Mulroney Gets a Deal

And it’s all perfectly legal under a Treasury Board policy that says former prime ministers can have their legal bills paid by taxpayers if it’s related to something that happened while they were in office.

Prime Minister Stephen Harper had an option.

He could have refused on the grounds that technically Mulroney was no longer prime minister when arms dealer Karlheinz Schreiber hired him as a lobbyist to help sell light-armored vehicles.

But why begrudge an old friend his legal fees? Especially one who helped him so much in that difficult transition period after the 2006 general elections?

None of the other witnesses at the inquiry had their legal fees paid by the government, except for one witness, Mulroney’s old friend Fred Doucet, who claimed he was impecunious.

And who knows? Harper himself might have to testify before an inquiry someday. After all, this is Canada where every single prime minister for the past 25 years has had to testify before a commission of inquiry – Mulroney and Kim Campbell before Oliphant, and Jean Chrétien and Paul Martin before Gomery.)

It’s our Canadian mania. We hold inquiries over almost anything at all to prove almost nothing at all.

The Oliphant inquiry was called by Harper because Mulroney said he wanted to clear his name and restore his good reputation once and for all.

Mulroney promised to testify “with bells on” -- which he did in a way.

He arrived along with an RCMP chauffeur and police escort from Montreal to Ottawa and back, along with a phalanx of RCMP bodyguards to keep the news media away from getting close enough to ask pesky questions.

Great treatment for a great guy, said one Mountie.

The Harper government has paid $800,000 on Mulroney’s legal bill up to March 31. Another $1.2 million was set aside in the January budget for the current fiscal year. That’s on top of the $14 million the inquiry has cost so far.

Mulroney certainly got our money’s worth in legal talent – a six-member team featuring the indomitable Guy Pratte (Jean Pelletier’s lawyer at the Gomery Commission) and the superb Harvey Yarosky (Jean Brault’s lawyer at Gomery.)

Lawyers like that are easily worth $3,000 a day. You won’t find them chasing ambulances.

Mulroney’s antagonist, the arms dealer Karlheinz Schreiber, who paid his own fees, had the wily Richard Auger (Chuck Guité’s lawyer at Gomery.) Only top talent shows up at these inquiries.

All through the Oliphant inquiry we were led to believe that Mulroney had been paying his own fees. It was only on his last day of testimony that the news about legal fees came out after a Canadian Press investigation.

By coincidence it was the same day the inquiry found out that Mulroney had been given a special deal by the Revenue Canada people on the $225,000 he got in $1,000 Canadian bills in brown manila envelopes during hotel room meetings with Schreiber in Montreal and New York.

Mulroney stashed the money in a safe in his basement in Montreal and in a safety deposit box in a New York bank and did not declare it to the revenue people for six years.

He testified the money was really a “retainer” and he was waiting to finish working for Schreiber before declaring it as income.

And since he was lobbying overseas for Schreiber to help sell light armoured vehicles to leaders in China, Russia and France (who have all since died) Mulroney figured it was international income and he didn’t have to pay GST on it.

In 1999 his tax-lawyer made a deal with Revenue Canada that allowed Mulroney to pay taxes on only half the $225,000 he said he had received from Schreiber.

Judge Jeffrey Oliphant was intrigued by what he called Mulroney’s “deal.” How could a guy not declare income for six years and then declare it and end up paying taxes on only half the total amount?

The judge’s eyes twinkled. Twenty-four years on the bench and he’d never heard of such a thing. “I had a good lawyer,” Mulroney replied with a smile.

His lawyer was Wilfrid Lefebvre, a top tax lawyer and partner in Mulroney’s Ogilvy Renault law firm.

Mulroney said he was never told details of the agreement and never asked. He just signed the papers.

The following day the revenue people took the stand and said the Mulroney special was no longer offered to Canadians, but it was legal back in the year 2000 for people who were willing to make a voluntary disclosure about money they had not declared. The idea was to entice people hiding money to come forward with it on their own.

Mulroney thanked Judge Oliphant for having been so “fair and equitable” with him. He smiled and went back to Montreal.