Grain board execs in front lineCaroline OveringtonNovember 12,...

Grain board execs in front line
Caroline Overington
November 12, 2005
JOHN Howard has never paid much attention to UN secretary-general Kofi Annan. On the contrary, he ignored Annan's plea not to go to war with Iraq. He says Annan was wrong to withdraw peacekeepers from Rwanda. and from Kosovo. The Prime Minister has always supported the US in its ideological war with elements of the UN, and he has long refused to back the UN's many admonishments of Israel.

This week, however, Howard adopted Annan as one of his closest political advisers. In announcing a commission of inquiry into the Iraqi wheat sales scandal, Howard said he was following "to the letter" a request made by Annan to investigate whether any private companies - but not Australian government ministers or officials - had any knowledge of the kickbacks made to Saddam Hussein's regime or had broken any Australian laws.

In defining the terms of reference so tightly, Howard hopes to shield his Government from scrutiny. There is good reason for that: Howard does not want there to be any suggestion that his Government knew that the Australian Wheat Board, in a mad effort to keep its wheat contracts, was still funnelling hundreds of millions of dollars to Saddam's regime as Howard was considering sending Australian troops to Iraq to unseat the dictator.

The Iraqi Government also has announced that it expects some compensation, before future wheat deals are done.

However, there are some good reasons the role of the Government should be examined. It was a so-far unnamed government official from the Department of Foreign Affairs and Trade who told the AWB that it could enter into a commercial arrangement with a Jordanian trucking company called Alia. That company turned out to be a front for Saddam's regime. Alia took more than $290 million from the AWB and kicked most of it back to officials from Saddam's government.

Also, it was a government minister - Mark Vaile, who handles the trade portfolio - who congratulated AWB executives for making a controversial "dash to Baghdad" in August 2002. The circumstances surrounding that trip are likely to be closely examined in the inquiry and with good reason.

A group of executives, comprising former AWB chairman Trevor Flugge, managing director Andrew Lindberg, international marketing manager Michael Long and cereal chemist Bob Cracknell, made the trip just seven months before bombs fell on Baghdad.

Officials from Saddam's Iraqi Grains Board announced they were going to halve one of Australia's contracts to supply wheat to Iraq. They also threatened to cancel all future deals, to punish Australia for its support of the looming war.

After driving for hours across the desert, the AWB executives met and dined with Iraqi trade minister Mohammed Medhi Saleh, who would soon become the "six of hearts" in America's "most wanted" pack of cards. The AWB executives emerged triumphant from these meetings. Not only did Saleh agree to restore the cancelled contract, he also agreed to buy even more Australian wheat, at higher prices than Iraq was paying before the meeting.

In any language, this was quite a coup, and when Long returned to Australia he was asked how he pulled it off. "They [the Iraqis] decided to reinstate the trade out of respect for Australian farmers," he solemnly told ABC radio. "And for the Australian people and the Australian Wheat Board."

The Weekend Australian has obtained copies of some of the official - and confidential - oil-for-food contracts that were signed by AWB executives after that trip and stamped by the Australian Government's mission to the UN in New York. None contain the word Alia but they clearly show that Iraqi officials agreed to pay dramatically higher prices for Australian wheat after AWB executives flew to Baghdad.

For example, one contract, dated July 16, 2002 (before the visit), has wheat priced at E237.55 per tonne. A second contract, signed in December 2002 (three months after the visit), has wheat priced at E280.37 per tonne.

Iraq could have bought much cheaper wheat from other countries, such as Canada, except for one thing: Canada was refusing to play ball with Saddam's regime. When Canadian wheat farmers were told, in 1999, that they would have to make a $700,000 payment to a Jordanian trucking company as the price of doing business with Iraq, they baulked and reported the matter to the UN.

The UN then brought the matter to the attention of the Australian mission to the UN in New York, which passed a message to DFAT (and to Foreign Minister Alexander Downer).

The AWB was asked whether it was paying "transport fees" and it denied it, outright. Ten months later, the wheat board wrote to DFAT, saying it was having trouble with its transportation arrangements in Iraq and asking for permission to enter into a commercial agreement with a Jordanian trucking company. DFAT said yes.

During the next few years, these fees to Alia rocketed from $12 a tonne to more than $50. In total, AWB paid more than $290 million in "transport fees", almost all of which was funnelled straight back to Saddam's regime.

Some demands for money were even more transparent. For example, in September 2002 (that is, just a month after Flugge and fellow executives returned triumphant to Australia), the AWB received a fax marked "Urgent".

The fax was from Alia, but it essentially contained an Iraqi government demand for money. It complained that Saddam's Iraqi water transport company was missing a payment from the AWB. The fax said: "You should credit their [the Iraqi government department's] account with E203,303 (around $300,000) immediately, today, otherwise they will stop discharging the vessel and would not permit it to leave the harbour until the money is received." The AWB responded by email, assuring Alia that all fees had been paid.

Vaile knew all about the dash to Baghdad. Indeed, when the wheat board executives returned to Australia, he congratulated them for pulling off the deal. After the war, it was the Howard Government that gave Flugge a new job in Iraq, advising Iraqis on how to revive their agriculture industry.

When Paul Volcker's report into UN oil-for-food corruption was released two weeks ago, Howard said he couldn't believe that anybody from the wheat board - or, presumably, from his own Government - would knowingly have paid bribes to Saddam's regime or turned a blind eye to kickbacks.

If he's so certain, there's no reason to fear the commission of inquiry, which is why all government officials and ministers - indeed, anyone who knew anything about the trade - should be preparing to testify.


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