OTTAWA - Brian Mulroney waged an "unrelenting campaign" to try to keep his business dealings with Karlheinz Schreiber from coming to light, says the man who broke the story.

William Kaplan, testifying Thursday at a public inquiry, said the former prime minister, in a series of interviews and phone calls in 2003, repeatedly insisted he had done nothing wrong and there was no need to disclose the transactions.

"Mr. Mulroney did not want the story of the cash payments to become public, and encouraged me on a number of occasions not to report on that," Kaplan told the inquiry headed by Justice Jeffrey Oliphant.

Mulroney's deal with Schreiber to lobby for a controversial project to build German-designed armoured vehicles in Canada has since become the main focus of the probe ordered by Prime Minister Stephen Harper.

Schreiber says he paid Mulroney $300,000 to promote the so-called Bear Head project. He claims the deal was struck just before Mulroney left office in 1993 although the money didn't change hands until later.

Mulroney puts the total payments at $225,000 and says he did nothing illegal or unethical. He says his lobbying was aimed at foreign political leaders, not Canadian politicians or officials.

Kaplan, a lawyer by profession, first reported the transactions in an article in the Globe and Mail in November 1993 and later elaborated on them in a book.

Notes of his interviews with Mulroney indicate the former prime minister adamantly denied he had given misleading testimony at a 1996 hearing in a libel suit he had launched against the Liberal government of Jean Chretien.

Mulroney said at that hearing he knew Schreiber only casually, had coffee with him a few times after leaving office and "that was it."

He has since said he wasn't asked directly about their cash transactions and would have answered more fully if the right questions had been posed.

Kaplan's notes also indicate that Mulroney told him the RCMP had thoroughly examined the matter as part of an earlier probe of the sale of European-built Airbus jets to Air Canada in the 1980s.

"They investigated that and concluded it was all clean as a whistle," Kaplan quoted the former prime minister as saying.

The Mounties have publicly contradicted that, saying they weren't aware of the cash payments from Schreiber. Chretien and former Liberal justice minister Allan Rock have also said they knew nothing of the dealings.

Mulroney sued for libel after it was disclosed the RCMP and Justice Department had sent a letter to Swiss authorities in 1995 accusing him of conspiring with Schreiber and former Newfoundland premier Frank Moores in an alleged kickback scheme linked to the Airbus sales.

The Chretien government settled the suit in 1997 with a $2.1-million payment to Mulroney.

Kaplan, who had written an earlier book about the Airbus affair that was sympathetic to Mulroney, said he felt betrayed when he learned belatedly of the money Mulroney accepted from Schreiber to lobby for the Bear Head project.

It was disturbing, he said, that "a former prime minister of Canada met with someone in a hotel after he left office -- someone he had dealt with in an official capacity -- and received a cash payment."

Kaplan readily acknowledged, under cross-examination by Mulroney's lawyer Guy Pratte, that he had no evidence Mulroney had broken any law -- but he said that wasn't the point.

Mulroney had a moral duty, he said, to go beyond "legal technicalities" and disclose his all dealings with Schreiber, whether they occurred during or after his time in office.

"He had an obligation, because of the public trust he enjoyed as prime minister, to be fully forthcoming."

In his interviews in 2003, Kaplan said, Mulroney argued he didn't want to go public with anything that might impinge on the extradition proceedings Schreiber faced. Then as now, Schreiber was fighting removal to Germany on fraud, bribery and other charges.

Mulroney further maintained that all his dealings were above-board and he had reported his income from Schreiber for tax purposes in Canada -- but he neglected to mention he didn't do so until 1999, six years after the first payment.

In an emotional confrontation just before the 2003 newspaper article was published, Kaplan said he rejected Mulroney's explanations as "not good enough." The two men haven't spoken since.