Australian PM says misled over Iraq deals

By Michael Byrnes
April 13, 2006 
The Washington Post
Original Source: http://www.washingtonpost.com/wp-dyn/content/article/2006/04/12/AR2006041202182.html

 
SYDNEY (Reuters) - Australian Prime Minister John Howard said on Thursday his government was misled by the country's wheat exporter about its oil-for-food deals in Iraq, which a U.N. report said involved multi-million dollar kickbacks.

Testifying at an official inquiry into reports wheat exporter AWB Ltd. allegedly paid kickbacks to Saddam Hussein's regime, Howard said he was aware U.N. sanctions were broken, but he did not know at the time that any Australian company was involved.

A 2005 U.N. report alleged AWB was one of more than 2,000 firms that had paid kickbacks worth $1.8 billion to Saddam's government through the U.N.-managed oil-for-food account.

It was public knowledge that Iraq was rorting the oil-for-food program. I was aware that Saddam had rorted the program, Howard told the Sydney inquiry, using an Australian expression that means to defraud.

There was absolutely no belief, anywhere in the government, at that time that AWB was anything other than a company of high reputation, said Howard at the hearing, under tight security.

Howard consistently supported the AWB before the inquiry, but told a news conference after giving evidence that the wheat exporter had misled the government, its Department of Foreign Affairs and Trade (DFAT) and the United Nations.

The government was plainly deceived by AWB. DFAT was systematically deceived, he said.

The AWB has told the Australian inquiry that it hid details of inflated wheat prices from the United Nations, after initially saying it thought the extra payments were U.N.-approved.

GOVERNMENT CREDIBILITY TESTED

The inquiry has no political brief and can only recommend prosecution of the AWB and other companies and associated individuals if Australian laws were broken.

But the government's credibility has been brought into question with the release of the cables talking of AWB kickbacks, with local media discrediting its response that it knew nothing.

In the inquiry, Howard echoed earlier testimony from his foreign and trade ministers, saying he had not seen 21 diplomatic cables between 2000 and 2004 warning of possible AWB kickbacks.

Howard is the first Australian leader to face such an investigation since 1983 when then prime minister Bob Hawke gave evidence to a spy scandal inquiry.

Opposition Labor leader Kim Beazley called on Howard to sack his foreign and trade ministers for incompetence and to take responsibility for allowing sanctions to be broken as Australian forces were enforcing sanctions and later invaded Iraq.

Australian soldiers were sent to fight in Iraq. The Howard government's neglect and turning of a blind eye meant that we funded their enemies, Beazley told reporters.

Australia was one of the first countries to join the U.S.-led invasion of Iraq and still has about 1,300 troops in the region.

Howard rejected calls to dump his foreign and trade ministers and said he would not change the way the government in future dealt with diplomatic cables.

AWB was among firms from 66 nations, including the United States, Russia, France and Germany, mentioned in the U.N. report. It alleged the AWB provided the most kickbacks, paying $222 million via a trucking firm that was a front for Saddam's regime.

It's true we gave very high priority to defending and protecting the interests of Australian wheat growers, but not ... at the cost of, to our knowledge, undermining the sanctions regime, Howard told reporters.

Australia is the only country to order an inquiry into the Iraq kickback allegations.

Under Australian law it is illegal to pay kickbacks or bribes for deals, but facilitation payments made overseas are allowed.

The Cole inquiry will report to the government by June 30.