awb 'never compared prices'

AWB 'never compared prices'
Jennifer Sexton
February 07, 2006
GOVERNMENT officials who approved AWB wheat contracts with Iraq failed to do a simple comparison with world grain prices that would have exposed the 41 deals as vastly inflated.

Kickbacks to Saddam Hussein's regime included in the wheat contracts ballooned by 400 per cent in three years and pushed the total amount paid for the Australian wheat to a world-wide high.

The Cole inquiry's second whistleblower, former AWB Middle East manager Dominic Hogan, said yesterday that had Department of Foreign Affairs and Trade officials checked international grain market prices, they would have discovered five years ago that a premium of about $US50 a tonne was being extracted from the UN account reserved for humanitarian purposes.

"It wouldn't be a hard inquiry to make," Mr Hogan said.

"It would have shown that that was an extremely high price for grain on the international market at the time."

The UN and DFAT never questioned the price, Mr Hogan said. He described DFAT as acting like "a post box" in the approval process.

DFAT signed off on 41 contracts over the life of the UN's oil-for-food program to 2003 for wheat worth $2.29 billion. Through those contracts $290million was funnelled to the Saddam regime via a Jordanian trucking company, Alia.

Mr Hogan in early 2001 told his direct boss, Charles Stott, general manager of international sales and marketing, that "inland transport" fees the AWB was paying to a Jordanian trucking company were "going directly to Iraq" and were a "mechanism for the Iraqis to extract more money from the UN escrow account".

"He said I had no direct proof that this was occurring, and I was only making assumptions," Mr Hogan said.

To go over Mr Stott's head would have been "career suicide" in a culture of intimidation and fear. This culture contributed to a breakdown he suffered in 2002.

Mr Hogan also revealed that AWB's internal lawyer Jim Cooper warned him last year about investigators working in New York for the UN's Volcker inquiry into corruption in the oil-for-food program.

"You will need some coaching on how to answer their questions," Mr Cooper told Mr Hogan.

After the Cole inquiry was announced late last year, Mr Cooper invited Mr Hogan -- who resigned in July 2003 -- in for a chat. Mr Hogan said Mr Cooper left a message on his answering machine saying AWB and its lawyers, Arnold Bloch Leibler, were talking to "absolutely everyone".

Mr Hogan named former chief executive Murray Rogers and former chairman Trevor Flugge as being present in Iraq and involved in the discussions and negotiations with the Iraqi trade minister in October 1999, which marked the beginning of the secret payment arrangements.

Alia general manager Othman al-Absi said in a statement read to the commission yesterday that his company never directly trucked any Australian wheat.

He said it was no secret the Iraqi Transport Ministry owned 49per cent of Alia, which took a commission from the AWB payments before remitting the money to a state company.