Former prime minister Brian Mulroney, who received $300,000 in cash from German-Canadian deal maker Karlheinz Schreiber in 1993 and 1994, did not pay taxes on the payments in the years he received the money.
The former prime minister filed a voluntary tax disclosure some time later, The Globe and Mail and CBC's the fifth estate have learned, an option that the Canada Revenue Agency offers for people who have previously filed inaccurate returns and subsequently decide to correct the record. Mr. Mulroney had declined to say when he paid taxes on the cash Mr. Schreiber handed over to him in hotels in Montreal and New York over a 19-month period.
A letter received late last night from an intermediary of Mr. Mulroney's explained that the former prime minister was delayed in paying his taxes because of the “cataclysmic event” that disrupted his life in November, 1995 – the RCMP letter to the government of Switzerland that falsely accused him of a crime.
“As such, it is understandable that until all these matters were resolved – as they eventually were with his total vindication – he could not resume normal functioning and attend to normal day-to-day affairs … and indeed to the point of the finalization of his tax matters with his accountants,” the letter said.
Two of the cash payments given to Mr. Mulroney by Mr. Schreiber, totalling $200,000, were made in 1993. The taxes owing on those payments would have been due by May 2, 1994, 18 months before Mr. Mulroney discovered that the RCMP was investigating him.
The taxes owing on the final $100,000 payment from 1994 would have been due on May 1, 1995, six months before Mr. Mulroney learned about the RCMP investigation.
The response last night said: “He complied with all prevailing Canadian tax law and was entitled to do so in any way he chose and was to his best interest. He – like all of us – is entitled to do so.”
Although Mr. Mulroney's intermediary fails to address when Mr. Mulroney made his voluntary tax disclosure, he states that it is “understandable” that Mr. Mulroney could not finalize his tax matters until he was vindicated in his legal battle with the federal government and the RCMP. Mr. Mulroney didn't receive a $2.1-million settlement in the matter until January, 1997.
For roughly a decade after he received the cash payments, the public knew very little about Mr. Mulroney's relationship with Mr. Schreiber, who supported the former Conservative leader and helped him with campaign financing early in his political career.
Mr. Mulroney has always played down his relationship with the German-Canadian middleman. Mr. Schreiber's name doesn't appear once in his recently published 1,100-page memoir.
In 1995, when Mr. Mulroney sued the federal government for sending an intergovernmental letter that suggested he had conspired to defraud Canadians on Air Canada's purchase of Airbus airplanes, he testified under oath that he had only met Mr. Schreiber for a cup of coffee “once or twice” after leaving office and that he “had never had any dealings with him.”
Over the past few years, the curtain on Mr. Mulroney's history with Mr. Schreiber has been gradually pulled back. In 2003, author William Kaplan revealed that Mr. Schreiber gave Mr. Mulroney $300,000 in cash. Mr. Mulroney's spokesman later explained that the money was to help him promote Mr. Schreiber's pasta business, as well as establishing a light-armoured vehicle factory in Montreal for Mr. Schreiber's client Thyssen AG.
In 2006, CBC's the fi fth estate revealed that the payments were made in hotel rooms in New York and Montreal and that the cash came from a Swiss bank account codenamed “Britan.”
