Fred Doucet, Brian Mulroney's former chief of staff, received a list from Air Canada detailing how many Airbus aircraft had been delivered to the airline in the early 1990s, contradicting Mr. Doucet's sworn testimony that he has "no knowledge at all about anything involving Airbus."
The fax, as well as three letters written by Mr. Doucet, are the first indication that someone in Mr. Mulroney's inner circle expressed interest in the airplane sale before it erupted as a public scandal.
The airplane delivery schedule received by Mr. Doucet outlines how many Airbus A320s were delivered to Air Canada between 1990 and 1993. The date stamp indicates the former prime ministerial aide received the fax on Aug. 27, 1993, at 3:50 p.m.
At that time, Karlheinz Schreiber was sitting in the back of a limousine on his way to Quebec's Mirabel airport to meet Mr. Mulroney and pay him at least $75,000 in cash - a meeting that Mr. Doucet has previously acknowledged he arranged. That payment, as well as two other cash payments Mr. Schreiber made to the former prime minister shortly after he left office, are the focus of a coming public inquiry.
The fax, as well as three previously undisclosed letters written by Mr. Doucet, were supplied to The Globe and Mail and CBC's the fifth estate by Mr. Schreiber. The letters, which were written between 1992 and 1994, make a number of references to the airplanes, and in one instance Mr. Doucet uses a code word, "The Birds," to describe the jetliners.
"Should the documents prove to be genuine, this new evidence has blown the whole Airbus affair wide open," said Paul Szabo, a Liberal MP and the former chair of the House of Commons ethics committee, which last year launched a probe of the cash payments accepted by Mr. Mulroney.
After reviewing the documents for the first time last night, Mr. Szabo said he will consult with parliamentary lawyers because the material "raises questions of contempt of Parliament."
When Air Canada announced it was ordering $1.8-billion worth of airplanes from Airbus in 1988, the European manufacturer quietly began paying millions of dollars in secret commissions - about 2 per cent per airplane - to a Liechtenstein shell company. The company, International Aircraft Leasing, was controlled by Mr. Schreiber, German authorities allege.
By the time the last A320 made its maiden voyage across the Atlantic Ocean in 1993, Airbus had channelled about $20-million to the shell company. What happened to that money has never been explained.
Mr. Doucet's letters not only show that he was deeply concerned about the number of planes delivered but was embroiled in a feud involving the purchase with Frank Moores, the lobbyist and former Newfoundland premier enlisted by Mr. Schreiber to promote Airbus to Air Canada. The dispute over the number of planes was so caustic that Mr. Moores and Mr. Doucet stopped speaking to each other, the letters show.
The same day Mr. Doucet received the delivery schedule from Air Canada, he attached it to a memo and fired it off to Mr. Schreiber: "34 Airbus have been purchased and delivered to Air Canada according to the enclosed schedule. I sincerely hope that this evidence, many times stated before is emphatically and categorically relayed to F.M. [Frank Moores.]"
In February, Mr. Doucet was called to testify before the House of Commons ethics committee about his role in arranging the cash payments to Mr. Mulroney. He testified, under oath, that he knew nothing about Airbus. When he was asked whether he knew about the Airbus commissions, he replied, "Not at all." When he was asked whether he was aware of any dealings Mr. Moores's lobbying firm, Government Consultants International, had with Airbus, he replied, "Not at all."
Mr. Doucet declined to be interviewed. When he was told by a CBC producer there were documents that contradicted his testimony about Airbus, he replied: "So be it."
Mr. Mulroney, who has denied any knowledge of the Airbus commissions and any role in the purchase of the planes, also declined an interview request through his spokesman. There is no mention of Mr. Mulroney in any of Mr. Doucet's letters.
FRIENDS SINCE UNIVERSITY
It is not clear why Mr. Doucet would have any interest in the airplanes.
When Air Canada opted to buy from Airbus, the airline was still a Crown corporation and Mr. Doucet was an employee in Mr. Mulroney's government, serving as the chair of the organizing committee on international summits. He was Mr. Mulroney's first chief of staff when the Montreal labour lawyer became leader of the Progressive Conservative Party in 1983, and later served as an adviser in the Prime Minister's Office. The two men have been friends since their undergraduate years at Nova Scotia's St. Francis Xavier University.
"If I asked Fred to move a building across the street one inch to the left by morning, Fred would do it, no questions," Mr. Mulroney was quoted as saying in 1987 by the Toronto Star.
The Airbus controversy first ignited in the mid-1990s when Mr. Mulroney sued the RCMP and the federal government for defamation over allegations that he had collected a portion of Mr. Schreiber's commissions. The accusation was contained in a letter the Department of Justice sent to the government of Switzerland, the country where Mr. Schreiber kept a myriad of coded bank accounts holding the Airbus money.
As part of his lawsuit, Mr. Mulroney testified in an examination for discovery proceeding that he didn't know anything about the Airbus commissions, that he "had never had any dealings" with Mr. Schreiber and that since leaving office he had met Mr. Schreiber "once or twice" for coffee.
After two years of proceedings and negotiations, the government apologized to the former prime minister and paid him $2.1-million in costs.
When it emerged that not only had Mr. Mulroney accepted hundreds of thousands of dollars in cash from Mr. Schreiber, but that he waited six years to pay tax on the income, Prime Minister Stephen Harper called for a public inquiry and appointed an independent adviser, University of Waterloo president David Johnston, to set the terms of reference.
However, the mandate set by Mr. Johnston may inhibit the inquiry from exploring Mr. Doucet's letters as well as the Airbus commissions.
Two months into his appointment, Mr. Johnston deemed that the inquiry didn't need to delve into the Airbus money. In his first report to Mr. Harper, he pointed to the lengthy RCMP investigation that never resulted in charges and called the Airbus affair "well-tilled ground." In a follow-up report a few months later, he said looking into the Airbus money would be "inappropriate."
The release of the Air Canada fax and Mr. Doucet's letters is Mr. Schreiber's latest move in a decades-long string of incremental disclosures that has helped stall his extradition to Germany, where he is wanted on charges of bribery, fraud and tax evasion. Ever since his 1999 arrest in Toronto at the request of the German government, he has ever so slowly pulled back the curtain on his relationship with Mr. Mulroney.
He said he decided to release the letters now when it became clear that the inquiry would address only the cash payments and how they figured into an armoured-vehicle factory, known as the Bear Head project, that Mr. Schreiber also urged the Mulroney government to support.
In an effort to corroborate the content of the Air Canada fax and Mr. Doucet's letters, The Globe and CBC have examined Mr. Schreiber's detailed agenda books for the years 1991 through 1994, his bank records, memorandums written by Government Consultants International, and interviewed numerous sources.
The joint research has revealed:
On Dec. 18, 1992 - about nine months after Mr. Doucet's first letter and seven months before Mr. Mulroney left office - Mr. Schreiber scrawled a note in his agenda book that indicates he owed, paid or intended to pay "460" to someone or something identified as "PM." In a handwritten calculation, under the heading FDM for Frank Duff Moores, he appears to divide $2.3-million by five to come up with $460,000. Beside the "460" figure he wrote "erhalten," which is the German word for "received." The note is consistent with facts already known because on the same page he wrote "Georgio" next to "820," which is almost exactly the same amount - $826,640 - that Mr. Schreiber's disgruntled ex-accountant Giorgio Pelossi pocketed. Mr. Schreiber said he can't explain what he was thinking when he made the calculation, nor could he identify PM. "I have no idea," he said repeatedly in an interview.
Lobbyists at Mr. Moores's firm were forbidden from publicly acknowledging that they were representing Airbus in its efforts to get the Air Canada contract. A former lobbyist with the firm, who agreed to an interview on the condition that he not be identified, said he was instructed by his partners: "If anybody asks, we're not working for Airbus. Don't tell anyone we're working for Airbus."
'Matter of the Birds'
By March 24, 1992, at least 19 Airbus planes had been delivered to Air Canada, and the money had started to flow. According to a breakdown of the secret commissions prepared by authorities in Germany, Airbus had doled out more than $14-million at that time to the Liechtenstein shell company that prosecutors allege was controlled by Mr. Schreiber. Unfortunately for Mr. Doucet, Mr. Moores was becoming increasingly difficult to reach.
"Dear Karlheinz, I do not want to bother you with the matter of the Birds but since you insisted when we last spoke that I raise this matter by March 15, I decided to drop you a note on it. As I recall you felt by now that I would have heard from F.M. and that if not I should let you know. I have not heard from him," Mr. Doucet wrote in a note dated that day. (At the time, Mr. Doucet was working as a lobbyist in his own firm, having left the government in August, 1988 - a few months after the Airbus deal was announced.)
Mr. Schreiber's 1992 agenda book, where he recorded his daily tasks, shows that the two men and their conflict over the airplanes were occupying much of his time.
On March 13, about two weeks before Mr. Doucet sent his letter about "the Birds," Mr. Schreiber wrote a note to phone "Fred TI+AB" - acronyms that Mr. Schreiber says stand for Thyssen Industrie, the arms manufacturer that was represented by Mr. Schreiber, and Airbus. A week after Mr. Doucet sent his letter, Mr. Schreiber wrote in his agenda book, "Frank re: ABI/AC" - acronyms that Mr. Schreiber says stand for Airbus Industrie and Air Canada.
By the summer of 1993, shortly after Mr. Mulroney left office, it appears Mr. Moores and Mr. Doucet had not overcome their differences. On Aug. 27, 1993, Mr. Doucet received the fax from Air Canada, which was sent by investor relations manager Denis Biro.
It's not known what caused Mr. Biro to fax the delivery schedule to Mr. Doucet. The Air Canada manager, who is still employed with the airline, declined to comment.
By April 28, 1994, Mr. Mulroney was nearly a year out of office and had accepted a second envelope of cash from Mr. Schreiber at Montreal's Queen Elizabeth Hotel, but the question of how many planes had been delivered was still unresolved. Mr. Doucet sent another letter - and, as appears to be his trademark, underlined a number of passages for emphasis.
"Dear Karlheinz, I have been able to carry out (once again) my assignment to find out accurately how many A320s were bought and fully paid by Air Canada directly from the Airbus Company," he wrote.
"The answer today is the same provided to me the last time I sought this information. The answer is 34 and this number is two more than what was originally contracted."
In the letter, Mr. Doucet explains that there was some confusion about the number of planes because Air Canada had sold seven of the A320s to a leasing company for a higher price than the airline paid for them. The airline then leased the planes back from the company, he wrote.
"For our purpose, Karlheinz, we now have what we need and it is accurate beyond any doubt," he wrote. "I truly hope this removes the confusion. In fact, it's even better than I had hoped because the total sale was 34, not 32, as we have on our pieces of paper from last summer.
"For me, settling this matter is so very important for reasons I will tell you about in person."
It's not clear what "pieces of paper from last summer" Mr. Doucet is referring to, nor is it apparent what contract he meant when he wrote that 34 planes were "more than what was originally contracted." Every public statement made by Air Canada about the $1.8-billion purchase referred to 34 airplanes, not 32.
When asked about these "pieces of paper," Mr. Schreiber said he thinks Mr. Doucet is referring to a meeting he had with Mr. Doucet and Mr. Moores when their fight boiled over. The two men turned to Mr. Schreiber to sort out who was owed what, Mr. Schreiber said.
"I recall a meeting where ... he and Frank were dealing with the numbers and what it is, how much he has to get, how much it is per plane. They were playing with the numbers," Mr. Schreiber said. "They showed me pieces of paper where they were fighting over the figures."
Explaining the payments
It has been about two decades since Mr. Schreiber first made the rounds in Canada's capital, constantly on the lookout for politicians who could help with government contracts for his European clients.
He was a fixture at the restaurants and watering holes favoured by Ottawa's insiders. He was photographed at least five times with Mr. Mulroney while he was prime minister, and for a time was on Mr. Mulroney's Christmas-card list.
That all changed when Mr. Schreiber revealed that he had paid Mr. Mulroney the cash, and the two sides of the transaction offered different explanations about the purpose of those payments.
When first approached about the cash, a spokesman for Mr. Mulroney said the former prime minister was hired to promote a pasta business that Mr. Schreiber had recently launched. Last year, Mr. Mulroney broke his silence and offered, for the first time, the only explanation he has given in his own words. He said Mr. Schreiber hired him to promote armoured vehicles manufactured by Germany's Thyssen Industrie to leaders in Russia, China and France. He identified two people with whom he met about the vehicles: former French president François Mitterrand and former Russian president Boris Yeltsin. Both men are dead.
His testimony has been rejected by a number of people, including arms-trade experts, a former Thyssen executive as well as a former Canadian diplomat. Winfried Haastert, a former director at Thyssen, called it "nonsense" and said the company never intended to sell vehicles to Russia and China.
Mr. Schreiber has been equally difficult to pin down about the purpose. The 74-year-old, who recently launched a website attacking the Canadian government over its treatment of soldiers in Afghanistan, has said he wanted to give money to Mr. Mulroney because he was grateful for the former prime minister's support of the reunification of Germany. He has also said he thought Mr. Mulroney might be helpful in persuading government officials to help him launch an armoured-vehicle factory in Quebec.
He repeatedly denied to the ethics committee that the Airbus commissions had anything to do with the payments.
The committee also repeatedly pressed Mr. Schreiber to submit all relevant documents, yet he neglected to hand over Mr. Doucet's correspondence and the Air Canada fax. In an interview, he said they were out of his reach until an intermediary retrieved them from Switzerland. He also acknowledged that he wanted to give Mr. Doucet and other witnesses a false sense of comfort that his filing cabinets had been emptied and all his secrets revealed.
"They ran into my trap like a high-speed train," he said.
HOW THE CASH CAME TO LIGHT
In the mid-1980s, a war was being waged between two giants of airplane manufacturing: Seattle-based Boeing and Airbus, a consortium owned by a collection of European countries.
At the time, Air Canada was preparing to make the largest aircraft purchase in Canadian history. In July, 1988, the Crown corporation announced it was buying 34 Airbus A320s for $1.8-billion.
After the deal was signed, millions of dollars in commissions began flowing from Airbus headquarters to a mysterious shell company in the tiny principality of Liechtenstein, a tax haven of about 30,000 people.
That money might have remained a secret if not for a fight between Karlheinz Schreiber and his Swiss accountant, Giorgio Pelossi. Mr. Schreiber, a Bavarian lobbyist who came to Canada to promote European clients such as Airbus, felt that his accountant had helped himself to too much of those Airbus commissions. When Mr. Schreiber threatened legal action, Mr. Pelossi went to the media.
In March, 1995, CBC's the fifth estate broadcast an interview with Mr. Pelossi filmed in silhouette. The accountant alleged that Mr. Schreiber had helped win the contract for Airbus by hiring Tory lobbyists, such as Frank Moores, and promising a portion of the commissions to certain politicians that the program declined to identify.
Later that year, the RCMP sent a letter to the government of Switzerland in an effort to access Mr. Schreiber's coded bank accounts. In the letter, the Mounties alleged Mr. Schreiber, Mr. Moores and former prime minister Brian Mulroney had defrauded the government.
When the letter was leaked to the public, Mr. Mulroney launched a multimillion-dollar defamation lawsuit. After he testified that he knew nothing about the commissions, the government apologized to Mr. Mulroney and paid him $2.1-million in 1997.
In 1999, Mr. Schreiber was arrested in Toronto at the request of German authorities, but he has effectively delayed his extradition through a number of court challenges. Since his arrest, he has slowly released details about his relationship with Mr. Mulroney, including three cash payments, totalling at least $225,000, that he made to the former prime minister after he left office. Both men have denied that the payments had anything to do with Airbus.
NOTES IN THE MARGIN
Much of what Karlheinz Schreiber was up to during his years in Ottawa was recorded in his agenda books. Some of those books became public after authorities in Germany seized them during raids, but books for some years, such as 1992, have not been seen until now. On Dec. 18, 1992 - about six months before Brian Mulroney left office - Mr. Schreiber made a series of calculations in the margin of the page. They indicate that he owed, paid or planned to pay "460" to someone or something identified as "PM." The calculation shows that he divided $2.3-million - under the heading "FDM" for Frank Duff Moores - by five to arrive at his "460" figure. He also wrote "PM 460" next to the word "erhalten," which is German for received. Asked in an interview what he was thinking when he made the calculation, he repeatedly said "I have no idea."
1. March 24, 1992
Fred Doucet, a former aide to prime minister Brian Mulroney, sends a cryptic letter to German-Canadian lobbyist Karlheinz Schreiber inquiring about "the matter of the Birds." The letter also shows that Mr. Doucet is having a hard time reaching someone identified as "F.M."; Frank Moores, the former
premier of Newfoundland and past president of the Progressive Conservative Party, was a lobbyist employed by Mr. Schreiber to promote Airbus jetliners to Air Canada when
the airline was a Crown corporation.
2. Aug. 27, 1993, 3:50 p.m.
Air Canada investor-relations manager Denis Biro faxes Mr. Doucet a list showing how many Airbus aircraft were delivered to the airline from 1990 to 1993. The fax is addressed to "J. Doucet;" Mr. Doucet's full name is Jean Alfred Doucet, but he goes by Fred.
Aug. 27, 1993
Mr. Doucet attaches the Air Canada fax to a memorandum
and sends it to Mr. Schreiber. In his memorandum, Mr. Doucet states that the list is proof that 34 Airbus planes have been purchased and he implores Mr. Schreiber to inform F.M.
of the number.
3. April 28, 1994
Mr. Doucet writes Mr. Schreiber again about the number of planes delivered to Air Canada. He writes that he has confirmed again that it was 34 planes, which he states is "two more than originally contracted."