The Airbus Affair was one of the longest running scandals to exist in Canadian political history. The scandal evolved around Prime Minister Brian Mulroney and the German-Canadian lobbyist, Karlheinz Schreiber. The two had established a complicated and controversial relationship, which inaugurated in the 1970’s and lasted over two decades. Schreiber made his debut to Canadian politics when he contributed nearly $30,000 to Mulroney’s political campaign. Mulroney lost to Joe Clark, nevertheless, Schreiber saw potential in Mr. Mulroney and the two stayed in touch. In 1983, Schreiber devilishly aided in Mulroney’s campaign by helping fund a movement for delegates to vote against Joe Clark at the Progressive Conservative leadership convention. Mulroney defeated Clark and was later sworn in as Prime Minister after the Progressive Conservative party won in 1984.
Several months after Mulroney was elected, Schreiber and his Swiss accountant, Giorgio Pelossi, set up the International Aircraft Leasing (IAL). The IAL signed a secret contract with Airbus Industrie aircraft, stating the IAL is to receive up to three percent commission for every Airbus aircraft sold to Canada. Five days later, the Mulroney government fires Air Canadas board of directors and quickly replaces them, one being Ottawa lobbyist, Frank Moores.
March 1988 Air Canada’s board of directors agreed to purchase 34 Airbus A320 aircraft for $1.8 billion. Boeing, who had also been competing for the contract with Air Canada, believed Airbus had paid secret commission to aid in the sale of their aircrafts. They conducted an investigation in the aircraft sale and the allegations warranted the additional involvement of the FBI and the RCMP.
June 1993 was a very notable month for the scandal. Brian Mulroney stepped down as Tory party leader. Shortly after, Mulroney sent a limousine to bring Schreiber to visit the prime minister’s official summer retreat at Harrington Lake, Quebec. An affidavit was filed stating during this meeting an agreement was made that would see Mr. Schreiber pay Mulroney $300,000 via cash in closed envelopes for business deals. Mulroney eventually acknowledged accepting the cash, but states it only totaled to $225,000. Two days later, Mulroney official stepped down as prime minister.
The next month, Schreiber transferred $500,000 between his Swiss banking accounts dubbed ‘Britain’ and ‘Frankfurt’. Banking records have revealed that the Frankfurt account received Airbus commission money for the aircraft sales in Canada. Over the course of the next two years, Schreiber would meet Mulroney on three separate occasion in Montreal and New York hotel rooms. It was during these visits Mulroney was presented with closed envelopes containing $1000,000 cash each time, exactly as discussed at Harrington Lake.
In 1995, the scandal began to unravel. The RCMP was actively investigating the billion-dollar Airbus sale, with the Federal Justice Department even sending a letter to the Swiss authorities requesting their help investigating the corrupt activities. Soon after, Mulroney’s lawyer sent a letter to the Justice Minister and the RCMP commissioner which objected to the wording of the “letter of request”. The Financial Post published the first newspaper linking Mulroney’s name to the Airbus investigation. Mr. Mulroney filed a $50-million defamation suit against the federal government and when on trial, Mulroney testified to meeting Schreiber once or twice over a cup of coffee. In 1996, the Federal Court rules that Justice Departments letter of request to the Swiss violated Mr. Mulroney’s rights, and ultimately suspended the RCMP efforts, however this was short lived as in 1998, the Supreme Court of Canada over ruled and allowed the RCMP to continue investigating Schreiber’s Swiss banking records. A judge sets Mulroney’s settlement at $2.1 million in 1997.
Investigations were resumed 10 years later after a desperate attempt by Schreiber to stay in Canada. Minutes before being put on a plane to Germany by the RCMP, Mr. Schreiber announced new information stating he negotiated a $300,000 lobbying deal with Mr. Mulroney during his visit to the summer retreat in Quebec. Upon review, Prime Minister Stephen Harper announced an independent review of these new allegations and over the next two years, Schreiber claimed he was paying Mulroney. Mr. Mulroney, however, denied he received the full amount and even reveled he paid income tax on the $225,000 he did receive. Oliphant’s term of reference did not permit him to accuse anyone of criminal behaviour or to look into the possibility of bribery in Air Canadas purchase of Airbus aircraft.
This was an intricate scandal, with powerful individuals being deceitful and thoroughly planning their every move. There are also many questions which have been unanswered. Canadians are left wondering what was the money Mulroney received really for? Would the judge have settled for $2.1-million if he knew the complexity of Mulroney and Schreiber’s relationship? Why would the former Prime Minister of Canada get involved in something as corrupt as the Airbus Affair?