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Mulroney had lucrative prospects

by William MarsdenThe Gazette
November 23rd, 2007

Despite Brian Mulroney's claim that he took $300,000 cash from German-Canadian businessman Karlheinz Schreiber because he had run out of money, he was about to become a very wealthy man.

Throughout his tenure as prime minister, Mulroney cultivated close friendships with top executives in Canada and the United States, as well as with such political leaders as U.S. President Ronald Reagan and his successor, George H.W. Bush.

According to sources, this assured his smooth transition into a world of wealth and privilege, where his international connections would make him a sought-after lawyer and deal-maker.

Indeed, within months of leaving office on June 25, 1993, Mulroney was welcomed onto the boards of Fortune 500 companies. As well, he quickly began earning top dollar for speaking engagements and accepted a lucrative partnership at a prominent Montreal law firm that insiders estimate pays him at least $1 million a year.

Mulroney's spokesperson, Luc Lavoie, said this week it was because the ex-prime minister was "not a rich man" that he had made the "colossal mistake" of accepting the $300,000 in cash from Schreiber, who faces extradition to Germany on charges of tax evasion and bribery.

Lavoie said Mulroney needed the money to bridge a financial gap between the time he left office and the time he could re-establish himself in private life.

Lavoie did not return phone calls for this article.

Mulroney originally said he fully declared the money to tax collectors. Later, he said he filed a voluntary tax disclosure only after he settled a $50-million lawsuit with the federal government in 1997 over bribery allegations in the Airbus scandal.

Schreiber has been at the eye of a storm since 1989 over allegations that he paid at least $5 million in bribes to Mulroney for the purchase by Air Canada of 34 Airbus planes in 1985. The deal was worth $1.8 billion. Airbus paid Schreiber's Liechtenstein company, International Aircraft Leasing (IAL), $8.8 million as a commission.

That same year, the German company Messerschmitt-B�lkow-Blohm (MBB) paid IAL $1,122,072 for the sale of 12 helicopters to the Canadian Coast Guard.

It has never been clear what work Schreiber did for Airbus or MBB to obtain his commissions. Mulroney has always denied receiving money for the deals. An RCMP investigation found no evidence of wrongdoing on his part.

But Schreiber's cash payments to the former prime minister still raise questions that both a parliamentary ethics committee and a government commission are set to investigate.

On Thursday, the committee summoned Schreiber from his Toronto jail cell, where he is awaiting extradition, to testify about the payments to Mulroney. The former prime minister is expected to testify next month.

Mulroney accepted the first cash payment of $100,000 after he left office but while he was still MP for Baie Comeau.

Schreiber has stated he gave Mulroney the cash on Aug. 27, 1993, during a stopover at Mirabel Airport. Mulroney came to the airport to pick up the money.

Schreiber claims he made the second payment four months later, on Dec. 18 at the Queen Elizabeth Hotel in Montreal, and the third and final payment about a year later, on Dec. 8, 1994, at the Pierre Hotel in New York.

Schreiber is suing Mulroney for return of the money, claiming Mulroney did no work for it.

Mulroney says the money was a retainer for representing Schreiber on a venture to market pasta machines and on a project to construct a military vehicle plant in Montreal. The factory was never built.

When Mulroney left office, he had a $33,500 annual government pension.

But insiders who knew him said he knew he would get numerous lucrative jobs in the private sector. While in office, "he made sure he cultivated massive business relationships," one source said.

He jumped right into a position at the law firm Ogilvy Renault. His earnings there are secret, even from his fellow partners. But he is considered a major rainmaker for the firm, which would put his earnings at about $1 million.

Also confidential is how much of his income derives from fees he earns sitting on various corporate boards.

Within a short time of leaving office, he did find himself on nine boards, for which he was paid hundreds of thousands of dollars. These included Horsham Corp., which at the time was a large shareholder in Barrick Gold, Trizec and Clark Oil, Barrick Gold and Archer Daniels Midland, one of the world's largest food processors.

Archer Daniels pays Mulroney $200,000 a year in cash and options. He now holds 85,192 shares in the company, valued at about $3 million U.S.

In 1994, Horsham paid him $120,000 for "advisory services."

Also in 1994, Barrick Gold Corp. paid him $141,000 for "advisory services and reimbursement of expenses."

Barrick also gave him 250,000 stock options in November 1993, plus another 250,000 in September 1994.

Mulroney has earned millions of dollars exercising his stock options. In 1999, for example, he earned $756,750, and in 2000 he earned another $1.48 million in this way. By the end of 2006, he owned 425,000 Barrick options, valued at $3.7 million U.S.

In 1994, he earned $75,000 U.S. as a board member of the Freedom Forum in Washington, D.C.

Mulroney was also earning as much as $45,000 per speaking engagement.

In addition, Mulroney in 1993 took seats on boards of Petrofina SA of Belgium, which was partially owned by Power Corp., Pro-Agro of Venezuela, the China International Trust and investment Corp., Chemical Bank of New York and Power Corp. International.

Mulroney was also on the advisory board of Bombardier Aerospace, where he had been hired to help market the company's business jets.

During that time, Mulroney was spending about $1 million renovating his home at 47 Forden Cres. in Westmount, which he had purchased in 1993 for $1.68 million with a mortgage of $1.26 million. Mortgage payments would have cost him about $10,000 a month.

He was also sending his oldest son to Duke University in North Carolina, his daughter Caroline to Harvard University in Massachusetts and his two other sons to private schools.

There was never a clear public record of how much money Mulroney had when he left office. Senator David Angus was quoted at the time saying Mulroney was "a millionaire."

Angus did not return phone calls for this article.

Others said Mulroney had spent most of his settlement with his former company, the Iron Ore Co. of Canada, where he served as president before becoming prime minister.

According to Stevie Cameron's book On the Take, industry leaders raised about $4 million for Mulroney to help finance the purchase and renovations of his Westmount home. Mulroney has never denied this.

Mulroney's secretary said the former PM was out of town and unavailable for comment.

Whatever the case, Mulroney knew he was stepping into big money when he stepped out of 24 Sussex Drive. He clearly had big expenses ahead - but he also had great prospects.

wmarsden@thegazette.canwest.com

 

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