Australia to Examine Oil-For-Food Scandal

By Meraiah Foley
February 3, 2006
The Washington Post
Original Source: http://www.washingtonpost.com/wp-dyn/content/article/2006/02/03/AR2006020301933.html

SYDNEY, Australia -- An inquiry will examine whether Australia's government knew the country's main wheat exporter paid hundreds of millions of dollars in kickbacks into Saddam Hussein's coffers under the U.N. oil-for-food program, the head of the investigation said Friday.
AWB Ltd. _ the single largest supplier of humanitarian goods under the discredited U.N. program _ is the focus of the government inquiry into whether it knowingly paid up to $222 million in bogus transport fees to a Jordanian trucking firm partly owned by Saddam's government to keep lucrative wheat contracts under the U.N. program.
The money then was allegedly diverted to the former Iraqi dictator.
While AWB is the focus of the inquiry, Prime Minister John Howard's government is coming under increased scrutiny.
Howard vehemently denied again Friday that his government was aware of the scheme after documents emerged Thursday suggesting that officials had been tipped off as early as 2003.
The documents were written by the Coalition Provisional Authority _ the U.S. occupying government in Iraq _ in June 2003 and sent to former AWB manager Michael Long, who then forwarded them to the Department of Foreign Affairs and Trade, or DFAT, according to testimony before the government inquiry.
Howard said the documents did not specifically say that AWB was paying kickbacks but rather contained a general expression of concern about the payment of bribes in Iraq.
On the information I have been given and based on the advice I have received, I do not believe that anybody in DFAT has behaved improperly, Howard told reporters Friday.
He said he and senior government ministers would appear at the inquiry if called to testify.
Terence Cole, the former Supreme Court judge heading the investigation, said he would examine whether government officials had any involvement in the alleged scheme, saying it was a matter to be addressed by this inquiry.
Earlier this week, U.S. Sen. Norm Coleman, whose Capitol Hill subcommittee is reviewing the oil-for-food scandal, demanded that the government explain assurances by Australia's then-ambassador to Washington, Michael Thawley, in late 2004 that AWB had not paid kickbacks to Saddam.
Coleman, R-Minn., said he was troubled by evidence given to the inquiry suggesting that DFAT officials were aware of and complicit in the bribery.
It's really important to clear the air, to find out what folks knew and when they knew it, Coleman said.
Howard said there was no such evidence and branded the questioning of the inquiry's integrity offensive.
I would like an apology from the American senator alleging that evidence has been given implicating government officials in the alleged scandal, Howard said in an interview on 3AW radio.
According to a U.N. report issued last year, AWB sold 6.8 million tons of wheat to Iraq and received more than $2.3 billion in payments from the United Nations in 1997-2003.
Numerous internal AWB documents have been presented to the inquiry suggesting that senior executives knew about _ and tried to cover up _ alleged kickbacks linked to the sales.
The most damning evidence came from former AWB manager turned whistle-blower Mark Emons, who testified Friday that senior executives knew the trucking fees violated the U.N. sanctions.
Emons told the inquiry he helped set up the scheme after a 1998 meeting with the director of the Iraqi Grain Board, Zuhair Daoud.
Emons said Zuhair demanded that AWB pay the Jordanian trucking company, Alia, a fee of $12 per ton of wheat to keep its contracts in Iraq.
Senior AWB officials have not denied making the payments but have suggested they had no reason to believe the trucking fees were bogus or that they violated U.N. sanctions.
Emons said his fellow AWB executives were well aware the payments were illegal.
We knew it was outside U.N. sanctions, he said.
The oil-for-food program was established in 1996, when Iraq's economy was crippled by international sanctions imposed after Saddam's army invaded Kuwait in 1990. Proceeds from the sale of Iraqi oil were to be used only for humanitarian goods to allay suffering caused by the sanctions.
A U.N. inquiry later found that Saddam sold oil to foreign countries in hopes of getting their support for lifting sanctions and enriched himself by $1.8 billion through a kickback scheme.