Wheat and U.N. Chaff

February 15, 2006
The Wall Street Journal
Original Source: http://online.wsj.com/article/SB113995415819673930.html?mod=opinion&ojcontent=otep

The rot from the U.N. Oil for Food scandal has now reached Australia. At least that democratic nation has the nerve to sort the wheat from the chaff -- and do it publicly. Other countries could take note, since hardly anyone mixed up in this massive scam has suffered penalties.
This mess, first exposed by this newspaper, was officially confirmed in all its sordid details by independent investigator Paul Volcker after 18 months of digging. Over 2,000 companies paid kickbacks to Saddam through humanitarian assistance; 139 through oil surcharges.
One of those complicit was AWB Ltd., formerly the Australian wheat board and Iraq's largest foodstuff supplier. Mr. Volcker says AWB's payments accounted for over 14% of the illicit humanitarian assistance payments, totaling $221.7 million.
AWB, which had a 40-year business history with Iraq, negotiated contracts through Oil for Food starting in 1997. (AWB was privatized in 1999 but maintained Australia's monopoly on wheat exports.) At first, AWB only shipped wheat to the Iraqi border. But in July 1999, the Iraqi purchasers asked AWB -- so AWB claims -- to assume the cost of transporting the produce into Iraq, too. The Australian company duly entered into an agreement with Alia Transportation, a Jordanian company with Iraqi government ownership. It's alleged that some of this trucking money eventually was channeled to Saddam, in violation of U.N. sanctions.
The tale gets murkier. AWB told the Volcker Committee that it didn't know Alia was partially owned by Iraq's Ministry of Transportation, nor where the payments were going. AWB didn't disclose its additional payments. Even worse, the U.N. allowed the Iraqi Grain Board to choose Alia as AWB's transportation company. Talk about a dereliction of oversight duty.
Australian Prime Minister John Howard wasted no time in creating an independent commission to investigate the matter, chaired by former judge Terence Cole. The inquiry was originally tasked to investigate AWB and two other companies mentioned in the Volcker report, but Mr. Cole has applied to have its terms widened. The inquiry is now in its fifth straight week of hearings -- which are covered like flies by the Australian press and transcripts of which are posted on the Internet.
Even though the inquiry hasn't been completed, the Cole Commission is having a tangible, positive impact already. AWB's managing director, Andrew Lindberg, testified that he had no knowledge of, or details about, the trucking fees paid to Alia. Late last week, he resigned without explanation. On Monday, Iraq suspended its purchases from AWB -- a contract worth hundreds of millions of dollars annually. That hit may finally give Canberra enough political leverage to deregulate AWB's wheat monopoly.
It's striking how Australia has been one of the few countries to push the Oil-for-Food investigations further and examine its own role. China, Russia and France, to name a few, have reacted with studied nonchalance. Saddam knew what he was doing when he put individuals with good political connections on his payroll.