Contaminated wheat, indeed

The story of the AWB's involvement in corrupt dealings with the Saddam Hussein regime in contradiction to the UN's sanctions and Oil-for-Food program (see, and, and) has gotten only more sordid. It now looks like the bribery and duplicity has continued into its dealings with the post-Saddam regime, as well.

The Herald reports:

SENIOR executives from Australia's wheat exporter, AWB, have been accused of discussing paying bribes to "influential people" in Iraq with the help of a BHP-linked company within weeks of the toppling of Saddam Hussein's regime by coalition forces.

Evidence pointing to AWB plans to resume paying kickbacks in the newly liberated Iraq emerged yesterday at the royal commission on the oil-for-food scandal and will be deeply embarrassing to the Howard Government, which committed 1200 Australian defence lives to help overthrow the regime it labelled corrupt and dangerous.

Recall this bit when the UN investigation first suggested the possibility that the AWB had been naughty:

"[Australian Prime Minister John Howard said,] "My dealings with the people in the AWB in the past have always been such that I've found them a very straight up and down group of people and I can't imagine for a moment that they would have knowingly been involved in anything improper." Trade Minister Mark Vaile has also defended AWB. "I wouldn't imagine for a moment that any of the management or the board of AWB would have knowingly been involved," he said. Mr Vaile says the AWB followed all UN guidelines while taking part in the program. Mr Vaile has blamed the United Nations, saying it oversaw the contract." (http://www.abc.net.au/news/newsitems/200510/s1492749.htm)

"These [DFAT]officers were not corrupt," Mr Downer told parliament during a fiery exchange with his Labor counterpart Kevin Rudd. But Mr Rudd said DFAT's evidence before the Senate estimates committee showed "inexcusable negligence" by the government. DFAT laid responsibility for policing the corruption-ridden oil-for-food program squarely with the UN." (http://smh.com.au/news/NATIONAL/DFAT-approved-AWB-oilforfood-request/2005/11/03/1130823328054.htm)

If not corrupt, then what? Marian Wilkinson writes in the Herald,

"We know from internal documents uncovered by the Cole inquiry that Foreign Affairs officials discussed the pros and cons of some AWB schemes to pay fees, in violation of UN sanctions, to the Iraqi regime. The close relationship between the department and AWB is best illustrated by the role of the former AWB chairman, Trevor Flugge. There is already evidence that Flugge took part in talks in Baghdad which resulted in an inflated contract, designed secretly, to pay a kickback to Iraq. Foreign Affairs officials accompanied Flugge and his AWB colleagues to Baghdad at this time, but their role in the negotiations, if any, has yet to be revealed.

Significantly, at the end of the Iraq war, the department turned to Flugge to establish Australia's presence in the occupation government when the war was over in April 2003. The Minister for Foreign Affairs, Alexander Downer, personally announced the appointment of Flugge as a senior agricultural adviser who was to help reform the Iraqi agricultural ministry."

In a prior report, Wilkinson reported,

"One memo bluntly advised senior [AWB] staff: "We have to keep the lid on this." Several other memos indicate officials in the Department of Foreign Affairs and Trade discussed the sanction-busting deal with AWB managers, along with another proposal to pay the Iraqi Government a secret rebate on a contaminated wheat shipment by inflating transport fees. "According to DFAT there is no clear UN protocol for debt repayment that we can find. It is a grey area we would ideally not like to test openly," one memo read.

A later memo in February 2003 indicated the AWB chief executive, Andrew Lindberg, was supposed to personally inform the Howard Government of a scheme to funnel the secret rebate through an Iraqi front company in Jordan, called Alia. "Managing Director only to convey our intentions to the Australia Government at the appropriate time prior to Shipment," read the memo. It also warned that the Government would be "obliged to prevent AWB" from paying the Iraqis directly.

But Mr Lindberg said he could not recall ever approaching the Government on the deal.

In the witness box yesterday, Mr Lindberg often failed to recall key elements of the deal involving Tigris Petroleum and kickbacks paid as trucking fees on the Iraq contracts. This included details of a meeting he attended in Baghdad in 2002 with the Iraqi Minister for Trade. At that meeting, according to several memos, he and other AWB executives agreed with the Iraqis to inflate the wheat price to repay $8 million owed by the Iraqis to Tigris Petroleum, a BHP partner investing in oil in Iraq. The Iraqis also agreed to settle a $2 million contract dispute with the AWB over iron filings in one of its shipments.

Counsel for the inquiry, John Agius, SC, asked Mr Lindberg whether he believed AWB had "deceived" the UN over the Tigris deal. He replied: "I don't know."

Asked if it was "ethical behaviour" to inflate the wheat price and mislead UN officials about its contracts with Iraq, Mr Lindberg replied: "I think it would be better if that was disclosed."

Mr Lindberg said his role was to make every attempt to keep the Iraq wheat contracts, which were "treasured" in the AWB. He said he believed an Iraqi claim about iron filings contaminating a wheat shipment was "a complete hoax" to punish the Howard Government for its pro-US stance in the lead up to the war."

It bears keeping in mind that the AWB is a specially formulated government entity, only fairly recently "corporatised". What is does is hold monopoly power over the sale of Australian wheat. No wheat farmer can export wheat unless the sale is conducted through the AWB. Obviously, given that governments generally abhor monopolies, this one only exists by the grace and legislation of government. It is this closer than usual relationship to the government that is a political scud missile.

As Wilkinson again puts it,

"The problem for the Howard Government is that these illicit payments began before the Australian Wheat Board was corporatised. And AWB, even after it was listed on the stock exchange, continued to see the Department of Foreign Affairs and Trade as its ally in shoring up the claims that it was complying with UN sanctions.

But the evidence of AWB's behaviour raises serious questions for the Government. If officials have any knowledge that AWB was circumventing the UN sanctions, it is not just politically embarrassing. It means the Government was complicit in allowing AWB to rip money off the UN's Iraq escrow account, which was intended to purchase food and medicine for malnourished Iraqis."

The shere audacity of the parties to deny, stonewall, prevaricate and "forget" is exemplified by this action yesterday:

"Australian wheat export monopoly AWB has apologised to the Australian Stock Exchange for a statement it released about its involvement in kickback payments to the regime of Saddam Hussein. In a short statement, company secretary Richard Fuller said it was inappropriate for the company to release the two-page statement, which sheeted home much of the blame over $300 million in payments to Saddam's regime to the United Nations and the Iraqi Grains Board.

"AWB Ltd apologises for the unauthorised release of the statement made by the managing director, Andrew Lindberg," he said in the statement. "Due to the fact that an inquiry into the UN oil-for-food program is currently in progress, it was inappropriate that the statement be lodged."

The statement was released while Mr Lindberg was giving evidence for a second straight day to a Commission of Inquiry, which is examining the role of certain companies in the oil-for-food program and kickback payments to the then Iraq government. In the original statement, Mr Lindberg appeared to contradict evidence presented to the inquiry. Mr Lindberg said in the original statement to the stock exchange that AWB did not know where the $300 million in extra payments eventually finished up, even though it had been revealed the money went into the coffers of Saddam Hussein.

Head of the inquiry, Terence Cole, QC, took serious issue with the statement."

Meanwhile, back at the business-as-usuall AWB, the Herald noted, tucked away at the end of a story buried in the business section,

"AWB also confirmed yesterday that its annual meeting would be brought forward to February 23. The company will use the meeting to ask shareholders to vote on increasing the total amount payable to directors by $400,000 to $1.6 million".