An Ottawa judge has thrown out fraud charges against Eurocopter Canada Ltd., stopping in its tracks the one criminal prosecution in the decade-long Airbus saga.
The case involved the purchase by the federal government of 12 helicopters for $25-million between 1986 and 1994. The seller was Messerschmitt-Bolkow Blohm, or MBB, now known as Eurocopter.
Eurocopter's Canadian arm and two German executives -- Kurt Pfleiderer and Heinz Pluckthun -- were charged with fraud in October, 2002. The RCMP alleged that more than $1-million in illegal commissions were paid to get the contract.
But Mr. Justice Paul Bélanger of the Ontario Court of Justice threw out the case against Eurocopter Canada yesterday after a preliminary hearing that spanned two years, took 50 days of court time, and heard about a dozen witnesses.
"I accept defence submissions that there is no evidence of fraud against [Eurocopter Canada]and that the defendant ought to be discharged," he wrote in his decision.
Judge Bélanger did not deal with the charges against the two Germans, who were not included in the preliminary hearing.
The charges alleged that Eurocopter paid illegal fees through a shell company controlled by Karlheinz Schreiber -- an international deal-maker who has been controversial for his ties to former prime minister Brian Mulroney.
Mr. Schreiber was also the lobbyist who helped Airbus secure a huge order of airplanes from Air Canada in 1988. Germany is trying to have him extradited from Canada on tax-evasion charges.
While the helicopter contract Eurocopter Canada and Ottawa signed had a provision prohibiting the payment of commissions, Mr. Schreiber's commission arrangement was actually with the German parent company, Judge Bélanger noted in his ruling.
In addition, he said, that commission deal was signed months before the sales agreement between Ottawa and the Canadian arm was completed.
Eurocopter Canada may have acted "somewhat less than ethically" by not telling Ottawa that its parent had a commission deal with Mr. Schreiber, "but the criminal law does not exist to redress bad bargains or sharp conduct falling short of fraud," the judge wrote.
Paul Schabas, the lawyer for Eurocopter Canada, said yesterday that it is unfortunate that the case has taken up so much time, effort and money.
"This is the only charge that arose out of the 10-, almost 11-year-long investigation of Airbus and the former prime minister and so on. They came up with one charge and a judge at the end of a long [preliminary hearing]has said there's not a basis to send it to trial."
A spokesman for the prosecutors said yesterday that the Crown is reviewing its options, and has not yet decided if it will appeal Judge Bélanger's decision.
Mr. Schreiber's lawyer, Edward Greenspan, said he hopes this decision "puts an end" to the Airbus affair. "For a good 10 years, the RCMP have been desperately trying to link Mr. Schreiber to criminal wrongdoing. This was the only case where charges were laid, and they were not even against him."
Mr. Schreiber testified at the preliminary hearing, and denied any criminal activity.
"I hope the RCMP go back to their musical ride and spend their time more usefully," Mr. Greenspan said.
The intrigue began on the morning of Dec. 13, 1999, when RCMP officers raided the company's Fort Erie, Ont., offices with a search warrant from an Ottawa judge. But the warrant was sealed, as were the orders to seal it. A three-year secret hearing was held in Toronto to deal with the validity of the warrant and the propriety of sealing information.
When the wraps were finally lifted from that proceeding in 2003, further controversy arose over the existence of a "confidential informant," who was eventually identified as journalist Stevie Cameron.
In testimony at the preliminary hearing in the Eurocopter case -- now unsealed because the charges have been dismissed -- RCMP investigator Fraser Fiegenwald described Ms. Cameron as a key source of information.
Some matters in the Eurocopter case are still unresolved. Ontario Superior Court Justice Edward Then has yet to issue comments after a special inquiry he conducted in the spring of 2004. He is expected to say whether he was misled by the RCMP or the Crown when he issued orders in 2001 sealing court documents, and to discuss Ms. Cameron's role in the case.
William Kaplan, author of several books on the Airbus affair, said questions are unanswered surrounding a payment of $300,000 Mr. Schreiber made to Mr. Mulroney after he left office, and about the final destination of the commissions paid to Mr. Schreiber.
The case history
1984: Brian Mulroney leads the Progressive Conservatives to office. Karlheinz Schreiber sets up International Aircraft Leasing in Liechtenstein. Frank Moores and fellow Mulroney associates form Government Consultants International, a lobbying firm in Ottawa.
1985: The lobbying firm is hired by German companies, including helicopter manufacturer Messerschmidt-Bolkow-Blohm, which is negotiating a sale to the Canadian Coast Guard.
Airbus also enlists Mr. Schreiber's leasing company to help market in Canada.
1986: MBB's Canadian subsidiary, Messerschmidt Canada Ltd. (MCL, now known as Eurocopter Canada), sells 12 light helicopters worth just under $27-million to the Coast Guard.
1988: Mr. Mulroney wins a second term. Air Canada awards a much-sought-after $1.8-billion contract for 34 new passenger jets to Airbus Industrie.
1993: Mr. Mulroney leaves office, is succeeded by Kim Campbell, and Liberals come to office.
1995: After media reports surface regarding Mr. Schreiber's relationship with Airbus and the Air Canada contract, the RCMP has the Justice Department write to Swiss authorities seeking information about secret bank accounts. The letter names Mr. Mulroney, who finds out about the allegation and sues the RCMP and federal government.
1997: After a variety of revelations, the federal government settles with Mr. Mulroney and pays $2-million in legal fees but continues its investigation.
1999: Mr. Schreiber leaves Europe for Canada but is arrested on a warrant from Germany, where he faces criminal charges.
He hires lawyer Edward Greenspan to fight the extradition request. In December, the Mounties execute five search warrants, including one against Eurocopter Canada, issued by Judge James Fontana in relation to the Airbus investigation. The warrants are sealed, as are the orders to seal them.
2000: Eurocopter lawyer Paul Schabas applies to Judge Fontana to break the seal and allow access to the information justifying the searches. The proceedings are subjected to a publication ban, and on Jan. 31 the judge dismisses Eurocopter's application. In February, Eurocopter seeks a judicial review of his orders, and that review takes place in secret before Mr. Justice Edward Then in Toronto. In December, Judge Then turns down the judicial review.
2001: Lawyers for Mr. Mulroney, Mr. Schreiber, Mr. Moores and the CBC are notified of the secret proceedings and told the case may be of interest to their clients. The seal is lifted and the parties get to see the long-suppressed information.
2002: Eurocopter Canada and two German executives are charged with fraud in connection with the 1986 helicopter deal. The allegations say more than $1-million in illegal commissions were paid.
2003-05: Judge Paul Bélanger holds preliminary hearing in the Eurocopter case in Ottawa. Mr. Schreiber, Mr. Moores, RCMP investigator Fraser Fiegenwald and others testify.
2004: Judge Then holds a special inquiry to determine if he was misled by the RCMP and the Crown when they had him issue the sealing orders in the Eurocopter case. (Judge Then has not yet issued his findings.)
Nov. 25, 2005: Judge Bélanger throws out the charges against Eurocopter Canada.