Global Policy Forum

A German-Canadian Fights Extradition:


By James Brooke

New York Times
January 12, 2000

Carlheinz Schreiber, a millionaire German arms broker, is the kind of international figure more normally found under the palm trees of Rio de Janeiro than on the snowplowed sidewalks of Toronto. Mr. Schreiber, a persuasive man who made his fortune in private deals, is fighting extradition from Canada to Germany to testify in a corruption investigation of Helmut Kohl, the former German chancellor who led the conservative Christian Democratic party for a quarter-century.

He openly acknowledges handing an envelope stuffed with one million German marks to two Christian Democrat emissaries in a Swiss restaurant in July 1991, when Mr. Kohl was in power. The money, he said in a telephone interview on Friday, was campaign money, not bribe money. But the cash, about $670,000 at the time, never appeared in the party's official accounts, German government investigators say.

"What I do not understand is why he did not allow the money to go to the official account first, then to a special account" Mr. Schreiber said of Mr. Kohl.

On Jan. 3, German prosecutors began an investigation of Mr. Kohl to see if he should face criminal charges for campaign finance violations, notably the use of secret party accounts. With Mr. Kohl's reputation as the father of German reunification possibly at stake, German investigators have increased pressure on Canada to send Mr. Schreiber, a dual Canadian-German citizen, back to Germany. On Monday, Mr. Schreiber's name surfaced again, this time in connection with a second payment to the party, a bag of $100,000 German marks, or about $52,000, handed over in 1994.

But in the interview, Mr. Schreiber, 65, a silver-haired millionaire, sounded unruffled by a week spent in early September in a detention center in Toronto where the extradition fight began. In a tribute to his skill at making friends in high places, two major contributors to his $815,000 bail were former Canadian cabinet members. They seemed unperturbed by hopscotching ahead of a German warrant seeking him for questioning. Since May 1997, when the warrant was issued, he has moved from from his mansion near Munich to his apartment near St. Moritz, Switzerland, then, skipping his mother's funeral in Germany last summer, he moved into a luxury hotel in Toronto, registering under an assumed name.

"Karlheinz is basically an honest and decent person," Elmer MacKay, a former solicitor general in the Conservative government of Brian Mulroney who helped raise the bail. "I am concerned that this firestorm in Germany could burn Karlheinz," he said in an interview.

In Canada, Mr. Schreiber started a real estate businesses in Alberta in the 1970's, then in the 1980's became known as Bavaria's man in Ottawa. A friend of the late Franz Josef Strauss, then governor of Bavaria and chairman of Airbus Industrie, Mr. Schreiber helped broker the largest aircraft purchase in Canadian history and Airbus' first beachhead in North America: the $1.5 billion sale of 34 Airbus jets to Air Canada in 1988, then a state airline.

Lobbying for other German companies, he brokered the sale of 12 Messerschmitt helicopters for the Canadian Coast Guard, and unsuccessfully pushed a plan by Thyssen Industrie A.G. to build armored vehicles in Nova Scotia. He also tried to persuade BMW to set up a car plant in Quebec.

Mr. Schreiber has not been formally accused of any crime, but he is wanted in Germany for a tax evasion inquiry based on commissions he earned on those deals and one in the Mideast: the 1991 sale of 36 Thyssen-made Fuchs tanks to Saudi Arabia. After raiding his house in Bavaria in 1995, German investigators began studying his schedule and bank records, trying to decipher a system of coded Swiss bank accounts to see if Mr. Schreiber paid kickbacks to Canadian or German officials.

"I am sure he paid something," said Giorgio Pelossi, a former business partner who had a falling-out with Mr. Schreiber in 1991 and is now a prosecution witness. "He told me everything: who he had to pay and so on," Mr. Pelossi said in a telephone interview from his home in Lugano, Switzerland. "They found the evidence later on."

Asked about Mr. Pelossi's statements, Mr. Schreiber called them "a lie." "This is a political game," he said, noting that center-left governments in Germany and Canada are now investigating business deals made a decade ago under center-right governments in Germany and Canada.

Edward Greenspan, his Toronto lawyer, has derided attempts by investigators to decode the Swiss bank accounts as "a game of Scrabble." Mr. Schreiber, a self-made man who got his start as a buyer of carpets in Iran, has bounced back from his jail stay to take on the German and Canadian governments with a battery of legal and press pyrotechnics. In interviews with German newspapers and television, he has demanded that the Christian Democrats return to him the one million marks, claiming that while he does not know what happened to the money, it appears not to have been used for legitimate campaign work.

On the legal front, he has hired Mr. Greenspan, one of Toronto's most formidable criminal lawyers. Last year, American Lawyer magazine called Mr. Greenspan and his brother, Brian, "Canada's Answer to the Dream Team," in reference to their success in beating back American extradition requests for celebrity clients. Mr. Schreiber has sued Canada and Germany for $690,000 each for "personal injury and mental distress" caused by his detention last September. He also has sued Canada's Justice Ministry for $28 million, saying it illegally requested his confidential bank records from the Swiss.

With a host of other legal challenges up his sleeve, Mr. Greenspan predicted that there is little chance that German prosecutors will see his client on German soil any time soon. Mr. Greenspan said that the extradition request was made under an "investigative warrant" that demands Mr. Schreiber's return to Germany to answer questions about allegations that he failed to pay more than $14 million in German taxes from 1988 to 1993.

"If the Canadian police arrested someone and detained them in jail for the purpose of investigation, for even 20 minutes, it would be unconstitutional," Mr. Greenspan said. In addition, he said, Canada's extradition treaty with Germany does not list tax evasion as an extraditable crime. Vowing to challenge the constitutionality of Canada's brand new Extradition Act, which streamlines expulsion procedures, he said, "This case has all the earmarks of ending up in the Supreme Court of Canada."

But, according to a supporting document for Mr. Schreiber's arrest, public prosecutors in Augsburg, Germany, wrote in late August that prosecutors expect to issue an expanded warrant that "will also include bribery, and aiding and abetting criminal breach of trust. "We think that Mr. Schreiber has German citizenship, and so he has to come to Germany and be charged in Germany," Hans-Jürgen Kolb, a deputy state prosecutor, said by telephone from Augsburg. "We think Mr. Schreiber's accusations are not right."


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