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May 19, 2010

Why only Schreiber behind bars?

Geoffrey Stevens

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Karlheinz Schreiber, the German-Canadian arms merchant and lobbyist at the heart of the Airbus Affair, was sentenced last week in Augsburg, Germany, to eight years in prison for income tax evasion.

His conviction and incarceration must have been greeted by sighs of relief among the powers that be in both countries.

In Germany, Schreiber was the central figure in a political bribery scandal that forced former German chancellor Helmut Kohl to resign as honorary party leader after he admitted that his Christian Democrats — now headed by Chancellor Angela Merkel — had accepted illegal party donations, some from Schreiber.

In Canada, where Schreiber distributed “grease money” to “Canadian friends,” as he called them, his activities stained the reputation of his friend, former Prime Minister Brian Mulroney, caused an uproar in Parliament and led to hearings by the Commons ethics committee, followed by a judicial inquiry under Justice Jeffrey Oliphant, who is scheduled to report on May 31. Schreiber was extradited to Germany last August after losing a decade-long legal struggle to stay in Canada.

Now that Schreiber, who is 76, is behind bars, possibly for the rest of his life, we may never learn just what favours politicians and other officials did for him in return for the money with which he plied them. The investigations in both countries appear to have reached a dead end.

In Germany, Kohl, the chancellor who reunified Germany in 1990, diverted a criminal investigation into his dealings with Schreiber by agreeing to pay some heavy fines. Prosecutors in Bonn then closed the case against him in 2001 without any charges.

The German authorities originally charged Schreiber with bribery and fraud as well as tax evasion, but they allowed the statute of limitations to run out on the bribery allegations and did not proceed with the fraud charges.

In Canada, investigations were similarly contained. It was as though the authorities in each country did not want to hear any more embarrassing information about Schreiber’s involvement with political figures.

The RCMP conducted a cursory probe that, astonishingly, failed to uncover the central fact that Mulroney, after leaving office, accepted hundreds of thousands of dollars in cash from Schreiber, a man he claimed he barely knew. The RCMP called off its investigation after Mulroney successfully sued the federal government for suggesting he might have been involved in something illegal.

The money that went to Mulroney and others in Ottawa originated with Toulouse, France-based Airbus Industrie and was paid to Schreiber after Air Canada made a $1.8-billion purchase of 34 A320 aircraft in 1988. Schreiber distributed the money out of Swiss bank accounts he had set up for the purpose.

But big question remains unanswered: Did Schreiber bribe members of the Mulroney administration, politicians or bureaucrats, to grease the purchase of those Airbus aircraft?

Or as lawyer and author William Kaplan puts it: “The only question that really matters in this country … is never going to be answered: Were there payoffs made in Airbus, and if so who got them?”

We are not likely to find out from the Oliphant inquiry. The judge’s terms of reference, drafted by University of Waterloo president David Johnston for Prime Minister Stephen Harper, do not permit the judge to go back as far as that 1988 aircraft deal.

Investigative journalist Harvey Cashore, a producer with CBC-TV’s Fifth Estate program, spent 15 years trying to get to the bottom of the Airbus scandal and has just published a splendid book on the subject. It’s entitled The Truth Shows Up.

But Cashore knows the chances of uncovering the whole truth are slight and fading. Commenting on Schreiber’s conviction last week, he said: “There are a lot of secrets out there about this scandal. We still know there are millions in shmiergelder (grease money) unaccounted for, but it is looking more and more like German and Canadian institutions don’t want to find out any more about it.”

And that, it seems, is the sad truth.

Published by the KW Record, May 10, 2010.

Cambridge resident Geoffrey Stevens, an author and former Ottawa columnist and managing editor of the Globe and Mail, teaches political science at Wilfrid Laurier University and the University of Guelph. He welcomes comments at

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