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Last Updated: Saturday, 10 November 2007, 00:34 GMT
Canada ex-PM under investigation
Brian Mulroney
Opposition parties have called for a public inquiry into the allegations
Canadian Prime Minister Stephen Harper has announced an investigation into allegations about former leader Brian Mulroney's dealings with a businessman.

Mr Mulroney was prime minister from 1984 to 1993.

Karlheinz Schreiber, a German-Canadian businessman, is fighting extradition to Germany on bribery and fraud charges.

Mr Schreiber alleges he negotiated a $300,000 (152,000) lobbying deal with Mr Mulroney two days before he stepped down as prime minister.

In June 1993, Mr Schreiber was approached by Mr Mulroney's former chief of staff Fred Doucet, who told him Mr Mulroney needed financial help, the businessman said.

From 1993 to 1994, Mr Schreiber claims he met Mr Mulroney three times in hotel rooms in Montreal and New York and handed over envelopes stuffed with cash.

New development

Mr Schreiber is currently suing Mr Mulroney over the money, saying that he failed to honour his side of the deal, which was to help him develop a chain of pasta restaurants and secure government approval for an arms factory in Quebec.

None of the allegations have been proven in court.

Previously Mr Schreiber had said he made the payments after Mr Mulroney had stepped down, but in an affidavit on Thursday he says they were discussed before he left office.

It was this development which prompted Mr Harper to act. He has promised to appoint an independent third party to investigate.

Mr Harper said his government must investigate the allegations because they relate to Mr Mulroney's term in office and he must "always protect the office of the prime minister".

The court papers filed by Mr Schreiber also draw Mr Harper into the lawsuit for the first time by claiming Mr Mulroney was to meet the prime minister last summer to talk about the matter.

Mr Harper says he did host Mr Mulroney but the matter was not discussed.

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