Former prime minister Jean Chretien suggested to reporters that a public inquiry may not be the best way to get to the bottom of the Mulroney-Schreiber affair.

"It's not the best way to solve problems," Chretien told reporters, in his first media appearance since undergoing heart bypass surgery last month. "We have police for these things. But there will be an inquiry, so we will live with an inquiry."

Chretien was speaking at a public signing of his biography in Montreal on Sunday.

German businessman Karlheinz Schreiber alleged in a recent court affidavit that he first discussed business dealings with Brian Mulroney while the latter was still prime minister. Schreiber eventually paid Mulroney $300,000 in cash from 1993 to 1994.

The federal government has asked David Johnston, president of the University of Waterloo, to review the affair and propose a mandate for a full inquiry.

Mulroney has denied doing anything improper and supports the calling of a public inquiry.

Liberal Leader Stephane Dion has stated that he wants the inquiry to also examine some actions by Prime Minister Stephen Harper's government. The Liberals have raised alarm bells about a letter that Schreiber sent to the Prime Minister months ago, outlining his allegations, but the letter apparently never reached Harper.

Mulroney sued the government and received a $2.1 million settlement and an apology after the then-Liberal government wrote the Swiss government in 1995 and alleged that Mulroney and Schreiber might have been involved in a kickback scheme involving the Airbus deal.

In defence of his government's settlement with Mulroney in 1997, Chretien said he had no choice but to accept his fellow former-PM's account of events.

"The former prime minister swore that he never had any business with Mr. Schreiber. We could not prove the contrary, so the RCMP looked like they made a mistake," Chretien told reporters.

Chretien, 73, also said he had fully recovered from his heart surgery.

"I feel good," he said. "(The doctors) did lots of good plumbing and the heart was in good shape."

When asked if he had any advice for current Liberal Leader, Chretien merely encouraged Stephane Dion to "keep working hard."

Prepared with a report by CTV's Jed Kahane in Montreal