Disputed Swiss bank account not Mulroney's, inquiry told

The widow of one of Brian Mulroney's confidants told a federal inquiry Tuesday that a Swiss bank account set up by her husband in 1986 was meant for her, not for the former prime minister, as Karlheinz Schreiber's accountant has said.

Beth Moores, the widow of former Newfoundland premier Frank Moores, spoke to the inquiry probing the business dealings between Schreiber, a German-Canadian businessman and Mulroney.

Frank Moores, who was named by Mulroney to the Air Canada board of directors in March 1985, had to step down six months later after reports surfaced that his lobbying firm — GCI International — was working for two of Air Canada's rival airlines. Moores was also lobbying for Airbus at the time.

Moores, who died of cancer in 2005, had set up two Swiss bank accounts, one for himself, marked 34017, and the other marked 34117, under the moniker "Devon."

Beth Moores, who had worked for GCI, told the inquiry Tuesday that the Devon account was opened for her for "fun" — she was given power of attorney on it.

But Giorgio Pelossi, Schreiber's former accountant, told a Commons ethics commission in February 2008 that he and government lobbyist Frank Moores had set up two secret Swiss bank accounts, one for Frank Moores, and one for Mulroney.

"At the time we set up the account, [Schreiber] told me if the deal with Airbus would be done, he will have to give 25 per cent to Mr. Moores and 25 per cent to Mr. Mulroney," Pelossi said in 2008. Pelossi has also said he wrote "B.M." and "F. Moore" next to corresponding account numbers on a business card to remind him which account was going to hold funds for Moores and which one would hold funds for Mulroney.

Conflicting accounts

But Moores said Tuesday the account was opened for her.

Adding another wrinkle to the story is a Dec. 16, 1995 report in the Financial Post on allegations Mulroney had received commissions from the sale of Airbus jets to Air Canada.

The report quoted Moore as saying that he had not opened the account for the benefit of his wife. He said at the time that he opened the account for certain European business deals that had not been finished.

Later, Frank Moores backtracked, saying the account was actually opened for his wife. In his 2008 testimony, Pelossi called this claim a fabrication, meant to cover for Mulroney.

There is no evidence Mulroney knew anything about the Devon account, the one supposedly opened for him.

Moores, before his death, released evidence that showed the account never contained more than $500, quashing any ideas that Mulroney — or anyone else — could have received Airbus commission money.

Mulroney has always denied benefiting in any way from the $1.8-billion government contract given to Airbus in 1988 to provide 34 new jets to Air Canada.

It is still unclear whether the probe will look into Mulroney's Airbus dealings, which have been deemed off limits by University of Waterloo president David Johnston, who determined how far-reaching the inquiry should be.

There was no mention of the Airbus affair in Monday's testimony, although Tuesday's questioning of Moores may suggest it.

'Nothing sinister'

Derek Burney, who served as Mulroney's chief of staff from 1987 to 1989, testified later Tuesday. He said he had received no pressure from Mulroney on a light-armoured vehicle factory in Bear Head on the southern coast of Cape Breton Island that Schreiber lobbied the government hard to build.

He said the prime minister did "nothing sinister" regarding the manufacturing facility, which was never built.

Burney painted a picture of cabinet split into regional factions that was divided on the merits of the Bear Head project. He often had to play peacekeeper, he said.

Burney said the Department of National Defence was strongly opposed to giving Thyssen AG a sole-source contract — where no public tenders are invited — to build LAVs. The minister for the Atlantic Canada Opportunities Agency, Senator Lowell Murray, said Burney, was one of those who were strongly in favour of the project.

Schreiber, had lobbied the government on behalf of Thyssen, a German company, to build the plant.

In testimony to the federal ethics committee in 2007, Mulroney said he received cash payments from Schreiber after he left office in June 1993.

Mulroney said he was paid $225,000 in three instalments, and that the money was payment for his efforts as an international lobbyist on behalf of Thyssen.

He has acknowledged waiting until 1999 to pay tax on the money. He has called accepting the cash "the second-biggest mistake" of his life.

"My biggest mistake in life was ever agreeing to be introduced to Karlheinz Schreiber in the first place," he said in December 2007.

Schreiber has argued that the total was $300,000 in cash, and that the arrangement was reached while Mulroney was serving his last days as prime minister in 1993, which would have violated federal ethics rules. Schreiber has also contended Mulroney was paid that amount to lobby the Canadian government, not those overseas.

The hearings will adjourn until April 14, at which point Wolson will call on Schreiber to testify.

It's not known when Mulroney will testify, although it's possible he will do so in May as the inquiry wraps up.

Manitoba Court of Queen's Bench Judge Jeffrey Oliphant, who is presiding over the inquiry, is expected to submit his findings by Dec. 31.