February 02, 2006 A FORMER AWB manager has blown the whistle on the wheat exporter's payment of kickbacks to Iraqi dictator Saddam Hussein's regime, telling an inquiry that senior executives agreed to the system and knew it could be illegal.
Mark Emons, the former manager of the company's Middle East Section, has begun giving evidence to the Commission of Inquiry examining $300 million in kickbacks paid by AWB to Iraq under the United Nations oil-for-food program.
Mr Emons, who was interviewed by commission investigators in secret a week before Christmas, has told the inquiry he helped set up the system that funnelled money to Saddam's regime.
Mr Emons said the payments were first raised by Iraq during a meeting he had with Iraqi Grain Board director general Zuhair Daoud in 1998, and were first imposed the following year at the rate of $US12 per tonne of wheat.
"There was no negotiation, it was a figure given to us," he told the inquiry.
Mr Zuhair also told him the fee had been approved by the United Nations.
"At this time I recall that there was much discussion between employees of AWB Limited (in addition to the emails) about the new provision that Zuhair had insisted be inserted," Mr Emons said in a written statement to the commission.
"It was common knowledge that Iraq was imposing a fee."
The issue was widely discussed within the company, Mr Emons said.
"We were uncertain about any legality about this matter. However the issue of the process was approved," he told the inquiry.
Mr Emons' evidence represents the first admission at the inquiry by any current or former AWB employee that the company was complicit in kickbacks to Saddam's government. His testimony also places the starting point for the payments while the monopoly wheat exporter was still the Australian Wheat Board – a Federal Government-owned entity.
In his statement to the commission, Mr Emons implicates AWB's most senior staff as knowing about the affair including the then chairman Trevor Flugge, managing director Murray Rogers and chief financial officer Paul Ingleby.
Mr Emons said he recalled speaking to Mr Flugge about the "trucking fees" imposed by Iraq, telling the chairman that managers were looking at various methods of paying the impost.
"It was during those discussions that I refer to, that Mr Flugge said to me words to the following effect – 'We have to find a way to pay this money. As long as it is not costing AWB any money, you have to find a method of payment'," Mr Emons' statement said.
AWB managers never suggested going to the UN with the trucking fee plan, Mr Emons said.
"I do not recall anyone suggesting processing the issue through the United Nations," he said.
"There were many conversations about trucking at this time."
The commission has previously heard evidence that AWB paid the trucking fees to Jordanian transport firm Alia – a company which turned out to be half-owned by Saddam's government.
AWB then recouped the money by inflating its wheat prices through UN contracts and recovering the cost from the world body's escrow account under the oil-for-food program.
Mr Emons will continue giving his evidence tomorrow.
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