Airbus affair

Airbus
Industry	Aerospace
Founded	1970
Key people	Franz Josef Strauss (former chairman)

The Airbus affair centers on accusations that then-Prime Minister Brian Mulroney and certain members of his cabinet received undisclosed commissions connected to the acquisition of Airbus aircraft by the crown corporation Air Canada. During this period, Airbus was chaired by Franz Josef Strauss, a notable German political figure from Bavaria.

This highly anticipated deal involved fierce rivalry between Boeing and Airbus. Both companies proposed joint manufacturing ventures within Canada; Boeing even purchased de Havilland Canada to bolster its position and enter the regional aircraft market. In the end, Airbus won the 1988 contract to supply 34 Airbus A320 jets, along with a transaction involving some Air Canada Boeing 747 planes. Shortly after, Boeing put de Havilland up for sale, jeopardizing its future—a decision largely attributed to government influence.

RCMP allegations

In 1995, the Royal Canadian Mounted Police (RCMP) charged Mulroney and Frank Moores with accepting kickbacks from businessman Karlheinz Schreiber related to the Airbus deal during Mulroney’s time as prime minister. As part of their probe, the RCMP sought access to Swiss banking documents. Schreiber had earlier supported Mulroney’s victorious 1983 campaign for leadership of the Progressive Conservative Party.

Mulroney refuted these accusations and initiated a $50 million defamation lawsuit against the Canadian government, claiming that the newly elected Liberal administration under Jean Chrétien was orchestrating a smear operation. The government settled in 1997 by issuing a formal apology and covering Mulroney’s legal expenses totaling $2.1 million.

Although no proof emerged confirming kickbacks during his prime ministership, Mulroney admitted in 2003 to receiving $225,000 over an 18-month period from Schreiber after leaving office in 1993. The payments were made in three installments of $75,000 each; one occurred while Mulroney still held a seat in the House of Commons of Canada. He maintained these sums were consulting fees for promoting a pasta enterprise and assisting Schreiber in establishing international contacts. Mulroney had previously denied such dealings under oath and failed to provide any documentation supporting the services claimed. He only declared this income to Revenue Canada years later, following criminal investigations into Schreiber in Germany. Schreiber rejected the consulting explanation as minimal involvement and asserted that the payments were actually $100,000 each in cash, totaling $300,000.

Media/journalistic coverage

Journalist Stevie Cameron investigated the scandal and Schreiber’s connections to the Mulroney administration in her 1994 bestseller On the Take: Crime, Corruption and Greed in the Mulroney Years. The CBC program The Fifth Estate aired a 1995 documentary revealing a covert side agreement between Airbus and International Aircraft Leasing (IAL), a Liechtenstein shell company that received millions in commissions following Airbus sales to Air Canada. William Kaplan responded critically with his 1998 book Presumed Guilty, challenging the journalists’ findings.

In 1999, The Fifth Estate disclosed Swiss Bank Corporation records indicating Schreiber held a secret Zürich account codenamed "BRITAN," from which $300,000 was withdrawn during 1993-94. Cameron and producer Harvey Cashore authored The Last Amigo in 2001 focusing on Schreiber. Kaplan revisited these matters in his 2004 book A Secret Trial, criticizing Cameron for acting as an RCMP informant and Mulroney for failing to disclose receiving $300,000 from Schreiber.

On February 8, 2006, Schreiber told Fifth Estate that the "BRITAN" funds were provided at the request of a Mulroney aide due to financial difficulties faced by the former prime minister. He dismissed Mulroney’s claim that these payments were consulting fees linked to an investment in Schreiber’s pasta business. The program noted there was no evidence that Mulroney was aware of where the money originated. In 2007, The Globe and Mail and The Fifth Estate revealed that Mulroney submitted a voluntary disclosure to Revenue Canada years after receiving cash envelopes from Schreiber.

Cash transactions

On November 1, 2007, The Globe and Mail disclosed that Mulroney acknowledged accepting $75,000 in cash from Schreiber’s claimed total of $300,000 during a meeting in New York City in December 1994. These funds should have been declared upon re-entering Canada unless already expended. Bruce Bowie, a retired RCMP inspector who contributed to the development of Canadian legislation concerning the reporting of significant cash transactions during Mulroney’s tenure, highlighted that U.S. regulations similarly mandate reporting such transfers. It remains uncertain whether Mulroney adhered to these requirements.

An affidavit containing additional accusations from Schreiber was submitted on November 8, 2007. Subsequently, Prime Minister Stephen Harper announced an independent third-party investigation into the financial interactions between Schreiber and Mulroney, to be led by David Lloyd Johnston, then-president of the University of Waterloo. The RCMP initiated their own review on November 14. In June 2008, the government formally established the "Commission of Inquiry into Certain Allegations Respecting Business and Financial Dealings Between Karlheinz Schreiber and the Right Honourable Brian Mulroney."

Schreiber's appeal against his extradition to Germany was denied on November 15, resulting in his continued detention near Toronto. The extradition process, which began in 1999, arose from criminal charges filed in Germany related to fraud and bribery connected to the downfall of a government and the CDU donations scandal, which negatively impacted former German Chancellor Helmut Kohl's reputation. Schreiber declared he would refuse cooperation with the inquiry if extradited. Minister of Public Safety Stockwell Day confirmed that the inquiry would permit witnesses to give testimony remotely, ensuring Schreiber's involvement. Opposition parties called for postponement of the extradition to secure his testimony. Minister of Justice Rob Nicholson committed to delaying extradition until at least December 1, 2007, allowing time for appeals by Schreiber’s counsel, Edward Greenspan.

Ethics Committee testimony

Following a Speaker's Warrant issued by Commons Speaker Peter Milliken, Schreiber was transported from jail in Toronto to Ottawa on November 28, 2007. He appeared before the House of Commons Ethics Committee on November 29, December 4, and December 6, 2007. On November 30, Schreiber secured a stay on his extradition from the Ontario Court of Appeal and posted bail amounting to $1.3 million on December 4.

During his testimony, Schreiber revealed that the $300,000 paid to Mulroney in three separate cash payments throughout 1993 and 1994 did not originate directly from Airbus but was instead derived from 'success fees' earned through commissions related to lobbying efforts for Airbus, MBB, and Thyssen during the late 1980s and early 1990s. Both Airbus and MBB secured significant contracts with the Canadian government while Mulroney held office as prime minister. Thyssen's proposed project involved constructing a factory for light armoured vehicles; although initially approved by the government, this facility was never built.

Schreiber clarified that these payments were not compensation for services rendered while Mulroney served as prime minister (1984–1993), but rather a retainer for anticipated work after leaving office as well as a reward for Mulroney’s role in supporting German reunification, completed in 1991. The initial sum agreed upon was $500,000 but was reduced because Mulroney did not fulfill the expected duties, according to Schreiber—who is currently pursuing legal action against Mulroney to reclaim these funds. Prior to his scheduled appearance before the Ethics Committee on December 13, 2007, Mulroney declined to comment. Approximately six weeks later, his legal representatives notified committee chair Paul Szabo that Mulroney would not return due to what they described as "unfair" treatment during his earlier testimony.

On February 26, 2008, it was reported by CTV News that Mulroney reaffirmed his refusal to attend the committee’s February 28 session through his lawyer. After contemplating issuing a subpoena, the committee opted on February 29 to conclude hearings without additional testimony. Throughout these proceedings, it emerged that all university expenses for Mulroney’s children were covered using money received from Schreiber.

On February 14, 2008, Schreiber’s Swiss accountant testified that he had opened a Swiss bank account on behalf of Mulroney but denied awareness of any transactions conducted by or for the former Prime Minister using this account.

Oliphant Commission report

The Oliphant Commission inquiry commenced in April and May 2009 under the leadership of Mr Justice Jeffrey Oliphant, Associate Chief Justice of the Court of Queen's Bench of Manitoba. The investigation centered on the interactions between Schreiber and Mulroney. Although the nature of the questioning varied, both Schreiber’s and Mulroney’s testimonies largely elaborated on their previous statements given to the Ethics Committee. Of particular interest, Mulroney clarified his reasons for postponing the declaration of cash payments as income, describing them as advances for anticipated future work. He also disclosed that his accountant had arranged for tax to be paid on only half of the sum, utilizing a now-defunct Canada Revenue Agency amnesty program aimed at encouraging late income declarations.

The hearings concluded in July 2009. Soon thereafter, Schreiber was ordered to be held at the Toronto Detention Centre pending extradition proceedings to Germany. Within a few hours, RCMP officers escorted him onto a flight bound for Europe, where he was formally handed over to German authorities.

The commission’s final report, issued on May 31, 2010, determined the following:

While serving as a Member of Parliament, Mulroney entered into an agreement with Schreiber; however, this did not occur during his tenure as prime minister
Schreiber engaged Mulroney to assist in promoting military vehicle sales abroad (outside Canada), providing three cash payments amounting to no less than CAD $225,000 without any actual services being performed
These transactions were deemed inappropriate considering Mulroney’s official status, with multiple instances of nondisclosure and reporting failures

Due to the scope of its mandate, the report intentionally refrained from making judgments about civil or criminal responsibility. Oliphant emphasized his caution in avoiding language that might imply such conclusions.

External links

Oliphant Commission - Official Site (Library and Archives Canada)
Money, Truth and Spin a CBC Fifth Estate investigation