A former cabinet minister under then-prime minister Brian Mulroney told an public inquiry Monday he wasn't convinced lobbyists had the insider support from his boss they claimed to have.
Bill McKnight, who was Mulroney's defence minister, said that lobbyists working on gaining a contract for German-designed armoured vehicles, claimed to have the support of the prime minister.
"People used the prime minister's name, and other members of cabinet, to further their own cause," McKnight told the inquiry, which is being lead by Justice Jeffrey Oliphant.
"I worked under the assumption that I would do whatever my prime minister asked me to do. But the prime minister must ask."
He said the prime minister never spoke to him about the so-called Bear Head project and there was not any external pressure applied to approve the deal.
Monday marked the first day of the inquiry into the questionable business dealings between German arms dealer Karlheinz Schreiber and Mulroney.
The Ottawa inquiry began with McKnight as the first witness.
Marc Lalonde, a former Liberal minister, will follow. Lalonde became a friend and business associate of Schreiber and posted $100,000 in bail for him while he fought extradition proceedings.
Many have complained that the inquiry, estimated to cost $14 million, is an expensive process that will reveal few new details about the relationship.
However, CTV's Ottawa Bureau Chief Robert Fife said the inquiry, which is led by a judge who has subpoena powers, should finally put to rest lingering questions about their relations.
It will focus on hundreds of thousands in payments made by Schreiber to Mulroney after he left the PMO but was still an MP, and whether laws were broken in that exchange.
The proposal
The Bear Head proposal would have had a subsidiary of the engineering firm Thyssen AG set up a plant in Cape Breton to build light-armoured vehicles.
The suggestion that Mulroney backed the proposal first came in a May 1989 letter to McKnight from Frank Moores, a former premier of Newfoundland, who was then running a lobbying firm.
In the letter Moores said that "deep sense of foreboding" that the project was about to "go down the tubes" despite the Mulroney's support.
McKnight said he met with Schreiber two or three times about the project.
Mulroney claims he was paid $225,000 in 1993 -- after he left office -- to lobby foreign leaders for their support of a project to build armoured vehicles in Nova Scotia.
Schreiber claims he paid Mulroney three cash payments of $100,000 each for his help and that the deal was made while Mulroney was still prime minister.
Schreiber contends that no work was ever done for the money, and that Mulroney was supposed to lobby Ottawa, not foreign leaders. If the allegation is true, it could represent a possible breach of federal ethics rules.
Mulroney has said that accepting the money was the biggest mistake of his life.
"What the judicial inquiry is trying to determine is whether there was any quid-pro-quo, if any of this money might have been linked to when he was prime minister," Fife said.
There are also questions about why it took Mulroney eight years to declare the income and pay tax on it, and whether income tax laws were broken in the process.
"We will get to the bottom of this whole Mulroney- Schreiber cash payment because this is a judicial inquiry, the people who are holding the inquiry are all very experienced lawyers," Fife said.
"They're going to follow the evidence, people will have to testify under oath and they will have subpoena powers. So I think we will finally get to the bottom of this issue."
Schreiber is expected to take the stand in mid-April. Mulroney is scheduled to follow in May, before the inquiry wraps up in June.
After that, Schreiber is expected to be deported to his home country of Germany, where he faces a long list of charges and could spend the rest of his life in prison, if convicted.
The charges he faces in Germany are for fraud, bribery and tax-evasion arising from other deals.
He has been allowed to remain in Canada in order to participate in the Oliphant inquiry.
Fife said it is in Schreiber's best interest to remain in Canada, and he wouldn't be surprised if he found a way to extend his time here.
The hearing comes 16 months after Prime Minister Stephen Harper first promised an inquiry.
