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
brucew@thecoast.ca.
This article appears in Apr 23-29, 2009.
It’s great that this has come to light… However, I can only think that Schreiber is only doing this to avoid fraud charges in his native Germany. Otherwise, we wouldn’t be hearing about this. Sure, the money is greasy, but so is Schreiber. I loved how in the early days of his testimony, he would say one thing, and the recant it the next. He’d say things like: “I can’t remember what I wrote 22 years ago” and then remember meetings from that time frame. Hmmm… I’m sure that this would have been over and done with years ago if he wasn’t so full of shit half the time. What is most disturbing is not the actual “success” fees he handed out, but a 300 K political donation that he never got a receipt for, and didn’t want one for.
Mr Wark, you fell for the Schreiber BS jusat like the fifthestate crowd.
KHS has led them and you down the garden path for a decade. he’s a slimevall. From the testimony you learn he met Muldoon only a couple of times and went around Ottawa and the country referring to Bill Gates, Bill Clinton, Allan MacEachern et al as his ‘friends’.
IMHO he scammed Airbus and Thyssen out of millions and spent a few million on Frank Moores and others and gave Muldoon $300,000 and pocketed the rest. That is theb trouble with bribes, you don’t keep a detailed record of how you spent all the money. You just tell the company you have handed it out to close the deal and the company is happy when it has the deal. There is no evidence to support the theory that KHS had anything to do with the decision by Air Canada to buy the Aibus planes. KHS never laid out ‘how he funnelled $20,000,000 to a network of politicians etc..’; in fact he gave few detals of how the money was spent or when it was disbursed. My gut tells me KHS has the money tucked away in the Cayman Islands or some such place and we will have to wait for more details coming to light when he faces the courts in Germany.
Thanks Dr. Fever and Joeblow for your comments on my editorial. I agree with many of the things you say. I am a bit horrified though that you seem to think I’m the least bit sympathetic to that arch influence peddler, con man and rabid right-winger, Karlheinz Schreiber. Apparently, Frank Moores (no leftie himself) used to joke that in Schreiber’s philosophy, anybody who didn’t own a car wasn’t contributing enough to society and should probably end up in jail. Hard for me as a leftie myself to love, respect or even believe a grease monkey like that!
Schreiber’s boasting of his friendship with Mulroney was well founded, however. Inquiry lawyer Richard Wolson demonstrated (using letters and other documents) that Schreiber had open access to Mulroney as prime minister and that they met many times. Mulroney’s lawyer tried unconvincingly to show the opposite. Mulroney was grateful for Schreiber’s financial support during the dump Joe Clark episode and then, Mulroney’s leadership campaign. It’s well known that “offshore money” i.e. funds from right-wing German politicians helped push Clark out and Mulroney in. (All for the good of the Canadian right-wing cause of course.) Schreiber acted as the conduit for those funds.
It’s also wrong to argue that everything depends on Schreiber’s questionable allegations. Lawyers at the inquiry are constantly referring to several thick binders of documents — thousands of pages in all — that include court transcripts, business memos, cancelled cheques, bank account withdrawals etc. etc. As I say in the editorial, 15 years of investigative work by some of Canada’s best journalists has uncovered an extensive paper trail.
The best book on the Schreiber affair is “The Last Amigo: Karlheinz Schreiber and the Anatomy of a Scandal,” by Stevie Cameron and Harvey Cashore. They do not rely on Schreiber’s word. They’ve interviewed dozens of others and tracked down hundreds of documents. What I was trying to get at in my editorial is summed up in this well-researched book. The Schreiber affair shows how in this case, international corporations sought to win government contracts through “secret commissions” (i.e. bribes) funnelled through hidden accounts in foreign banks.
As I say, the Schreiber scandal is a particularly blatant example of the mingling of money, influence and politics. You may have seen the Globe and Mail report last week recounting how Jean Chretien is busy selling a $4.5 billion luxury white sands resort and Las Vegas-style gambling casino just south of Ho Chi Minh City in Vietnam. (No, I’m not kidding!) Mulroney claimed that he earned Schreiber’s cash by peddling German military equipment abroad (that’s his story, not mine) and in light of Chretien’s herculean (and no doubt well-compensated efforts), Mulroney’s claim sounds quite ordinary, maybe even boring.
The main point of my editorial was not to embrace Schreiber (Ugh!), but to point out that since John A., we’ve been ruled federally by Liberal and Conservative politicians so deeply sympathetic to the cause of Big Business that while in office, they do everything they can to make life pleasant for corporate fat cats and once out of office, frequently enjoy the rewards of that service. This leaves these guys (yes, nearly all are men) very unsympathetic to the plight, for example, of women raising kids (remember how Mulroney said the bank president’s wife didn’t need Family Allowance and Chretien/Martin eliminated the Canada Assistance Plan for welfare recipients?) or the travails of the homeless (remember how Mulroney/Chretien/Martin ditched federal support for housing?)
Dr. Fever, Joeblow, please, please, I beg you, don’t accuse me of sympathizing with Karlheinz Schreiber. Next you’ll say I’m shilling for Mulroney, Chretien or Martin. Truth is, I despise all these fine gentlemen.
Bruce, I think we watched two different hearings when KHS was all over the map from day one to day fourand I don’t think you sympathise with KHS ( hard to find anyone who does). If I had taken notes I think I could more accurately refute the idea that KHDS had open access to Muldoon. KHS liked to give that impression but I think the testimony indicated that they actually had a meeting on very few occasions.
The main problem with with this affair is that if one dislikes Muldoon it is easy to believe KHS and KHS clearly went around giving the impression that he was a ‘friend’ of many well connected and/or rich people, a trait common to scam artists. The RCMP could not nail BM but I think I will trot off to the Library to read the Cameron/Cashore diatribe.
Ms Cameron went down in my estimation when she libelled Halifax developer Ben McRea and at trial the Globe & Mail settled and Ms Cameron slipped out the back door rather than face the media.
The ‘offshore money’ actually was covered by Lawrence Martin & Jock Ferguson over 20 years ago and referred to money from offshore supply vessel owner German-Canadian Walter Wolf. Martin & Ferguson were tipped to the story by Dalton Camp. You may have heard KHS refer to Mr Wolf during the testimony.
Personally, I think KHS and BM were made for each other and the latter was foolish to risk his reputation by having any business arrangement with the greasy Kraut.
If Schreiber had $20,000,000 from Airbus where did it go and why has he not told the inquiry ?
Has his lawyer advised him to keep quiet until Doucet and Mulroney have given evidence ?
And those Doucet memos to file – why would he write such detailed memos which if they ever became public would reflect badly on him and BM ?
I know you’re not sympathizing with Schreiber, Bruce. In all honesty, the whole affair smells of greasy dealings. What really bothers me is that one lobbyist had that much access to the PM’s office, and that this is bringing to light the dark side of Canadian politics, which is most disturbing. I can’t wait to see Wolson grill Mulroney. That’s the main attraction, and I’d like to see how he weasels his way out of this one.