Hear no evil, see no evil

Whoever pocketed Schreiber’s cash, their chief accomplice is public apathy

ANDREW COYNE January 14 2008

Hear no evil, see no evil

Whoever pocketed Schreiber’s cash, their chief accomplice is public apathy

ANDREW COYNE January 14 2008

Hear no evil, see no evil

Whoever pocketed Schreiber’s cash, their chief accomplice is public apathy



If the Parliamentary Press Gallery had been the ones to cover Watergate...

“So there was a break-in at the Democratic National Committee. So they found Howard Hunt’s phone number in one of the burglars’ address books. So Hunt works for the White House. I don’t see a story here.”

“It’s Nixon’s word against John Dean’s. I guess we’ll have to leave it at that.”

“A special Senate committee? Do you know how much these things cost?”

“Enough with the drive-by smears! Now they’re dragging that good man John Mitchell’s name into it.”

“Lloyd, it was vintage H. R. Haldeman, a bravura performance that put to rest any doubts: the President had nothing to do with the so-called hush money.”

“What can the tapes possibly tell us that we don’t already know?”

AND THAT’S about the size of it. The Commons ethics committee has taken testimony from just two witnesses in its current investigation: Karlheinz Schreiber and Brian Mulroney. It has heard shocking claims from the one, a preposterous explanation from the other, and barely scratched the surface with either. And most of the press gallery seems ready to pack it in now.

To be fair, much of the so-called Airbus affair has been reported before. But that only deepens the mystery. The gravest allegations have surfaced—of a Canadian party leader subverted and deposed by foreign interests, of federal contracts being used to funnel money back to those interests, of bid-rigging and kickbacks. At the centre of it all is a man who is alleged to have paid millions to bribe public officials in his native Germany, who was paid millions of dollars in secret commissions to deliver those federal contracts to Airbus Industrie and other firms, and who kept half of these in Canadian-dollar accounts to pay his “Canadian

friends.” A former prime minister, who arguably owes his leadership to that foreign intervention and on whose watch the contracts were awarded, is discovered to have been furtively taking hundreds of thousands in cash from this same man and from those same accounts, mere weeks after leaving office. And the only question on the gallery’s mind seems to be: do we have to hold a public inquiry?

I know of no other country where the prospect of a public inquiry inspires such dread, even among those who are not its immediate subject. But then, in a way, the media will be the inquiry’s subject (assuming there is an inquiry: professor David Johnston, who is to report by Jan. 11 on the inquiry’s terms of reference, has no mandate to recommend otherwise) in the same way that the police, and Parliament, and the civil service will be. Because, as troubling as the allegations arising from the Airbus affair may be, what is even more troubling is our failure to deal seriously with them. Watergate took barely two years, from break-in to resignation. Yet 20 years after questions were first raised about the Airbus contract, we still have not got to the bottom of it. Every one of the institutions we depend upon to hold public officials to account let us down. You say this is an old story? That's the story.

Indeed, the history of those 20 years is one of a seemingly endless string of troubling affairs, with few examples of anyone being called to account, the Gomery inquiry notwithstanding: the “culture of corruption” of


the Chrétien years flowed seamlessly out of the culture of corruption of the Mulroney years (“the boys have to earn a living,” Mulroney would sigh, told of his cronies’ exploits), and it is not hard to think that some of the same factors might have been at work. In short, for a long time you could get away with just about anything in this country, and for all we know you still can.

SO THE INQUIRY cannot confine itself merely to the bizarre goings-on between Schreiber and Mulroney after the latter left office. Looked at in isolation, denuded of any larger context, these would appear as what some insist they are, a mere private business deal between two individuals—and as such would not be worthy of an inquiry. Their dealings only take on public significance because there is a larger context: because of who they are—a former prime minister and a shady international arms dealer—because of their long personal history, and because of the many points of contact between Schreiber and Mulroney’s government.

If it is not to present a partial, and there-


fore misleading picture, the inquiry must go back to the beginning: to the involvement of Schreiber, Airbus chairman Franz Josef Strauss and others in financing the dumpJoe Clark movement in the early 1980s. It must investigate why Schreiber was paid so much money in commissions by his German and French clients on contracts that expressly forbade such commissions. It must ask how he earned this money, and what explains his remarkable string of successes: Airbus pays him $20 million, and gets the Air Canada deal; Messerschmitt-Bölkow-Blohm pays him $1 million, and gets the coast guard helicopter deal; Thyssen Industrie pays him $4 million, and gets achingly close to a deal to build light-armoured vehicles in Cape Breton, a letter of intent signed by three cabinet ministers. It must discover who he paid, and for what services. And of course, it must assess how he was permitted such free rein, for so long, without anyone catching on—or perhaps, why everyone in Ottawa looked the other way.

More than a judicial inquiry, then, this has the potential to be a major event in the life of the country. It is not just Mulroney or Schreiber who will be, in a sense, on trial. It is a generation: a city, a class, a culture. It is a chance to turn Ottawa upside down, to pull the lid off and have a look at its workings, in a way that even Gomery did not quite manage: the massive accumulation of power in the Prime Minister’s Office; the enfeeblement of Parliament; the lack of institutional checks and balances; the revolving

door of lobbyists and political staffers; the gross politicization of procurement; the bagmen and the cronies, the special pleaders and the PR spinners, and the journalists who, after 30 years in the capital, become indistinguishable from the people they cover. All of these contributed to this affair, but it could not have happened without a crucial extra ingredient: us.

Repeated exposure to scandal over many years has succeeded in educating public expectations downward. The very structure of our political institutions encourages it. We have been taught to believe that it is perfectly normal that our upper house should be used as a patronage dumping ground—or that if it is not normal, that there is nothing we can do about it—and having learned to justify this to ourselves, and to justify our justifications, we have become adept at rationalizing much else. The cynicism, the amorality of Canadian political discourse, is a primary


enabler of corruption. It is the oxygen it breathes. Most Canadians don’t want an inquiry? That’s the best reason to hold one.

TO BE CLEAR, I have no evidence that anyone committed a crime here. This is something of a red herring: we should expect a higher standard of those in public life than mere avoidance of criminal activity, and there is much that an inquiry might turn up that would be useful for the public to know, even if it did not send anyone to jail. Besides, how can we have evidence if we do not investigate? When columnists declare “an inquiry will turn up nothing,” how do they know? When editorialists demand that Schreiber be sent to Germany immediately, before an inquiry has even been held, what’s their rush? Whatever happened to simple human curiosity?

The presumption of innocence does not require us to be deaf, blind and stupid. Just because we do not have proof of something does not mean we should not ask questions about it. And nothing about Mulroney’s behaviour, or his subsequent explanations of it, can give us comfort.

If we believe the former prime minister, he was hired by Schreiber to sell armoured vehicles that hadn’t been made in a factory that hadn’t been built with federal funding that was never granted to officials he hasn’t named (other than the dead). They did not discuss the deal beforehand; Schreiber simply showed up at one of their meetings—for coffee, you recall—with $75,000 in cash.

Mulroney neither invoiced Schreiber, nor issued him with a receipt. He provided no written reports on his activities, filed no expense claims and, in the end, sold no vehicles. He spent none of the cash he was paid (except for the expenses he didn’t claim, the records of which he has since destroyed), nor deposited it in a bank, but simply stowed it—in a safe in his Montreal home and a safety deposit box in New York City—where it remained for six years. He paid no taxes on it in that time, then abruptly decided to pay tax on all of it, including the expenses, after Schreiber’s arrest on charges of fraud and bribery. And he told no one outside his immediate circle about any of this, even after the existence of the cash payments became known.

For someone who has “nothing to hide,” Mulroney seems to have gone to great lengths to hide it. Not only did he leave no paper trail to attest to his dealings with Schreiber, he neglected to mention them in two days of testimony in 1996, preliminary to his libel suit against the government of Canada. He allegedly pleaded with Schreiber to keep


them a secret, once in a hotel-room meeting in Zurich in 1998, a second time in a telephone call to Schreiber’s lawyer in 1999And when at length the lawyer and writer William Kaplan got wind of them, he alternately pleaded with and threatened him, even invoking Kaplan’s Jewish heritage as if to establish a bond between them. (“I defended the Jews and got abused for that.”)

When people are behaving this suspiciously, we are entitled to be suspicious. I don’t believe Mulroney was trying to cheat on his taxes, or

that his desire to conceal his dealings with Schreiber stemmed from mere embarrassment. People do not take such enormous risks for such small stakes. What the real explanation is I don’t know. But I do know it is something we should want to find out.

As for Schreiber, we are by now familiar with the Tory talking point, to the effect that he “will do and say anything to avoid extradition to Germany.” As a description of his character, this is undoubtedly true. What’s not evident is why we should take this to mean that he is necessarily lying. Maybe he will say anything, including the truth.

Suppose he is lying. How does that keep him in the country? To be sure, he has bought himself a few months’ reprieve from the ethics committee, merely by dropping tantalizing hints of what he knows. But he can only play this game for so long, and once an inquiry is called there will be nothing left to play for. If he doesn’t tell us everything then, and back it up, he’s on the next flight out.

IN ANY EVENT, we do not have to rely on Schreiber’s word. We have his documents, leaked to the media by Giorgio Pelossi, his former accountant, or seized by police in Germany, or dug up by the CBC program the fifth estate. Here is what they tell us. We know that Schreiber and Strauss pumped

thousands of dollars into the dump-Clark campaign, including funding the airlift of scores, perhaps hundreds, of anti-Clark delegates to the 1983 leadership review in Winnipeg. We know not just because Schreiber has said so: we have the bill of sale on a halfinterest in a property owned by a company controlled by Frank Moores, fundraiser for the anti-Clark forces and for Mulroney’s leadership bid, purchased for $369,000 in 1982 by a Schreiber-controlled company.

We know that Schreiber was paid a com-

mission of two to 2.5 per cent on the sale of each Airbus plane to Air Canada: we have a copy of the original contract, complete with the provision stipulating that the deal would expire in the event of “major political change” in Canada. We have copies of similar agreements with MBB and Thyssen as well.

We know the commissions were paid into a Liechtenstein bank account registered to Schreiber’s shell company, International Aircraft Leasing, eventually landing in his account at a Zurich bank, where they were distributed into a number of sub-accounts, including the notorious “Britan” account. We know, because we have his bank records. And we know that the amounts and dates on which Schreiber withdrew cash from this account correspond exactly with his version of events.

If what we know is a lot more than some believe (“this is all hearsay”), it is still less than others pretend. The popular notion that there is nothing more to be learnt about this affair, that it has all been “investigated to death,” has no basis in fact. The “inquiry” conducted shortly after the Air Canada contract was awarded by then-transport minister John Crosbie seems to have consisted of a chat with the airline’s president, Pierre Jeanniot, and a few department officials.

The RCMP? The Mounties took a cursory look at the deal in 1989, found nothing, and

dropped it. They only formally launched an investigation in the summer of 1995, following media reports of the secret commissions deal. But without Schreiber’s Swiss bank records, they had nothing.

And then, just as they were getting started, they botched it: a crudely drafted letter of request seeking access to Schreiber’s accounts was somehow leaked to the media. Mulroney’s ensuing lawsuit effectively hobbled the investigation for some time, and it never fully recovered. The lead investigator was taken off the case after it was alleged that he had told a reporter about the letter of request, and eventually left the force. (The reporter was later exposed as a confidential informant.) They would not gain access to Schreiber’s bank records until 2000.

If the RCMP bungled its investigation, the ethics committee’s was doomed from the start. The committee lacks either the tools or the competence to conduct a serious inquiry. Few of its members are lawyers, and most have shown themselves more concerned with partisan positioning than ferreting out the truth. Their questioning is generally unfocused, lacks follow-up, and cannot be sustained, under committee rules, for more than 10 minutes at a time.

Incompetent cops. Complacent media. Toothless committees. A public inquiry is our last chance: not just to tell us what we don’t know about Airbus, but to tell us why we don’t know it. Yes, it’s nearly 20 years after the fact. But the public interest in ethical government has no statute of limitations. We need to know if we were played for suckers, and if we are still being played for suckers. That’s not just a challenge for the inquiry, but for all of us reading about it and watching at home. This is a test of our democracy— this is our job—and we need to be up to it. It’s long and boring and hard to follow? Tough. Do your job.

Mostly, we need to send a message—not just to those who may have been taking Schreiber’s money then, but to those who might be contemplating similar actions now: that however well you cover your tracks, however far you run, however long you stall, we will get you. Or shall we wait to find out 20 years from now about things we might have prevented today? M

ON THE WEB: For more Andrew Coyne, visit his blog at