"All of a sudden, out of the blue, I'm a criminal," he testified at a public inquiry into his dealings with German-Canadian businessman Karlheinz Schreiber.
"This had serious consequences and it was extremely difficult (for Mulroney's family)," Mulroney said.
The Royal Canadian Mounted Police accused Mulroney in 1995 of accepting kickbacks from Schreiber in 1988 on a $1.8 billion sale of Airbus SAS aircraft to Air Canada, when Mulroney was prime minister. The allegations were made in a letter the Mounties sent to the Swiss government seeking access to secret bank-account records.
Mulroney said Wednesday the letter accused him of being a "criminal" from the time he was sworn in Sept. 17, 1984, until he left office June 25, 1993.
A Mulroney aide later accused two reporters of causing the former prime minister to cry by laughing "like a pair of schoolchildren" as he testified about the Airbus affair.
The Toronto Star reported no reporters were seen laughing during Mulroney's testimony.
Mulroney later testified he told the truth in 1996 when he testified in a legal hearing he "had never had any dealings" with Schreiber -- even though he testified Wednesday he had taken $225,000 in cash from him.
He explained Wednesday that when he gave his 1996 testimony, he was referring only to the Airbus affair.
Schreiber -- a German-born Canadian citizen who is a lobbyist, fundraiser and arms dealer -- faces extradition to Germany to face charges of fraud, bribery and failure to pay taxes on $20 million in commissions related to sales in the 1980s of Airbus jets.
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