Schreiber goes on trial, 5 months after extradition from Canada

Businessman Karlheinz Schreiber, who was extradited from Canada last August after losing a decade-long legal battle to stay in the country, went on trial in Germany on Monday on charges of tax evasion.

German businessman Karlheinz Schreiber

German businessman Karlheinz Schreiber

AUGSBURG, Germany — Businessman Karlheinz Schreiber, who was extradited from Canada last August after losing a decade-long legal battle to stay in the country, went on trial in Germany on Monday on charges of tax evasion.

The charges stem from his role in a financing scandal dating back to the era of former German chancellor Helmut Kohl.

Prosecutors accuse Schreiber of failing to declare millions from kickbacks he received for the sale of helicopters to Canada’s coast guard, Airbus planes to Thailand and Canada and tanks to Saudi Arabia in the 1990s.

Schreiber, 75, also faces charges of breach of trust and accessory to fraud.

Although no formal pleas are entered in the German system, Schreiber’s lawyer, Jan Olaf Leisner, told the court his client rejects all charges against him, insisting that the political context of the deals has not been taken into consideration.

“The tone was set by high-ranking politicians,” Leisner said.

Allegations that Schreiber gave a cash donation to the former treasurer of Kohl’s Christian Democrats, Walther Leisler Kiep, in 1991 triggered a scandal that deepened with Kohl’s 1999 admission that he had personally accepted off-the-book — and therefore illegal — donations from supporters. Kohl was Germany’s chancellor from 1982 to 1998.

The German-Canadian was arrested in Canada in 1999 under a German warrant seeking his extradition and was released on bail from a Canadian jail in late 2007.

He was sent to Germany in August after losing a 10-year battle to fight extradition. If found guilty, he faces up to 10 years in prison.

While in Canada, a public inquiry headed by Justice Jeffrey Oliphant examined the financial dealings between Schreiber and former Conservative prime minister Brian Mulroney.

A main focus of the inquiry was on the so-called Bear Head project in which the German firm Thyssen AG was to set up a plant in Canada to build German-designed light-armoured vehicles. Schreiber hired Mulroney to promote the sale of the military vehicles after Mulroney left office in 1993.

Mulroney has admitted taking $225,000 in cash from Schreiber but says he broke no laws or ethical guidelines. He says he merely tried to line up support from political leaders in Russia, China and France for a proposed UN purchase of the vehicles for peacekeeping work.

Schreiber says the payments totalled $300,000, not the $225,000 Mulroney later declared for tax purposes. He also maintains the former prime minister was supposed to lobby not foreign leaders but Canadian officials.

Oliphant had until Dec. 31, 2009, to submit his report to the government. It has not yet been released.

The decision by Prime Minister Stephen Harper’s Conservative government to hold the inquiry opened a rift within the party between Harper and Mulroney supporters.

The affair also raised questions about whether current ethics rules — especially those governing politicians once they leave office — should be strengthened to head off similar controversies in future.

In an interview with the CBC last September, Mulroney said he wasn’t worried the Schreiber affair will tarnish his political legacy.

Mulroney repeated his assertion that there was nothing sinister in accepting cash payments from Schreiber to promote the sale of German-made armoured vehicles.

“I don’t think that I’ve ever done anything knowingly wrong in my life,” Mulroney said, although he admitted he would have done things differently if he had another chance.

“Do you think I’m proud of what happened, of course not, not at all, and if I had to do it all over again, believe me I’d do it differently,” he said in the CBC interview.

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