Investigators say they are determined to pursue the Airbus case
STEVIE CAMERON,RAE CORELLIJanuary201997
CAN IT CONTINUE?
Investigators say they are determined to pursue the Airbus case
Now that Brian Mulroney’s libel case against the federal government has been settled and government apologies have been made to Mulroney, former Ottawa lobbyist and Newfoundland premier Frank Moores and GermanCanadian businessman Karlheinz Schreiber, the question remains: what is going to happen to the RCMP’s criminal investigation into the Airbus affair? It will carry on—at least according to RCMP Commissioner Philip Murray and Justice Minister Allan Rock. But that may be wishful thinking. Politically, the government is on the hot seat. And, legally, it has to wrestle with a conundrum: can it successfully investigate people to whom it has given such a public apology?
Opinions are divided about the future of the Airbus investigation. Section 4 of the settlement between Mulroney and Ottawa states: “Based on the evidence received to date, the RCMP acknowledges that any conclusions of wrongdoing by the former prime minister were—and are—unjustified.” But Earl Cherniak, a veteran litigation lawyer in Toronto, noted there is nothing in the settlement that would fetter the RCMP. “In fact, the statement acknowledges the reverse,” Cherniak says. “It speaks of‘evidence received to date’ and that imposes no restrictions on them continuing to dig—against Mulroney or anybody else.” Criminal lawyer Clayton Ruby disagrees. “As a defence lawyer, let me tell you that no matter what evidence they come up with, I’d have that jury looking over my shoulder and I’d be saying to them, in effect, that the government wants you to believe this time that somebody’s a crook and they have to prove it beyond a reasonable doubt,” Ruby said. “The last time they said this, on the same subject matter, they had to apologize. No jury would ever convict.”
But officials connected to the case insist that there is evidence— and that they will forge ahead on the basis of this assumption. Prior to last week’s developments, the Mounties were investigating the alleged payment of at least $20 million in sales commissions and fees. That total, the RCMP believed, included commissions in the $1.8billion sale in 1988 of Airbus jets to Air Canada, as well as $1.24 million in commissions and lobbying fees on the $24.5-million sale of helicopters from Messerschmidt Bolkow-Blohm to the Canadian Coast Guard, and $4 million in commissions from Thyssen Industries for a projected $58-million armored vehicle plant in Nova Scotia that was never built. Paying commissions to sales agents or lobbyists is not illegal, the RCMP has always insisted in its statements during this investigation, so long as no bribery is involved.
The roots of the investigation date back to 1988 when Seattle-based Boeing Co. complained to the U.S. government about Air Canada s decision to buy Airbus aircraft. Boeing believed it had the contract wrapped up—and that bribes were paid to change the decision. By 1989, both the FBI and the RCMP were looking into the deal amid allegations of kickbacks. Although the investigations ended with no re suits, Boeing officials and American diplomats, especially Tom Niles, then-U.S. ambassador to Canada, were seething. In fact, the Boeing complaint is believed to have helped spark an investigation by the FBI and the CIA into the practices of Airbus Industrie. And by January, 1995, the Mounties had again started nosing around.
Two media reports increased their interest. One was a lengthy story in the German magazine Der Spiegel on March 20 of that year; another was a documentary broadcast by the CBC’s the fifth estate eight days later. Both stories alleged that there was a contract between Airbus and International Aircraft Feasing (IAL), a Fiechtenstein holding company controlled by Schreiber. The reports stated that most of the Airbus commissions were paid to Schreiber through the Fiechtenstein shell company to his numbered account, 18679, in the main Zurich branch of the Swiss Bank Corp. (Both
Schreiber and Moores have denied any wrongdoing, and have filed $35million libel suits against the CBC.) Before long, the Mounties were interviewing a Swiss accountant, Giorgio Pelossi, who had worked closely with Schreiber for 10 years. The two had had a bitter business dispute—and Pelossi did not hesitate to provide some reporters and the police with the paper trail to show how the commissions were paid. He also claimed to have been present when Schreiber helped Moores open two numbered accounts in the same bank.
By the early autumn of 1995, armed with banking records provided by Pelossi, RCMP investigators believed they had enough evidence to launch a formal investigation. Justice department officials began working on a letter of request to the Swiss, asking for help in examining the Zurich bank accounts. Pierre Schmidt, head of a federal police investigative unit in Bern and one of the officials who received the request, told the fifth estate in November, 1995, that the letter was not unusual. “It’s not the first time,” he said. “I had the Marcos case, we have a Korean case, and so on and so on. We are not very shocked.”
After the story broke in Canada , in November, 1995, an outraged
Schreiber told reporters he did not control the Liechtenstein company nor own bank account 18679. In a Toronto Saturday Sun story published on Dec. 2, 1995, he issued a feisty challenge: “Where is the proof that IAL belongs to Mr. Schreiber?” he asked reporter Robert Fife. ‘Where is the proof that there is a signed agreement between Airbus and IAL? Where is the proof that the bank accounts where the money was transferred belongs to Mr. Schreiber or Mulroney or Mr. Moores? Where is the proof?”
The documents that may answer at least some of those questions are now in several hands. Pelossi himself has meticulous records that he has turned over to the RCMP and to certain media outlets including Maclean’s. From these documents, the police concluded that IAL was controlled by Schreiber, that commissions from Airbus, MBB and Thyssen flowed into account 18679 in Switzerland, and that one of the companies he controlled arranged the purchase of a Florida condominium for Moores. Pelossi would not give Maclean’s a copy of the contract between Airbus and IAL, but allowed it to be copied out by hand; the document shows an Airbus fee structure involving three airlines—Wardair, Air Canada and Canadian Airlines. What the documents clearly do not show is any trace of money going to Mulroney. Moores agreed to open his numbered Swiss accounts to the police.
Schreiber fought back. Finally acknowledging ownership of account 18679, he began a Canadian court battle to block the police from seeing his records, even though he might have helped to exonerate his friend Brian Mulroney by showing that no money had gone to him. Schreiber’s court fight was successful; last July, federal Judge Howard Wetston ruled that the search would violate Schreiber’s charter rights. But the assault on his banking records was not Schreiber’s only problem with the police. By the late fall of 1995, in an investigation they called Amigo, German tax officials, investigating possible tax evasion and corruption, were also examining his business
deals, especially allegations that Schreiber had paid millions of Deutschmarks to German politicians and government bureaucrats to help him sell Thyssen tanks in the Middle East. The German investigation is still under way and officials there admit frustration at not being able to interview Schreiber himself about his income taxes; since the raids, he has been living in his holiday home in Pontresina, Switzerland, near the ski resort of St. Moritz.
It began with a complaint from Boeing
In Canada, the federal government has appealed Wetston’s ruling on Schreiber’s bank account to the Supreme Court, but no decision has been made. Now that Sgt. Fraser Fiegenwald, who became the centre of controversy in the Mulroney libel case, is off the investigation, the five-member RCMP team is led by Det. Insp. Peter German, who came onboard last September after completing a lengthy and successful inquiry into the B.C. NDP’s notorious Bingogate scandal. German’s team has also hired a small Ottawa forensic accounting firm, Boyer, Monk & Payne Inc., to help them with the paper chase. So far, the formal investigation has lasted 15 months and has taken investigators across North America and to several European countries; insiders say it will take at least another three years to complete because of the difficulty of tracing money movements around the world and delays caused by court challenges. For the Mounties, despite last week’s stinging setbacks and humiliations, the bottom line remains the same. Where did the money go? And what was the purpose?
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