The former accountant of Karlheinz Schreiber said he was told by the German-Canadian businessman that Brian Mulroney was supposed to receive some of the proceeds from the sale of Airbus jets to Air Canada.
But Giorgio Pelossi also testified before the House of Commons ethics committee on Thursday that he had no first-hand knowledge of the alleged arrangement and that Schreiber "lied all the time."
Speaking by video link from Europe, Pelossi said he and government lobbyist Frank Moores had set up two secret Swiss bank accounts. The accounts were for Moores, now deceased, and Mulroney, Pelossi said.
"At the time we set up the account, [Schreiber] told me if the deal with Airbus would be done, he will have to give 25 per cent to Mr. Moores and 25 per cent to Mr. Mulroney," Pelossi said.
"I know now that he didn't but it was supposed to."
The Swiss accountant also said that he didn't know if Mulroney was aware of this alleged arrangement.
Pelossi denied past suggestions that the second account was for Moores' wife, Beth Moores.
"[Moores] invented the story that it is for his wife, but Mr. Schreiber told me exactly it is for Brian Mulroney."
Mulroney has always denied benefiting in any way from the $1.8-billion government contract given to Airbus in 1988 to provide new jets to Air Canada.
Mulroney, who was prime minister when the contract was signed, was investigated by the RCMP for his role in the deal. Mulroney launched a libel suit over the allegations and was awarded a $2.1-million settlement from the federal government in 1997.
Pelossi said he doesn't believe money was ever deposited into either account but that his former boss always dealt in cash when paying certain commissions.
Pelossi also admitted to the committee that most of the information he was relaying was told to him by Schreiber.
Asked whether Schreiber had ever lied to him, Pelossi said: "Yes. He lied all the time. He is still lying.
"When I read newspapers - his statements -I know that he's lying."
Pelossi was Schreiber's accountant and money manager from 1969 until 1991, when the two had a major financial dispute.
Pelossi became the star witness for German investigators in a government bribery scandal that tarnished longtime chancellor Helmut Kohl and his party, the Christian Democratic Union.
With files from the Canadian Press