The Swiss accountant whose revelations about Karlheinz Schreiber precipitated the Airbus scandal was of two minds last week when he heard of the former lobbyists arrest in Canada. Giorgio Pelossi, Schreibers former partner, was happy that German authorities, who asked Canadian police to hold Schreiber for extradition, found documents to back up his claims that Schreiber received undeclared commissions for, among other things, dealing tanks to Saudi Arabia and Airbus planes to Air Canada. But he said he was sad to hear that his friend and colleague for 20 years before their falling out was facing such a legal battle.
“My lawyer told him in 1991, ‘If you dont make an agreement with Mr. Pelossi, he will fall from the first floor, but you will fall from the 10th floor,’” Pelossi told Macleans. “Now, he has had a very bad week.”
That was an understatement. In the seven days prior to his arrest, Schreiber also lost his case in the Federal Court of Canada to stop the RCMP from getting access to his Swiss banking records. As well, Schreiber was unable to go to his mother’s Aug. 27 funeral because of the outstanding warrant for his arrest. And whether the 65year-old German-Canadian businessman and lobbyist successfully wins his fight to avoid extradition, he appears to have fallen from great heights. The onetime broker for helicopters, planes and tanks had been peddling a spaghetti-making machine in Barrie, Ont., the day the RCMP arrested him in Toronto. When he appeared in court last Wednesday, Schreiber looked rumpled; when the judge asked him to speak, Schreiber
mumbled, “I don’t know what to say,” before he was led away.
German authorities allege Schreiber failed to pay almost $21 million in income tax and trade tax stemming from $38 million he earned brokering deals between 1988 and 1993. The arrest warrant included banking records showing Schreibers company was paid $20 million for the $365-million sale by Thyssen Industrie AG of 36 tanks to Saudi Arabia, $1.1 million on the $24.5-million purchase of 12 helicopters by the Canadian
Coast Guard from MesserschmittBolkow-Blohm, $13 million on Air Canada’s $ 1.8-billion purchase of 34 planes from Airbus Industrie, as well as $4 million for a failed attempt to set up Bear Head Industries, a Thyssen subsidiary, in Nova Scotia. He was using the cellphone of former Bear Head associate, Greg Alford of Toronto, when German police tracked his family’s call notifying him that his mother was dying. Alford, a former executive assistant to Frank Moores, who was Newfoundland premier from 1972 to 1979 and has also been named in the Airbus affair, declined to comment to Macleans, saying: “I don’t think the subject has much to do with me.”
Just who will be implicated in Schreibers
case will be the subject of much speculation. Based on information provided by Pelossi in 1994-1995, German authorities raided Schreibers compound in Kaufering, a small town near Munich where he has a three-storey mansion, a separate office building and a fleet of Mercedes-Benz cars. During the October, 1995, raid, police seized Schreibers coded journal, which detailed transfers of money to several politicians and businessmen, inside Germany and out, often using companies in Liechtenstein and Panama.
In May, 1997, a German court issued a warrant for Schreibers arrest. He fled to his apartment near the resort of Saint Moritz in Switzerland. When German officials managed to obtain Schreibers Swiss banking records this spring, he fled Switzerland, and his whereabouts was unknown until he was traced to Canada. Using Schreibers banking records, German authorities have arrested two executives of Thyssen for income tax evasion and criminal fraud. A third suspect, Holger Pfahls—a former German defence ministry official code-named “Holgert” in Schreibers diary—has fled the country.
In Canada, meanwhile, the deals in which Schreiber was involved have also wreaked havoc. Former prime minister Brian Mulroney was caught up in the Airbus scandal when Canadian investigators named him, along with Schreiber and Moores, in a letter formally requesting help from Swiss authorities. Mulroney launched a $50million libel suit; in 1997, Ottawa was forced to apologize to him and pay $2 million for his legal costs. After Schreibers arrest, Mulroneys lawyers also produced a letter from Swiss officials stating that Mulroney is not connected to any of Schreibers Swiss bank accounts. But the RCMP has refused to give up on the case. Last week, a Mulroney spokesman demanded that the Mounties publicly exonerate him. The Mounties said no, leaving a Mulroney spokesman hinting at the possibility of another lawsuit—and more drama in the ongoing Airbus affair. E3
The story you want is part of the Maclean’s Archives. To access it, log in here or sign up for your free 30-day trial.
Experience anything and everything Maclean's has ever published — over 3,500 issues and 150,000 articles, images and advertisements — since 1905. Browse on your own, or explore our curated collections and timely recommendations.WATCH THIS VIDEO for highlights of everything the Maclean's Archives has to offer.