobby foreign leaders for their support of a project to build armoured vehicles in Nova Scotia.

Schreiber claims he paid Mulroney three cash payments of $100,000 each for his help and that the deal was made while Mulroney was still prime minister.

Schreiber contends that no work was ever done for the money, and that Mulroney was supposed to lobby Ottawa, not foreign leaders. If the allegation is true, it could represent a possible breach of federal ethics rules.

Mulroney has said that accepting the money was the biggest mistake of his life.

"What the judicial inquiry is trying to determine is whether there was any quid-pro-quo, if any of this money might have been linked to when he was prime minister," Fife said.

There are also questions about why it took Mulroney eight years to declare the income and pay tax on it, and whether income tax laws were broken in the process.

"We will get to the bottom of this whole Mulroney- Schreiber cash payment because this is a judicial inquiry, the people who are holding the inquiry are all very experienced lawyers," Fife said.

"They're going to follow the evidence, people will have to testify under oath and they will have subpoena powers. so I think we will finally get to the bottom of this issue."

Schreiber is expected to take the stand in mid-April. Mulroney is scheduled to follow in May, before the inquiry wraps up in June.

After that, Schreiber is expected to be deported to his home country of Germany, where he faces a long list of charges and could spend the rest of his life in prison, if convicted.

The charges he faces in Germany are for fraud, bribery and tax-evasion arising from other deals.

He has been allowed to remain in Canada in order to participare inthe Oliphant inquiry.

Fife said it is in Schreiber's best interest to remain in Canada, and he wouldn't be surprised if he found a way to extend his time here.

The hearing comes 16 months after Prime Minister Stephen Harper first promised an inquiry.