OTTAWA - Lawyers for Karlheinz Schreiber are voicing renewed fears that he may be booted out of Canada before a public inquiry into his business dealings with Brian Mulroney has finished its work.

"I don't want to be put in a position where I wake up one day and get a phone call saying that they've whisked him away," Edward Greenspan, the head of Schreiber's legal team, said Monday.

He warned that he's ready to go back to court if necessary to fight yet another round in a long-running battle to block Schreiber's extradition to Germany, where he's wanted on charges of fraud, bribery and tax evasion.

The warning came on the eve of Mulroney taking the stand at the inquiry headed by Justice Jeffrey Oliphant, who is delving into a lobbying deal in which the former Conservative prime minister hired on with Schreiber to promote a project to build German-designed armoured military vehicles in Canada.

Mulroney, who spent much of the last two days closeted with his own lawyers, was all smiles Monday evening as he emerged from a black sedan and strode into a downtown hotel.

He stopped to chat with a group of onlookers, hugging one woman and grinning broadly as he posed for pictures with tourists.

His expression grew more serious when a journalist asked how he felt about his impending appearance at the inquiry.

"Well, we'll see," he responded.

The main focus of Oliphant's work has been the so-called Bear Head project, which would have seen the German firm Thyssen AG set up a plant - first proposed for Cape Breton and later for Montreal - to build and export light-armoured vehicles.

Schreiber says he paid Mulroney $300,000 to lobby for the project in 1993-94. He maintains the deal was struck just before Mulroney left office, although the money didn't change hands until later.

Mulroney admits to taking $225,000, the sum he declared for income tax purposes - although he didn't report the cash payments until six years after they started.

The former prime minister says he broke no laws or ethical guidelines and confined his lobbying to foreign political leaders in search of export markets for the Thyssen vehicles.

A forensic accounting report has indicated the money paid to Mulroney likely came from commissions Schreiber collected as a middle-man in the earlier 1988 sale of European-built Airbus jets to Air Canada.

But there's been no evidence Mulroney knew that. He sued for libel after the RCMP accused him in 1995 of taking kickbacks in the Airbus affair and won a $2.1-million settlement. No criminal charges were ever laid.

Advisers say Mulroney is looking forward to the chance to tell his side of the story in the testimony that starts Tuesday and is expected to last at least three days.

Greenspan, for his part, insisted his renewed legal offensive on Schreiber's behalf wasn't an effort to shift the spotlight away from the former prime minister's version of events.

His moves were sparked, he said, by the refusal of Justice Minister Rob Nicholson to explain exactly how long he intends to delay enforcement of the extradition order now hanging over Schreiber's head.

Nicholson ruled last year that Schreiber could stay in the country long enough to participate in the Oliphant inquiry. But it's never been clear whether that meant until the end of the judge's work or just until Schreiber finishes his own testimony.

Greenspan said he's also written two letters to Nicholson raising new legal arguments against extradition, even after the inquiry is over.

He contends that a recent Ontario Court of Appeal ruling in another case cast doubt on the legality of the proceedings against Schreiber. And he argues as well that the present German-Canadian extradition treaty was never properly ratified by Parliament.

Greenspan said Nicholson has a legal obligation to answer his arguments - but has failed to do so since the material was sent to him last October.

"If we don't get an answer in the next little while I will go to court," he said.

Schreiber said the silence from Nicholson leads him to believe the Tory government will try to move against him sooner rather than later.

"So now we have to see what legal remedies we are gong to take," he said.

Darren Eke, a spokesman for Nicholson, declined to offer a response. "We don't comment on extradition cases," he said.

Schreiber appears safe from any move to evict him from Canada for the time being, since he technically remains under subpoena from Oliphant. But he fears that could change after his expected final day of testimony next week.

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