Australian Panel Focuses on Possible Government Role in Bribes and Kickbacks in Iraq 
By Raymond Bonner
February 3, 2006
The New York Times
Original Source: http://www.nytimes.com/2006/02/03/international/asia/03australia.html

SYDNEY, Australia, Friday, Feb. 3 — The leader of a high-level investigation here into corruption in the United Nations oil-for-food program said Friday that it would be examining the Australian government's role as it continues hearing testimony that the country's main wheat exporter secretly poured $220 million in kickbacks and bribes into the Iraq treasury. 
That sum makes the exporter — a privatized version of a former government agency — the single largest payer of the illicit millions that bolstered the government of Saddam Hussein through years of sanctions. The disclosures before the investigating panel, now in its third week of hearings, have created a major scandal for the conservative government of Prime Minister John Howard.
Some testimony has indicated that the exporter, AWB Ltd., was negotiating a deal to pay $8 million to a front company for the Iraqi government in early 2003, as American troops massed for the invasion of Iraq, where they were joined by Australian soldiers. Australia has been a chief United States ally in Iraq.
At the Friday morning session, the panel's commissioner, Terence Cole, said his first responsibility was to determine whether AWB had violated any laws, including whether it had defrauded the Australian government. But that, he said, required looking further into what the government, particularly the Foreign Ministry, had known of its dealings. 
As a matter of principle, said Mr. Cole, who is 68 and a retired state supreme court justice, a person or organization could not impose upon or defraud the government if the facts alleged to give rise to such imposition or fraud were known to the commonwealth. 
His announcement followed the testimony on Thursday of an AWB executive, Michael Long, that in 2003, he forwarded a memorandum that discussed the kickbacks from the Coalition Provisional Authority to the Foreign Ministry.
The Australian Wheat Board was privatized as AWB Ltd. in mid-1999 but retains the monopoly on exporting bulk wheat from Australia, whose shipments are valued at more than $4 billion a year. It has not denied making millions of dollars in payments in the deals with the Iraqis, but company officials told a United Nations panel investigating oil-for-food corruption that they thought the money was for inland transportation. 
However, on Friday, a former AWB executive, Mark Emons, said that in 1999 when the Iraqi government first asked for a premium on deliveries, he had no doubt, none whatsoever, that the $12 a ton transportation fee imposed by Iraq was going to the Iraqi government.
The Howard government helped the company get the Iraqi contracts, worth more than $2 billion over the seven years the oil-for-food program operated, and it has repeatedly defended it against kickback charges.
On Friday, Mr. Howard said the government had not known of any bribes. I didn't know, my ministers did not know and, on the information I have been provided, I do not believe the Department of Foreign Affairs knew AWB was involved in the payment of bribes, he told Australian television, according to Bloomberg News. 
A panel commissioned by the United Nations released a report in October detailing the illicit monies paid by companies from France, Russia and other countries, as well as Australia. Paul A. Volcker, who led the panel, called on those countries to investigate the activities of their companies; only Australia has done so, Australian officials have said.
The Cole commission has subpoenaed reams of internal AWB documents, including e-mail messages, faxes, trip reports and contracts that the company did not turn over to the United Nations committee. Its chief counsel, John Aguis, and Mr. Cole have been aggressive in questioning AWB executives about their knowledge, using words like dissembling, dishonest and sham to describe testimony.
The government's defense of AWB has taken several forms. In June 2003, when U.S. Wheat Associates, an industry group in Washington, wrote to Secretary of State Colin L. Powell saying AWB had been inflating the price of wheat and some of the excess money may have gone to Mr. Hussein's family, Australia's trade minister called the charges slanderous and outrageous.
In October 2004, when Senator Norm Coleman, Republican of Minnesota and chairman of the Senate Permanent Subcommittee on Investigations, had AWB in his sights as part of his inquiry into the oil-for-food program, the Australian Foreign Ministry sent its ambassador in Washington, Michael Thawley, to lobby Mr. Coleman against doing so. The visit was reported by The Sydney Morning Herald on Tuesday. 
On Wednesday, Mr. Coleman sent a strong rebuke to Mr. Thawley, in a letter that he made public, and he demanded that the Australian government explain exactly what it knew about AWB's dealings. He wrote that Mr. Thawley had denied that AWB had made any illegally payments and that he had suggested allegations to the contrary by United States Wheat Associates were perhaps an insidious trick. 
At the investigating panel on Friday, Mr. Cole made it a point to reassure those who have questioned whether a panel called by the government could fully investigate the government, including some United States senators. 
I am independent of the commonwealth government, he said adding, Judges in Australia are not elected but are appointed for their skill integrity and independence. 
Under the seven years of the oil-for-food program, Iraq sold $65 billion worth of oil and the money was deposited in an account handled by the United Nations, to be paid to suppliers of humanitarian goods. A C.I.A. study estimated that Iraqis may have amassed up to $2 billion in kickbacks and bribes. 
In 1999, Iraq told AWB to add $12 a ton to its contract price, to pay for transporting the wheat once it reached Iraq. AWB agreed. No skin off our nose, an AWB executive said in an e-mail message that was flashed on a screen during testimony on Thursday. Discretion is required here, he added. 
The Iraqi Grain Board instructed AWB to pay the money to a Jordanian company, Alia. AWB did no background check, AWB officials testified, so they did not discover that Alia was in no position to transport wheat, as it had no trucks.
Instead, according to testimony here and before the Volcker commission, Alia was a front company for the Iraqi government.
The Iraqis often threatened to terminate Australia's wheat contracts because of the country's support for the United States. Mr. Long, the AWB executive who testified Thursday, said that in June 2002, a high-level AWB delegation went to Iraq and met with Minister of Trade Muhammad Saleh, now one of the Pentagon's most-wanted figures in Iraq.
If Australia wanted to keep the wheat contract, it would have to pay 10 percent of the value of the contract, Mr. Saleh informed the delegation, in addition to the transportation costs, inflating the contract price by $48.60 a ton. The wheat itself cost $200 a ton.