A public inquiry has found the business dealings between former prime minister Brian Mulroney and disgraced German arms dealer Karlheinz Schreiber to be "inappropriate."'

Justice Jeffrey Oliphant unveiled his long-awaited report Monday afternoon, which should bring closure to the long-running political drama.

"I found that the business and financial dealings between Mr. Schreiber and Mr. Mulroney were inappropriate. I also found that Mr. Mulroney's failure to disclose those business and financial dealings was inappropriate," Oliphant said in his report.

"Simply put, Mr. Mulroney, in his business and financial dealings with Mr. Schreiber, failed to live up to the standard of conduct that he had himself adopted in the 1985 Ethics Code."

The former Progressive Conservative prime minister admitted to receiving $225,000 in cash-stuffed envelopes from Schreiber in the 1990s and keeping that secret for years.

He said the payments were for legal consulting work -- but Schreiber claimed it was to lobby the government.

Lead commission counsel Richard Wolson said Oliphant found that Mulroney's actions upon receiving the payments amounted to "an effort to conceal a transaction."

"As to why they attempted to conceal a transaction, we don't really know," Wolson told CTV's Power Play Monday afternoon. "But clearly, the money taken by Mr. Mulroney, kept in a safe or in a safety deposit box, not deposited in a bank, no documents which would create a paper trail, clearly led to what Mr. Mulroney said could be viewed by the public as suspicious circumstances. They were suspicious to say the least."

Oliphant said Monday Mulroney was likely trying to hide completely his relationship with Schreiber.

Oliphant also said he didn't buy Mulroney's claim that accepting the payments was an error in judgment.

"I confess to having a considerable problem with that explanation," Oliphant wrote in the report.

If Mulroney considered accepting the first payment in cash an error, Oliphant said, he could have corrected the error by asking for a cheque, issuing a receipt or depositing the cash at a bank. He also noted that Mulroney was an experienced businessman who had served nine years as prime minister.

"(Oliphant) didn't accept that it was a lapse in judgment because it occurred on three separate occasions," Wolson told Power Play. "And after the first payment was made, several months had gone by until the second payment was made. And if one were startled by the offer of cash after the first payment, they may have thought about it by the time the second or third payment came along."

Mulroney regrets conduct

Mulroney issued a statement Monday afternoon, saying he had not yet read the full report but had been briefed on its contents.

"I genuinely regret that my conduct after I left office gave rise to suspicions about the propriety of my personal business affairs as a private citizen. I will leave it to others to assess the full impact of these events," Mulroney said.

"For now, I am merely grateful that this unfortunate chapter is over and that my family and I can move forward with our lives."

Mulroney's dealings with Schreiber have tarnished his reputation, something Oliphant noted.

Oliphant said while he tried to avoid damaging anyone's reputation in his report, "findings of fact cannot be the cause of damage to a person's reputation where the person's conduct itself has damaged his or her reputation."

Oliphant was not allowed to make any findings of criminal or civil liability due to the terms of reference crafted by the Harper government.

Oliphant made a number of recommendations, particularly in relation to the 2006 Conflict of Interest Act as it relates to a politician's transition from public to private life.

The recommendations include:

  • Broadening the definition of "employment" to include any form of outside employment or business relationship involving terms of services
  • Broadening definition of "conflict of interest" to include an apparent conflict of interest
  • Extending Conflict of Interest act to include former politicians' post-employment provisions outside of Canada as well.
  • Change the Act to make it an offence for a former public office holder to fail to hold up new disclosure obligations

The Oliphant commission has cost Canadian taxpayers nearly $16 million.

The two-year inquiry was limited to 17 questions into Mulroney's involvement in the Bear Head project, which was to have seen German firm Thyssen AG set up a plant in Canada to build military vehicles.

Some questions included:

  • What were the business dealings between Mulroney and Schreiber?
  • Was Mulroney still prime minister when he agreed to do work for Schreiber?
  • What payments were made and what was the source of those funds?

Oliphant did not believe Mulroney's claim that he spoke to world leaders, including France's Francois Mitterrand and Russia's Boris Yeltsin, about the Thyssen vehicles. However, Wolson said there was evidence to support Mulroney's claim that he had an international mandate, including meeting notes taken by a third party and evidence that Thyssen was pursuing an international market for its vehicles.

"Mr. Mulroney was given the money by Mr. Schreiber for Mr. Mulroney to carry on an international mandate," Wolson said.

"But (Justice Oliphant) also found that he couldn't say that Mr. Mulroney had done any work for that retainer."

Mulroney said he was "satisfied, but not surprised" to learn that Oliphant found he did not, when he was prime minister, "apply pressure to or attempt to influence my ministers or other government officials with respect to the promotion or approval of the Bear Head Project. The evidence presented during the inquiry demonstrated that the allegations made against me to that effect were completely false."

Mulroney also said he was pleased that Oliphant "confirmed" that he had not reached any business agreements with Schreiber while he was prime minister, and that he "did nothing domestically to promote Thyssen or its objectives after I left office."