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Karlheinz Schreiber testified yesterday he used a Swiss bank account containing "success fees" from projects that moved forward under the Mulroney government to make his 1993 and 1994 cash payments to Brian Mulroney.

In his third appearance before the House of Commons ethics committee, Mr. Schreiber said the $300,000 he gave to the former prime minister was held in an account codenamed "Frankfurt" that included commissions Mr. Schreiber received as a lobbyist for three European companies: Airbus, MBB and Thyssen. The funds from "Frankfurt" were moved to an account codenamed "Britan" before Mr. Schreiber withdrew the money in cash and gave it to Mr. Mulroney.

Liberal MP Robert Thibault later said during Question Period that these commissions, derived from dealings with the government, "ultimately went into the bank account that financed Brian Mulroney's $300,000 cash windfall."

Mr. Thibault told reporters the money given to Mr. Mulroney "would not have existed if it hadn't been for an agreement with the Mulroney government."

Mr. Schreiber also testified that a Mulroney confidant, Fred Doucet, asked him in the early 1990s to send money from the sale of Airbus airplanes to Air Canada in 1988 to Mr. Mulroney's lawyer in Geneva.

Mr. Doucet issued a statement last night denying the allegations.

There is no evidence that Mr. Mulroney received money through a lawyer in Switzerland, and no indication that Mr. Mulroney was aware of the origin of the cash he accepted from Mr. Schreiber.

Mr. Mulroney is refusing to comment until his scheduled four-hour appearance before the committee on Thursday. The rare appearance of a former prime minister before a parliamentary committee will allow Mr. Mulroney to comment on an issue he recently described as "the usual trash and trivia of politics."

While rare, it will not be a first. Former prime minister Pierre Trudeau appeared before a parliamentary committee in 1988 to discuss his opposition to the Meech Lake accord.

Mr. Schreiber told MPs yesterday the Frankfurt bank account included a portion of the approximately $4-million he received when the Mulroney government signed an understanding-in-principle with his client, Thyssen Industrie, to build a military plant in Cape Breton in 1988.

While the Bear Head plant was never built, Mr. Schreiber received a payment from Thyssen when the agreement was signed by three Progressive Conservative cabinet ministers because the file was progressing.

Mr. Schreiber said the Frankfurt account also included commissions earned from Air Canada's purchase of Airbus planes and the Coast Guard's acquisition of helicopters from Messerschmitt-Bölkow Blohm.

Under questioning, Mr. Thibault asked Mr. Schreiber: "Can you confirm that the funds which ultimately ended up in the Frankfurt account came from success fees from projects involving MBB, Airbus and Thyssen?"

Mr. Schreiber responded: "Yes."

Mr. Schreiber said he later transferred some of those funds to a Swiss account dubbed "Britan," from which he started withdrawing cash in the summer of 1993 after a meeting with Mr. Mulroney at the prime minister's summer residence.

Mr. Schreiber said he paid Mr. Mulroney to promote the Bear Head project with the subsequent government, which they hoped would be a Progressive Conservative majority led by Kim Campbell. However, the Chrétien Liberals came to power in the fall of 1993, and Mr. Schreiber said Mr. Mulroney did no work on the project.

Mr. Schreiber said he dealt in cash because in the world of international lobbying, recipients of money do not want a paper trail.

"So therefore, if you want to be a professional in that world, make sure the money goes and nobody can find out how it went," Mr. Schreiber said.

Mr. Schreiber said the reason that Thyssen hired Peter MacKay to work with the firm in Germany in 1992 was to groom Mr. MacKay to become an executive at the proposed military factory in Cape Breton. Mr. Schreiber said he is good friends with Mr. MacKay's father, Elmer, but that he has little regard for Peter, the current defence minister, who said recently that he always felt "leery" about Mr. Schreiber.

"I would be prepared ... to tell you a couple of stories about the human being Elmer MacKay, but allow me not to comment on his son. He is not the same timber," Mr. Schreiber said.

During his appearance, Mr. Schreiber alleged Mr. Mulroney was told he would receive funds from a lobbying firm set up by some of his close political supporters, Government Consultants International, after he stepped down from office. Mr. Schreiber said he had no direct knowledge of any transfer, but was told by the now-deceased head of GCI, Frank Moores, before Mr. Mulroney was even elected that the company would make sure "everybody gets something."

(A former official from GCI is supposed to testify at the committee next Tuesday.)

Mr. Schreiber added he was asked by Mr. Doucet in 1992 or 1993 to transfer money to Mr. Mulroney's lawyer in Geneva in relation to the purchase of Airbus planes.

"I hear myself, even today, asking what the hell Mulroney had to do with Airbus. [Mr. Doucet's] answer was, 'Are you naive?' " Mr. Schreiber recounted.

Mr. Doucet issued a statement yesterday denying the allegation from Mr. Schreiber.

"Allegations of impropriety he has made about me [yesterday], and on earlier occasions before this Committee, and in correspondence are equally false," Mr. Doucet said.

The Conservatives are seriously challenging Mr. Schreiber's credibility, arguing he is mainly preoccupied with stopping his impending extradition to Germany, where he faces charges of fraud, bribery and tax evasion.

Mr. Schreiber acknowledged yesterday that he would have been willing last year to "sign anything," regardless of its veracity, in his campaign to persuade the Harper government to allow him to remain in Canada.

THE MULRONEY-SCHREIBER SAGA: SWISS BANKS

Following the money trail

Karlheinz Schreiber drew a complicated picture of money collected for deal-making with the government being placed in Swiss bank accounts - with some of it eventually going to former prime minister Brian Mulroney in three cash payments totaling $300,000. Mr. Schreiber's statements about the money and the deals were made yesterday in testimony before the Commons ethics committee. Among other things, Mr. Schreiber said he was paid a success fee of about $4-million by German company Thyssen Industrie for striking an agreement-in-principle with the federal government.

SCHREIBER'S SUCCESS FEE AND COMMISSIONS

SUCCESS FEE FOR DEAL WITH GOVERNMENT

For helping land a 1988 deal with the federal government and the government of Nova Scotia, Mr. Schreiber was paid a $4-million "success fee" by German military supplier Thyssen Industrie. Thyssen wanted to set up a plant to build a military-vehicle plant in Cape Breton, Nova Scotia through a new subsidiary, Bear Head Industries Ltd. The Sept. 27, 1988 understanding-in-principle between Ottawa, Nova Scotia, and Bear Head indicated the federal government was willing to put up more than $95-million in assistance for the project, and was signed by three of Mr. Mulroney's cabinet ministers. In the end, the plant was never built.

INTERNATIONAL AIRCRAFT LEASING COMMISSIONS

Karheinz Schreiber, through a Liechtenstein company he controlled called International Aircraft Leasing, collected commissions on deals involving the government of Canada from Thyssen, Airbus and Messerschmitt-Bölkow-Blohm.

THE FRANKFURT ACCOUNT

This Swiss bank account controlled by Mr. Schreiber was code-named for Frank Moores, the founder and senior partner of Government Consultants International, an Ottawa lobbying firm that was a heavy-hitter in the Mulroney era. The money in this account was supposed to go to GCI, but Mr. Schreiber said he did not pay it all to the lobby firm because the Bear Head project was never finalized.

SCHREIBER'S SWISS ACCOUNT

THE 'BRITAN' ACCOUNT

This Swiss bank account was controlled by Mr. Schreiber. He said he set it up shortly after he met with Mr. Mulroney at the prime minister's summer home at Harrington Lake, two days before Mr. Mulroney left office.

THE PAYOUTS

BRIAN MULRONEY - $300,000

Mr. Schreiber said he paid Mr. Mulroney $300,000 in three $100,000 cash installments. The first $100,000 was paid at a hotel in August, 1993, when Mr. Mulroney was still a Member of Parliament. The other two payments were made in December of 1993 and December of 1994. Mr. Schreiber said he paid the money because he was grateful that Mr. Mulroney had supported the reunification of Germany, and because he wanted Mr. Mulroney to help him close a deal for a Thyssen plant.