Karlheinz Schreiber paid Brian Mulroney $300,000 in cash as a retainer for unspecified services. Until recently, the understanding is that this money was paid after Brian Mulroney left office. Facing extradition, Karlheinz Schreiber has changed his story, stating that the agreement, including the amount to be paid, was arrived at while Brian Mulroney was counting down the last 48 hours in office.

That shift in time frame has changed everything, much to Karlheinz Schreiber's delight. The opposition Liberals are now Schreiber's closest friends, demanding that this unsavoury character be kept in Canada even though the courts have repeatedly ruled over the last eight years that there is no good reason not to ship Schrieber to Germany where he faces charges of fraud and tax evasion.

Some people wonder is why Brian Mulroney has not been more forthcoming about what the $300,000 was for:

Was Schreiber lying the first time when he said he didn't hire Mulroney until late 1993 or 1994, or the second time, when he said they made a deal at Harrington on June 23, 1993, two days before Mulroney left office? Or is Mulroney lying when he says he didn't make any deal with Schreiber, or anyone else, before leaving office? Regardless, Mulroney has to come forward at some point and explain why he accepted a cash arrangement with Schreiber, and what he did to earn the money.

Perhaps Brian Mulroney does need to explain the money, but right now he can't. What is rarely mentioned is that this $300,000 payment is the subject of a lawsuit, wherein Karlheinz Schreiber is the plaintiff suing Brian Mulroney:

Schreiber filed the lawsuit against Mulroney in March to recoup $300,000, plus interest, that he alleges he gave the former prime minister over three meetings in hotel rooms in New York and Montreal in 1993 and 1994.

In his statement of claim, Schreiber said the cash was to enlist Mulroney's help in establishing an arms factory in Quebec, with a head office in Ottawa, and a pasta business in Ontario.

The lawsuit claimed Mulroney did not follow through on his business commitments. None of the allegations have been proven in court.

Back in March, there was no allegation that the deal to pay the money was arranged while Brian Mulroney was in office.

Like everything else connected to Schreiber, though, this lawsuit has slipped in farce territory:

The businessman suing Brian Mulroney was ordered Friday to pay the former prime minister's full costs for fighting the latest "rare and exceptional'' round of their legal battle.

Ontario Superior Court Justice Frank Newbould ruled that Karlheinz Schreiber must cover Mulroney's $64,155 in costs for contesting a default judgment in the lawsuit. The ruling also covers another motion brought by Schreiber's lawyer to have Newbould recused from the proceedings.

The default judgment, which ordered Mulroney to pay $470,000 to Schreiber, was set aside by the court on Aug. 3.

In his ruling, Newbould stated that the actions taken by Schreiber and his lawyer, Richard Anka, to obtain the default judgment were "egregious and wrong.''

"In this matter there has been sufficiently reprehensible conduct to warrant an award of costs on a full indemnity basis,'' Newbould wrote.

Newbould also ordered Anka to pay Schreiber 25 per cent of the costs, or just over $16,000, because of his conduct during the proceedings.

Here's what happened. Schreiber sues Mulroney and files in Ontario. Mulroney's lawyers argue that Quebec courts have jurisdiction. Instead of filing a statement of defence (which would suggest that they recognize Ontario's jurisdiction in this matter), Mulroney's lawyers ask and receive assurances that a default judgment would not be sought, even though the question of jurisdiction will not be settled until after the deadline for filing a statement of defence. The deadline passes, and Schreiber's lawyer, Richard Anka, gets the default judgment anyway. Mulroney goes ballistic, and all hell breaks loose. The lawyers start writing hate mail to each other, and ultimately Justice Newbould steps in. After examining the situation, he decides that Anka was being a jerk. The judge orders Schreiber to pay Mulroney's legal costs related to undoing the default judgment. He then punishes Anka by compelling him to give Schreiber a 25% discount for being such a lousy lawyer.

All good fun to watch, but the key thing is that the suit is still ongoing.

Brian Mulroney really can't say much about the $300,000. If he says the wrong thing, Schreiber could jump on it and Mulroney could damage his side of the case. If there is a full inquiry, though, held under rules of evidence and with sworn testimony, Mulroney might be able to answer questions (with the guidance of a lawyer) in such a way as not to prejudice this case (assuming it is still ongoing). But if he started talking about it to reporters outside of restaurants, he could seriously compromise his side in the suit.

The funny thing is that Karlheinz Schreiber knows that too. So do the people coaching him, if any. So maybe they picked the payment of the $300,000 as the centre of the new allegations, designed to create a political firestorm and so prevent Schreiber's extradition, knowing full well that Brian Mulroney would be hard-pressed to do more than issue blanket denials with no detail whatsoever.

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