Wednesday, September 27, 2006

AWB: The story, and denials, continued

Now that the Courts have determined that the AWB cannot hide behind many documents AWB wanted to keep secret, the shear duplicity implied by prior testimony becomes incredulous. For background, start with this, AWB: The story so far.

Bribe exposed in released AWB notes
THE Howard Government's man in post-invasion Iraq allegedly admitted to bribing Saddam Hussein to secure contracts for AWB, the Cole inquiry has been told.
The alleged admission from former AWB chairman Trevor Flugge contradicts his sworn evidence earlier this year that he knew nothing of $300 million in bribes the monopoly wheat exporter paid the Iraqis.

The claim is a further embarrassment to the Government, which paid Mr Flugge $1 million to help stamp out corruption in the war-torn country after the fall of Saddam in 2003.

It was contained in hundreds of documents AWB had tried to suppress, finally released yesterday after a lengthy court battle.

The documents show Mr Flugge, AWB's chairman from 1995 to 2002, met lawyer Chris Quennell two years ago to discuss US complaints about AWB's Iraqi dealings.

Mr Quennell's notes show Mr Flugge admitted to paying the Saddam-controlled Iraqi Grain Board, breaching UN sanctions.

Jim Cooper, AWB's in-house lawyer who sat in on the Flugge-Quennell meeting, returned to the witness box yesterday to discuss his recollection - or otherwise - of events.

"If he actually said that, I don't recall that he did," Mr Cooper said.

"My strong impression was (there was) little useful information from Trevor Flugge."

When he appeared at the inquiry in February, Mr Flugge denied that AWB had knowingly funnelled the kickbacks to Saddam through the trucking company - which was 51 per cent owned by the Iraqi Government - or otherwise.

The newly-released documents also show AWB received legal advice three years ago that its payments to Iraq may be illegal.

The 2003 advice from law firm Blake Dawson Waldron said there was no indication the trucking fees were for genuine transport services in Iraq.

It also said AWB would have committed an offence if the money was paid to influence the Iraqi government.

Asked about his interpretation of the advice, Mr Cooper said: "I never felt we had a clear understanding of the facts. "I personally (felt) we never got to the bottom of the facts on the (UN) oil-for-food matter."

Cole inquiry finds farrago of AWB deceptions
AWB's legal advice was laid bare to the Cole inquiry yesterday, a week after the company lost a Federal Court battle to avoid handing over more than 350 documents. The commission found a farrago of untruths, manipulations and misjudgements that destroyed any surviving shreds of the company's claims to innocence.

Among the documents was legal advice provided to the company's top lawyer, Jim Cooper, by law firm Blake Dawson Waldron in August 2003 that AWB's payment of trucking fees in Iraq may have breached numerous Australian laws as well as United Nations sanctions.

"It is possible that AWB and/or certain of its employees have committed breaches of the Criminal Code Act (and) … Crimes Act. It is possible that AWB's conduct has resulted in a contravention by Australia of UN resolution 986," the newly released advice reads.

It notes there is no evidence that "trucking fees" paid to front company Alia were used to transport wheat and describes the money as a bribe for the Iraqi regime. All of this was known by AWB executives more than two years before they pleaded innocence at the Cole inquiry.

The inquiry was also transported back into the AWB legal bunker of early 2005, when the company was in damage control during the United Nations Volcker inquiry. In a "brainstorming session", top company executives, including then managing director Andrew Lindberg, mapped out AWB's "shortcomings" — a list that became public yesterday.

Mr Cooper, who took notes of the meeting on a whiteboard, said the extraordinary list did not record admissions by the senior management but "worst-case scenario" guesses of what the UN report might find.

[Trevor Flugge] will have some explaining to do after notes detailing a conference call he participated in were tendered yesterday. Taken by lawyer Chris Quennell, they quote Mr Flugge reeling off a note-perfect explanation of the shady system used to funnel money to Iraq.

The commission heard that Blake Dawson Waldron also advised AWB that its plans to recoup an $8 million debt owed to BHP-linked company Tigris Petroleum might be in breach of UN sanctions.

Emails show the advice was received by AWB's chief lawyer, Mr Cooper, who passed it on to senior managers but recommended that the deal proceed anyway. Mr Cooper told the inquiry yesterday that the recommendation was a mistake made in the email and did not reflect his true advice.

Some of the biggest names in the legal fraternity — including Robert Richter, QC, and Richard Tracey, QC, now a Federal Court judge — were also drawn into the fray. The inquiry was told that Mr Lindberg had obtained legal opinions from the two top barristers before approving the Tigris deal.

Mr Richter advised the company that although the AWB staff who drew up the deal to recoup money for Tigris might be found to have committed misleading conduct, they would not be likely to be found guilty of an offence under Australian law. His advice appears at odds with that given by Blake Dawson Waldron.

Earlier, the inquiry heard that in-house lawyer Jessica Lyons gave advice about another AWB Iraq deal — the plan to compensate Iraq for a wheat shipment tainted by iron filings, described the deal as "dodgy".

AWB lawyer quizzed about secret documents
An AWB in house lawyer has been reduced to tears at the resumption of public hearings of the Cole inquiry in Sydney.

Witness Jessica Lyons has been quizzed about two previously secret documents released to the inquiry by the Federal Court.

The documents from January 2003 show exchanges between Blake Dawson and Waldren's solicitor Hazel Brassington and Ms Lyons.

They discuss changes to the freight arrangements of two wheat contracts for the Iraqi Grains Board.

When senior counsel assisting John Agius asked Ms Lyons who authorised the change, she told the inquiry she believed it was AWB marketing executive Chris Whitwell.

Earlier, Mr Whitwell and former AWB employee Michael Long made an application to keep secret, names of two legal advice documents, claiming their publication would prejudice them and affect the conduct of any possible future jury trial.

One of AWB's in-house lawyers has denied devising a scheme that would allow the wheat exporter to make an illicit $US2 million payment to Saddam Hussein's regime.

The head of the inquiry into the kickbacks scandal, Terence Cole, QC, accused AWB lawyer Jessica Lyons of suggesting ways AWB could get around United Nations sanctions which banned any payments to the Iraqi government.

Newly released documents shown to the inquiry show how Ms Lyons provided AWB sales and marketing executive Chris Whitwell with legal advice about how to make the payment in January 2003.

AWB had agreed to pay the money to the Iraqi Grain Board (IGB), which had accused AWB in 2002 of sending a shipment of wheat contaminated with iron filings.

AWB never ended up paying the money, which the Iraqis wanted funnelled through a Jordanian based trucking firm part-owned by Saddam's regime, because of the US-led invasion of Iraq in March 2003.

However, just three months before the invasion, Mr Whitwell asked Ms Lyons for advice about whether any compensation could be paid for the iron filings claim.

Ms Lyons emailed him on January 24, 2003, noting that UN resolutions expressly forbade any payments to Saddam's government.

However, she set out three suggestions about how the payments could possibly be made.

Ms Lyons suggested the payments could be made in instalments, made to a company other than the IGB and based outside Iraq, and be recorded as being part of a settlement between the Iraqis and AWB over the contaminated wheat shipment from 2002.

"If we ensure that the above requirements are met then I consider it will be at least arguable that we are not 'making funds or financial resources available' to the Iraqi government," Ms Lyons wrote.

Commissioner Cole today suggested to Ms Lyons that she was providing advice on how AWB could get around UN sanctions.

"Not to put too sharp a point on it, you have said in first few paragraphs (of the email) we can't pay money to Iraq and then said here's a way of getting around the sanctions," he said.

But Ms Lyons said what she wrote was a "legalistic interpretation" of how legitimate payments could be made.

"At the time I genuinely considered that payment to the transport company could be made that would not fall foul of the UN sanctions," she told the inquiry.

Ms Lyons denied suggestions by counsel assisting the inquiry John Agius, SC, that she had put her ethics as a lawyer aside and succumbed to pressure to come up with a scheme so AWB could get around UN sanctions and still make the payments.

"There was certainly an overwhelming commercial imperative to make this payment ... I think there was a commercial imperative to make the payment but I absolutely don't believe I would have been proposing something that would have been a breach of the sanctions.

"But I did have concerns about this advice after having provided it."

Robert Hill denies shady AWB deal
FORMER defence minister Robert Hill has denied knowing anything about AWB's illicit payments to Saddam Hussein's regime.

The former senator, who was recently appointed Australian ambassador to the United Nations, today became the latest government official to provide a statement to the inquiry into the $290 million AWB kickbacks scandal.

Lawyers for the inquiry had asked Mr Hill about his association with British businessman and former BHP executive Norman Davidson Kelly.

Vaile denies bolting from AWB report
Deputy Prime Minister Mark Vaile has denied he is switching from the trade portfolio to escape parliamentary scrutiny of the AWB bribery scandal.

Mr Vaile has swapped portfolios with Transport Minister Warren Truss to concentrate on leading the Nationals ahead of next year's election.

Labor says Mr Vaile's decision to offload trade effectively puts him in a "witness protection program" to shield him from the expected fallout from the AWB inquiry.

But Mr Vaile, who was forced to give evidence to the Cole inquiry earlier this year, insists he has nothing to hide.

The Opposition argues Mr Vaile will be able to dodge questions in parliament about his government's handling of Australia's biggest trade scandal.

Under parliamentary guidelines, ministers cannot be made to answer questions in parliament about portfolios they no longer hold.



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