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Karlheinz Schreiber's kickback bonanza

Schmiergelder literally means "grease money" and it's at the heart of the federal inquiry focused on Tory PM Brian Mulroney



Schmiergelder. It's a lovely sounding German word, isn't it? Schmiergelder literally means "grease money" and it's at the heart of the federal inquiry into why former Tory PM Brian Mulroney received three envelopes stuffed with $1,000 bills back in 1993-94. Karlheinz Schreiber, the German-Canadian wheeler-dealer who handed Mulroney the cash, spent four days testifying before the inquiry last week. As I watched him on cable TV answering questions hour after hour, I wondered why Canadians have been faithfully electing Liberal and Conservative federal governments for the last 142 years, especially since politicians from the two old-line parties routinely line their own pockets, the pockets of their friends, business associates and supporters with tax money that comes from the rest of us.

All that was glaringly obvious as Schreiber sat patiently explaining how he funnelled more than $20 million in schmiergelder from European manufacturers to a network of politicians, former politicians and lobbyists who helped him arrange contracts to supply 34 European Airbus passenger jets to Air Canada (then a Crown corporation) and a dozen German-designed helicopters to the Canadian Coast Guard. He also paid grease money to his network of cronies for helping him work on a contract for German military vehicles that could have ended up earning him another $1.8 billion in secret commissions.

The light-armoured tanks were originally to have been manufactured at a plant in Cape Breton subsidized by both the federal and Nova Scotia governments, but the contract ultimately fell through. Schreiber says he paid Mulroney $300,000 to work on that deal after he had left the prime minister's office, but didn't know at the time that it was Mulroney himself who had killed it while still in power. Mulroney took the money, then did nothing, Schreiber claims. Mulroney on the other hand, says he received $225,000 (not $300,000) from Schreiber, and earned the money trying unsuccessfully to persuade foreign leaders to buy German military equipment. Mulroney acknowledges that he did not pay taxes on Schreiber's cash for about six years.

The Schreiber-Mulroney saga goes way back to the early 1980s when Schreiber says he helped finance the movement to dump Tory leader Joe Clark and also contributed $50,000 to Mulroney's successful campaign to take over the Conservative party. Schreiber's financial support sealed his friendship with Mulroney. It also gave him the insider status he needed to work on getting federal contracts for his European clients with the help of Tory lobbyists such as Fred and Gerry Doucet from Nova Scotia and Frank Moores, a former premier of Newfoundland. Schreiber and Moores got rich from the Airbus and helicopter contracts while Schreiber, Moores, the Doucet brothers and former Liberal cabinet minister Marc Lalonde earned handsome fees working on the unsuccessful deal for the manufacture of German military vehicles.

It would be comforting to believe that all this is coming out now because the Harper government is anxious to root out corruption. But there would never have been a public inquiry without more than 15 years of persistent investigations by journalists such as Stevie Cameron, Linden MacIntyre, Harvey Cashore and Philip Mathias. Moreover, the inquiry is so narrowly focused, we may never find out where all of Schreiber's schmiergelder went---who else for example, received secret commissions on the Air Canada Airbus deal. Schreiber's schmiergelder may be a particularly blatant example of scandal in high places, but it does illustrate how the old-line political parties routinely connive with business interests to distribute taxpayers' money. Liberal and Tory politicians steer lucrative federal contracts through an old boy's network of lobbyists and lawyers to companies which enjoy low tax rates and generous subsidies. Once they leave office, the politicians get lucrative patronage positions or end up with high-paying private-sector jobs and appointments to corporate boards of directors. It's a nice, comfortable system in which the old boys get rich and the rest of us get stuck with the bill.

Got an example of political chicanery? Let me know at

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