Australia to investigate Iraq kickback allegations

By Ray Marcelo
November 10, 2005
Financial Times
Original Source: http://news.ft.com/cms/s/3c7a9870-51db-11da-9ca0-0000779e2340.html

The Volcker report on the scandal-plagued Iraq oil-for-food programme could continue to embarrass more governments after Australia on Thursday gave a local inquiry special powers to probe an alleged kickback involving Australia’s wheat exporter.
The report by Paul Volcker, former US Federal Reserve chairman, found that the Australian Wheat Board (AWB), the nation’s wheat export monopoly, in October 2000 paid almost A$300m to Saddam Hussein’s regime.
Mr Volcker found the AWB, under the guise of paying transport fees, had unknowingly paid the money to a Jordanian trucking company that was a front owned by the Iraqi government.
Australia’s government, which initially resisted further inquiry, changed its mind after the United Nations urged all governments implicated in the scandal to investigate possible breaches of local laws.
The issue has become deeply politicised in Australia after the opposition Labor party accused the conservative Liberal-National coalition government of negligence in handling the affair.
Kevin Rudd, Labor’s foreign affairs spokesman, has demanded that a Royal Commission, a quasi-judicial body that can compel witnesses to give evidence and produce documents, investigate the scandal.
But John Howard, prime minister, on Thursday announced that an independent inquiry with some powers of a Royal Commission would be enough. “We are, to the letter, responding to the request made by the Secretary General of the United Nations,” Mr Howard told parliament.
Mr Rudd accused the government of trying to avoid “one of the biggest scandals involving any Australian government at any time.”
“John Howard has announced a 100 per cent, rolled gold whitewash of his own government's role in approving this $300m slush fund arrangement with Iraq,” he added.
Australia’s inquiry, to be chaired by Terrence Cole, a former NSW Supreme Court judge of appeal, will begin soon and is due to report by March 31 2006. But its terms of reference appear to be narrow.
The inquiry, for example, is unlikely to hold a rare investigation of Australia’s Department of Foreign Affairs and Trade, which in 2000 advised AWB that payments to an unnamed Jordanian trucking company would not breach UN sanctions.
The inquiry’s terms of reference provide for an investigation into the actions of AWB and the small contracts of two other Australian companies. The inquiry is also unlikely to investigate when the Australian government first became aware of the transport deals.
But the record of past inquiries with even less powers suggest investigations could still raise uncomfortable questions for the government.
The Australian government and AWB say the UN had full administrative control of the oil-for-food programme and had approved of AWB dealings.