Unless you were watching Mr. Schreiber’s appearance before the Commons’ Ethics Committee on February 25, you would never know that he raised, again and again, the name of Bruce Verchere. And members of this committee asked me, on February 14, several questions about Verchere.
Who is this man? And why does he figure in the Mulroney-Schreiber story?
The short answer is that Verchere was the tax lawyer who managed Mulroney’s blind trust between 1984 and 1993. Verchere is also the central character in Blue Trust: The Author, The Lawyer, His Wife, and her Money, a book I published in 1998.
A native of Kamloops, B.C., he graduated from the University of British Columbia in 1963 with a law degree and began his career as a government tax lawyer in Ottawa.
He married a beautiful woman, Lynne Walters, who was also a brilliant computer systems expert and they eventually moved to Montreal where he developed a large tax practice. Lynne Verchere established a company to produce software she had developed that would run billing and time management systems for law firms; at the same time, she managed the financial aspects of her husband’s law practice.
The Vercheres prospered, with much of their income generated by Lynne Verchere’s business. They bought a large house in Westmount and became part of Brian and Mila Mulroney’s social circle.
Verchere had several well-known clients but the best known were Mulroney and the author, Arthur Hailey, famous for his blockbuster books Hotel and Airport.
In Hailey’s case, Verchere helped him move from California to settle in the Bahamas, a tax haven, in order to avoid punitive U.S. income taxes on earnings from these books and their movie versions.
When Mulroney was elected prime minister in 1984, Verchere managed his blind trust as his financial trustee. He was also his tax lawyer. Both Bruce and Lynne Verchere received patronage appointments from the government during this period.
Verchere developed a skill in hiding money. After his wife sold her company to Prentice Hall in 1987 for nearly $17-million, he moved the money around through Panamanian shell companies and other offshore entities until it finally landed in two banks in Geneva: Darier Hentsch et Cie and Pictet Cie, both specializing in wealth management and infinite discretion.
Bruce Verchere used these banks for some of his other clients as well, including the Haileys.
But to her shock, Lynne Verchere discovered that her husband had put the money out of her reach. Not only had he moved it into Swiss accounts that she couldn’t access – and was spending it recklessly – but he was having a blazing affair with Arthur Hailey’s daughter, Diane, a much younger woman. Adding insult to injury, he and Diane were expecting twins.
With a great deal of effort, Lynne Verchere succeeded in obtaining an injunction to freeze her assets; the injunction, held in the Montreal courthouse, spells out the extent of her husband’s fraudulent activities to hide the money.
And her lawyers made it clear to Bruce Verchere that unless he dumped Diane Hailey, returned to Lynne and gave her back her fortune, she would turn over damaging information to the RCMP and to her husband’s law partners with information about his activities on behalf of others.
A strange coincidence appears at this point. The lawyer acting for Bruce Verchere in these grinding, emotional negotiations was Claude-Armand Sheppard, the same lawyer who, acting for the federal government, questioned Brian Mulroney three years later when Mulroney sued the government and the RCMP for libel. It was Sheppard who, in 1996, asked the former prime minister about his relationship with Karlheinz Schreiber and received the vague answer about an occasional cup of coffee together.
Verchere agreed to his wife’s conditions. On August 3 an out-of-court settlement was signed and he moved back into the family home. On August 28 he walked into his bathroom with a shotgun, put the barrel in his mouth and pulled the trigger. Mulroney attended his funeral as a pallbearer.
As the Globe and Mail reported earlier this month – on February 12, 2008 – “Mr. Schreiber has also testified that in the early 1990s, Mr. Doucet asked him to send a portion of the secret commissions from the 1988 sale of Airbus airplanes to Air Canada to Mr. Mulroney’s lawyer in Geneva. Mr. Doucet vigorously denied the claim, calling it a ‘fabrication. I did not know any lawyers in Geneva, Switzerland, or indeed anywhere else in that country,’ he told the committee.”
This week Schreiber went back on the attack.
First he told the committee that the lawyer in Geneva was Bruce Verchere.
When they appeared not to notice, he hauled them back to his statement saying, “You guys haven’t listened.” He stated plainly that Verchere was Mulroney’s financial trustee and that the “lawyer in Geneva” was Bruce Verchere.