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RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE
AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO
Food and Agriculture
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RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE
Department of Agriculture, Fisheries and Forestry
Food and Agriculture
Senator ROBERT RAY
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RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE
(Senate-Tuesday, 14 February 2006)
AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO
Food and Agriculture
Senator ROBERT RAY
ACTING CHAIR (Senator Nash)
Ms van Meurs
Australian Quarantine and Inspection Service
Australian Bureau of Agriculture and Resource Economics
Bureau of Rural Sciences
ACTING CHAIR (Senator Nash)
Mr P. Murphy
Mr G. Grant
- Food and Agriculture
- AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO
Content WindowRURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE - 14/02/2006 - AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO - Food and Agriculture
Senator SIEWERT —I have questions for the WEA. My first question follows on from the question I asked at the last estimates about any knowledge that WEA had about the Jordanian trucking company. I was told that they had none. Subsequently, a letter was received—just last week—saying that in fact the answer was ‘factually incomplete’. Firstly, I would like to know how no became yes and how that became ‘factually incomplete’ when it was in fact entirely opposite to the answer that I was given. When you admitted in the letter that you had in fact been investigating it in 2004, how could it possibly have slipped your mind when you came in here on 1 November and said that you were not aware, when you had obviously been investigating it?
Mr Besley —It is a matter of regret that I gave the answer I gave. The question you could ask is whether I am forgetful or I was improperly briefed. I do not want to speculate on either of those things, but the fact is that at the time I had in my mind advice that there was nothing untoward—I think those were the words I used—about those contracts. When it became clear to me, as we were providing information to the Cole commission, that I ought to revisit some of the documentation, I did so.
To cut a long story short, I then finished up writing a letter to the chairman and discussing it with the minister because, in fact, the information that I did not have in my mind—you could ask why I did not and the answer would be that I just did not have it in my mind—was contained in a report we sent to the minister in about October 2004, which did refer to the Jordanian trucking company. As I said, I regret that, and when I did my forensic examination of documents in the transcript I was a bit aghast at what the situation was and I did my best to correct it in writing that letter to the chair of your committee.
Senator SIEWERT —Did you just say that in 2004, in the report that you wrote to the minister, you did refer to the Jordanian trucking company?
Mr Besley —Yes, we did in that report.
Senator SIEWERT —So did you report—
Senator ROBERT RAY —We had better find out which minister.
Senator SIEWERT —Yes.
CHAIR —I will come to you, Senator Ray.
Senator ROBERT RAY —I apologise.
Senator SIEWERT —I am presuming it was the minister for agriculture, because that is the minister you report to.
Mr Besley —We are required to report each year on the results of our monitoring of the AWB’s management of the pool. It was in that annual report of review.
Senator SIEWERT —Did you also report on the rumours of kickbacks that you had been investigating?
Mr Besley —We became aware of the allegations of kickbacks in the press. So the Wheat Export Authority decided it would make sense to go down and try and get to the bottom of that. As I think I said at the last estimates, that lead to an examination of 17 contracts. There was an explanation given to our people. First of all, though, the AWB denied any wrongdoing. They said that, if it seemed that the price of wheat was above the benchmark, one had to recognise that the price that was being mentioned included the cost of getting the grain up country, which was expensive. But they denied any wrongdoing. So our report to the minister recounted this.
Further, in our examination of the affairs of the AWB at that time we looked at their corporate governance charter. Included in their charter is a requirement that any agency payments are required to be approved and then reported. We asked about those agency payments, and my colleagues in the Wheat Export Authority were shown that documentation. There was no record whatsoever of any agency payments to Iraq. So our report to the minister in effect gave AWB a clean bill of health.
Senator SIEWERT —Did you go beyond asking AWB whether they had been doing naughty things? Did you go beyond asking the body that you were investigating whether they were in fact paying kickbacks?
Mr Besley —We asked them that and they denied any wrongdoing.
Senator SIEWERT —You did not seek any further information outside the agency that was reporting?
Mr Besley —No, we had—I think I mentioned this last time—built up, I believe, a good working relationship of trust and we trusted them. We did do an investigation to a point where we were able to ask questions and then received assurances.
Senator SIEWERT —You asked the agency that you were investigating whether they were doing the right thing. They said yes and you did not go beyond that?
Mr Besley —They did not say yes. They said—
Senator SIEWERT —They said yes, they were doing the right thing, and you did not go beyond that.
Mr Besley —Yes, and remember—I think I said this to you or somebody else last time—that the prices that affect the operational management of the pool are the FOB prices. When there are CIF contracts—and there are some of those, not a lot—they are corrected back to FOB by AWB before the information is passed on to us. We check that. When we get hold of a contract that is in CIF or C and F terms, we look at the freights at the time of that shipment and we are able to work back from that and check that the FOB that they have given us is the right FOB. Our checks show that it is. We concentrate on FOB.
Senator SIEWERT —I understand that. You said that you were aware of rumours in 2000 from the 2003-04 media. Can you highlight where you saw that in the media and how you knew about that?
Mr Besley —I cannot, but I suspected you might ask that and I was thinking that we ought to dig it out. I think it was the Age but I cannot remember; I do not know. It came up at a board meeting. The board said, ‘Get down there and have a look at it.’ We could certainly let you have—and we would have to take this on notice—which newspaper it was and the date.
Senator SIEWERT —Was that included in the reporting that you did to the minister?
Mr Besley —Yes, it was. We referred to the media reports. We said we became aware of it through media reports, without citing the media which led us to undertake this investigation. So the report to the minister did contain that.
Senator SIEWERT —You will get back to us with information on where specifically you became aware of those?
Mr Besley —Yes. You would like to know which newspaper triggered our interest. We will find that out.
Senator SIEWERT —Yes. I want to be clear that you did include references to your knowledge of the trucking company to the minister.
Mr Besley —Our report does refer to the fact that they used a Jordanian trucking company. It does not name it but it refers to it.
Senator SIEWERT —I understood all the details you just gave us about FOB requirements, but when you had heard reports about the Jordanian trucking company, despite what you just told me about FOB, were you not concerned that there was knowledge of them using a Jordanian trucking company? You did not look into that, despite the fact that you had heard about it and no agency had ticked off on it?
Mr Besley —As I said, we checked on their register of agency payments and there were none registered for Iraq. We were satisfied that what they told us was correct. We had no reason to disbelieve it. We have no power, in fact, to go investigating what they do once the wheat leaves this country, and they ship it around in the places of its destination. That is a commercial issue for them.
Senator SIEWERT —So they obviously had not provided you with the appropriate information that you required for your investigation?
Mr Besley —I would like to take that in easy stages. They provided us with the information we needed to do our job, which is how they managed the pool. In response to our inquiry, ‘What’s all this about kickbacks?’ the answer was ‘We’ve done nothing wrong and, to the extent that the prices may seem to be inflated, you need to know that the cost of up-country shipment is quite high.’ The register, as I said, showed no agency payments for Iraq so we went away satisfied.
Senator SIEWERT —When you were talking about the corporate code of ethics and code of conduct policy, did you interpret that purely to mean in relation to how the agency meets its requirements in terms of getting agency sign-off. Is that correct?
Mr Besley —No. There is a broad corporate code of conduct, which we are aware of, but there is a specific section of their code of conduct about agency payments. In the letter I wrote to your chairman, I talked about that, using the term ‘corporate code of ethics’ as a general heading. The policy under that does include the issue of facilitation or agency payments. We asked to see a record of those because, under their own rules of racing, any facilitation payments are to be approved and then reported. So we asked to see the report of payments made and there was nothing there for Iraq.
Senator SIEWERT —So there was nothing there for Iraq?
Mr Besley —No.
Senator SIEWERT —So despite the fact that you had heard rumours, you were then satisfied?
Mr Besley —Yes, because I think the head of steam that is now surrounding this had not quite built to the point where it is.
Senator SIEWERT —Weren’t you concerned though that you had heard rumours separately, as I understand it, about that Jordanian trucking company and that you had heard rumours of kickbacks? Wouldn’t that have prompted you?
Mr Besley —There is nothing sinister in this. We did our job. We went down there, we looked them in the eye, they came back, looked us in the eye and said: ‘Look, we’ve done no wrong. Here is our code of conduct. Here is our agency facilitation thing.’ We looked at that. What more do you do? We trusted them, and you have to ask the question: were we unwise to do so? I do not know the answer to that. I would reserve my judgment on that until I see what Cole comes out with.
Senator SIEWERT —So you had done all that and then came to the estimates inquiry on 1 November and told me that—either it had slipped your mind or you had been improperly briefed and you told me that, no, you had not heard anything to do with a Jordanian trucking company?
Mr Besley —Yes. It is a matter of great regret to me that I was not able, for reasons that we do not need to go into now, to give you an answer that I have now corrected in my letter to your chairman. It has never been my intention to mislead—ever—and I am embarrassed by it and I am sorry about it. I am baring my chest. I have nothing more to add.
Senator SIEWERT —And did you report this to the minister?
Mr Besley —To the minister?
Senator SIEWERT —Yes, but you did not report any of this in your growers report to the shareholders and the farming community?
Mr Besley —No, we did not. There is always an issue. There are things in that report to the minister, which is a confidential report, and there are two levels of confidentiality I should mention. There is an arrangement we have with AWB that we will not disclose commercial-in-confidence information—and we stick to that. The other level of confidentiality is if we use our compulsory powers to acquire information, which we have only done once. That information is confidential of a kind that it is a criminal offence to break that confidentiality. So you need to know that there are two levels of confidentiality.
Senator SIEWERT —I refer to the compulsory powers that you said you have used once. Are those the ones that you used to investigate this?
Mr Besley —No.
Senator SIEWERT —There are two questions. Why didn’t you? Secondly, therefore, if you have not used your compulsory powers why is that information considered confidential?
Mr Besley —The answer to your first question is that we did not feel we needed to. We had gone down there, they had opened their books and had shown us what they showed us. They had looked us in the eye and said they had done no wrong—so we did not need to use our compulsory powers. The information is confidential because we have got this arrangement between ourselves and AWB that we treat what they give us as commercial-in-confidence. It is that level of confidentiality that I am speaking of. So there is always an issue about what you put in the growers report compared with what you put in the minister’s report, and there is always a difference for that reason.
Senator SIEWERT —So anything the AWB tells you you treat as confidential? Is that so?
Mr Besley —Not anything, but most things that we get. For example, if we get FOB prices precisely and so on, we do not publish those. We may publish trends. We may publish collective kinds of movements. But those sorts of things are confidential. We try to give the growers a report on how AWB has managed the pool in their interests.
Senator SIEWERT —So why didn’t you think that this was relevant for the growers to know?
Mr Besley —It is a judgment issue. That was regarded by AWB as part of their commercial negotiations and they preferred not to have it go in the growers report. There was no big deal about it, so we did not put it in.
Senator SIEWERT —Did the minister come back to you and ask you any questions? Sorry, I will take one step back. You put this in the 2004 performance review—the confidential report that you gave to the minister—on what date?
Mr Besley —It went to the minister in October 2004, as I remember.
Senator SIEWERT —Did the minister get back to you and ask you any questions about what was in that report concerning this matter?
Mr Besley —No.
Senator SIEWERT —So it went to the minister and you do not know what happened to it beyond that?
Mr Besley —I presume he noted it and had he had issues he wanted clarified he would have no doubt sought clarification. But he did not on this occasion.
Senator O’BRIEN —Does the minister ever ask for clarification?
Mr Besley —We cannot recall any instance.
Senator O’BRIEN —Has there never been a request for clarification, Mr Taylor?
Mr Besley —I would like to check that. I have only been sitting in this seat for a little while, though at the moment it seems like a long time. I do not recall it. Now you may say, ‘Well, you didn’t recall the other thing either’—and do I plead Alzheimer’s or what? The report we write is based on a performance monitoring framework which was designed by consultation between us, the Grains Council and AWB and then signed off by the minister. So we report against that framework and I guess the minister is entitled to think that if we report accurately against that framework, which I believe we do, then there is very little need to ask for clarification on any points. You would have to ask him that.
Senator SIEWERT —You said you have used your compulsion powers once. In what matter was that?
Mr Besley —There was a discussion about what is the base cost of operating the pool. We were unable to get information of a historic kind or subsequently to the establishment of a datum based on historic data. We sought and were given information which enabled us to check that the basic cost of operating the pool was indeed as claimed by AWB.
Senator SIEWERT —I would like to go back to the issue of when you were checking the contracts and whether there had been facilitation payments. Did you carry out a full audit of their books? Was that done or did you just check those 17 contracts?
Mr Besley —No, we did not carry out a full audit. They gave us a folder with the information on the 17 contracts, but we did not go back beyond that. That is not what we do.
Senator SIEWERT —Why not?
Mr Besley —As I said before, I have been in business for a number of years and I believe in operating on a basis of trust. Unless and until I find that that trust is misplaced, I take people at their face value. They did give us a look; they did explain their actions; they did show us their record of agency payments. So I think we were entitled to come away thinking that everything was cleanskin.
Senator SIEWERT —But if your role involves a responsibility for monitoring the performance of the AWB, surely you have to go beyond trusting what an organisation gets back and tells you.
Mr Besley —Let me clarify our role. Our role is to monitor—monitor, not regulate—the performance of the AWB as the manager of the pool in the interests of growers. It is not our role to get into their commercial operations or the way they run their business or, indeed, how they operate as a board. That is a matter for them, their directors, ASIC, ASX and all of that. That is not where our role lies at all.
Senator SIEWERT —In your letter to the chair—we talked about it just then—you made the comment that you reviewed their compliance with their corporate code of ethics and code of conduct policy.
Mr Besley —They showed us that because we were down there on a specific inquiry which had been triggered by our reading of media reports. They said, ‘We’ve done no wrong, let’s demonstrate that we haven’t and here are the things you can look at’—the essence of the contracts and their facilitation payments record.
Senator SIEWERT —In answer to a question that Senator Milne asked at the last estimates you made a comment about an out-of-performance bonus payment. What is an out-of-performance bonus payment?
Mr Besley —The remuneration arrangement has two elements to it. One is a fixed base cost. And then if there is a performance above a set benchmark, AWB can earn extra payments for beating that benchmark. It is similar to corporations where sometimes bonuses to executives are linked to the performance. As I understand it, these days they are usually linked to the performance of the company in relation to the performance of its peers. That is called an OPI. It is an out-performance incentive.
Senator MILNE —Can I follow up on that, since that was my question. You are suggesting that, at that time, you oversaw an out-performance bonus for the Wheat Board?
Mr Besley —At which time?
Senator SIEWERT —2002-03.
Mr Besley —There is quite often an out-performance payment incentive made, and it is only made when the benchmark set is bettered.
Senator MILNE —What sort of benchmark is set to warrant the Wheat Board getting this out-performance bonus at that time? What performance criteria do you judge against?
Mr Besley —We do not do that. That is a commercial arrangement between AWBI and AWBL. We are aware of it, and we report on it so that it is transparent to the growers; but it is not something that we are involved in the negotiation of.
Senator MILNE —Those two companies are virtually the same, as I understand it. But, either way, you are overseeing that. You were reporting on that bonus. Did it ever occur to you to question that bonus? It is extraordinary now to see that the AWB was getting an out-performance bonus at the time when it would appear that it was undermining all appropriate governance arrangements and going against everything that had been agreed with the UN?
Mr Besley —I think they are in a sense separable. The OPI is based on, as I said, benchmarks. If the benchmarks are bettered, then AWBL, which provides the services to AWBI, is entitled to an out-performance bonus.
Senator MILNE —So you never questioned what they did to achieve this performance level such as would lead to their bonus?
Mr Besley —All we are aware of are the facts that they have beaten the benchmark and, therefore, are entitled to an OPI.
Senator O’BRIEN —Can I get a clarification on what date you communicated with Minister Truss regarding your 2004 report, as required under the statute?
Mr Besley —We sent the report to him, as I recall it, in October 2004.
Senator O’BRIEN —Do you know the date?
Mr Besley —No. We could get that for you.
Senator O’BRIEN —Okay. Was there some preliminary communication? Did you put it in an envelope and send it or hand-deliver it? Did it go through the department? How did it get there?
Mr Besley —I do not believe that it went through the department. It was hand-delivered.
Senator O’BRIEN —So it was hand-delivered to the minister’s office?
Mr Besley —Yes.
Senator O’BRIEN —Presumably you did not see it after it landed on the secretary’s desk?
Mr Besley —No.
Senator O’BRIEN —Yesterday, Mr Vaile made a statement that the Wheat Export Authority was provided with a copy of the report prepared by the United States Defense Contract Audit Agency on its investigation of contracts awarded under the oil for food program. In response to a question as to whether or not the government had seen this report, Mr Vaile said that it was addressed by the Wheat Export Authority. Who provided that document to the Wheat Export Authority and when was the report provided to the Wheat Export Authority?
Mr Besley —I do not recall it, and that has been confirmed by colleague Glen Taylor. We know of the report but we have never had a copy of it.
Senator O’BRIEN —You have never been given a copy by anyone?
Mr Besley —I do not believe so.
Senator O’BRIEN —You have never heard of the report?
Mr Besley —Yes, we know of it.
Senator O’BRIEN —When did you know of it?
Mr Besley —I think only, again, in the press. Obviously we do a lot—as you would expect us to—checking on the tide of comment when things appear in the press.
Senator O’BRIEN —According to a media statement from the minister, the Wheat Export Authority commenced an investigation into allegations of kickbacks paid by the AWB in February 2004. Is that correct?
Mr Besley —Yes, that is when we were alerted to it. We got some information and looked at it and needed more information. In fact, at one point in that series of ongoing investigations we met with the board of AWB and said: ‘We need more information. We want to get to the bottom of this stuff that’s in the media.’ It was agreed at that joint board meeting that our people should go down and look at the documentation, which they did.
Senator O’BRIEN —Which board meeting?
Mr Besley —This was a joint meeting between us and the AWB. We do that periodically.
Senator O’BRIEN —It was a joint meeting of your board and the AWB board?
Mr Besley —AWBI.
Senator O’BRIEN —So the board of AWBI and the board of the Wheat Export Authority sat together and discussed your investigation?
Mr Besley —Amongst other things. We have regular joint board meetings, which makes sense, to resolve issues that need to be resolved which in no way impedes us in doing our statutory duty under the act. But we used that board meeting to say, ‘Look, guys, we need to know a bit more about this,’ and it was agreed: ‘Yes, you can come and have a look at our documentation.’ That is what happened.
Senator O’BRIEN —You had statutory powers to look at the documentation.
Mr Besley —We could have demanded it.
Senator O’BRIEN —Absolute statutory powers.
Mr Besley —Yes. They are fairly specific, but I think we could have used them then.
Senator O’BRIEN —Going back to when you made the decision to commence the investigation into the alleged kickbacks, I understand that the Wheat Export Authority advised the minister’s office and the department that you were commencing this investigation. Is that right?
Mr Besley —I guess that is right.
Senator O’BRIEN —Who from the Wheat Export Authority had that responsibility? Was it you or was it Mr Taylor?
Mr Besley —It was not me. Glen is just telling me that he does not recall that either. I think it would be better to look at that forensically—
Senator O’BRIEN —Haven’t you looked at it forensically, with the Cole inquiry going on? Hasn’t the Wheat Export Authority staff been forensically looking at what you did, when you did it and why you did it?
Mr Besley —We have, but you are asking a specific question which I cannot answer at the moment. Therefore, I would like to take it on notice. I do not think I should speculate.
Senator O’BRIEN —I do not want you to speculate. I am just asking you, in the context of your inability to answer, whether you have looked at these things?
Mr Besley —Yes, we do.
Senator O’BRIEN —It wasn’t you or Mr Taylor who advised the minister’s office or the department?
Mr Besley —It wasn’t me.
Senator O’BRIEN —You might both know that of your own knowledge.
Mr Taylor —I do not recall any such advice, but we will take that on notice.
Senator O’BRIEN —Can you let us know who did the contacting and who in the minister’s office was contacted?
Senator Abetz —If there was contact, who made the contact. They are not at this stage accepting that contact was actually made, so let us just get that clear for the record.
Senator O’BRIEN —Going to Minister McGauran’s media statement in February 2004, he said:
In February 2004 the WEA—
that is, the Wheat Export Authority—
Board, aware of media reports of allegations of kickbacks regarding Australia’s wheat trade with Iraq resolved to look into the matter. There was liaison with AWB Limited, information was sought and provided …
Senator Abetz —That does not establish the assertion that you were seeking to make, albeit that may be proven to be correct. But it has been taken on notice, and we will deal with it on the basis of ‘if’ and we will follow it up from there.
Senator O’BRIEN —Going back to the joint board meeting with the AWB International board and the Wheat Export Authority board, which was apparently a common occurrence—
Mr Besley —When you say ‘common’, we do it two or three times a year.
Senator O’BRIEN —So it has been going on since the establishment of the Wheat Export Authority.
Mr Besley —No, it is relatively new. You may recall that the panel which looked at the wheat industry said we ought to be developing a more mature relationship between the two bodies, we ought to be strategic, top-down and so on. We believe that the idea of getting together two or three times a year at most is a sensible way of helping to resolve things that need to be resolved. It has become more regular recently. We probably do it three times a year now.
Senator O’BRIEN —Was it happening before 2004?
Mr Besley —Yes, it was.
Senator O’BRIEN —But it was not happening in 2001-02?
Mr Besley —I cannot say; I was not around at that stage.
Senator O’BRIEN —Perhaps you could let us know on notice, thank you. Just going back to the United States Defense Contract Audit Agency, you say that you have never seen the report which I referred to earlier. Mr Vaile said on 13 February that that report was addressed by the Wheat Export Authority when they did the review of those contracts that were conducted by AWB. Are you saying you have never seen this report?
Mr Besley —I am saying I have never seen it. Mr Taylor tells me he has not seen it. I think we should take it on notice. As I said, we were aware of it because it was mentioned in the media.
Senator FAULKNER —When Mr Vaile made this claim in the House of Representatives, is it standard practice for someone at the Wheat Export Authority when your organisation is being mentioned in parliament to take note of that and check whether statements being made by a minister are accurate? What is the process in WEA in relation to that? This has been mentioned by a minister in parliament. There are a couple of occasions where it appears your name has been taken in vain. Is there any checking of this?
Mr Besley —I do not believe there is anything sinister at all. I think we should have a look at that on notice.
Senator FAULKNER —I am not asking whether it is sinister. I am asking you whether the Wheat Export Authority has a process of checking when its name is mentioned in parliament. It appears to me, on the evidence I have heard so far this morning, that on two occasions Mr Vaile may well have misled the parliament. Things will need to be clarified, but it sounds to me like there is a serious case here of a mislead. But my question is a process one: when the Wheat Export Authority is mentioned in parliament what happens? What do you do? Do you check it up? Do you make sure that any statements made about the authority are accurate? Is that standard operating procedure?
CHAIR —Or do you just do what I do and say, ‘Oh, shit!’?
Mr Besley —It is a small organisation but I understand that the secretariat does its best to keep abreast of those kinds of things and check up on them. Obviously it did not check up on that one.
Senator FAULKNER —It did not check up on that one. What about Mr Vaile yesterday in the House of Representatives—did anyone check up on that?
Mr Besley —No.
Senator FAULKNER —No checking.
Senator O’BRIEN —Mr Besley, after the joint meeting of the two boards, yours and AWB International’s, you sought information from AWB International and that was provided—they gave you a file of documents. Was that the subject of a formal written request or something that was discussed at that board meeting?
Mr Besley —We had been seeking information before the joint board meeting and we did not believe we had the information we needed to satisfy ourselves whether or not the press reports had any substance. So at the board meeting we said: ‘Look, there is an issue here. We need to come down—
Senator O’BRIEN —Can we go back to the original request for information: what sort of request was it? Was it a written request, an email or a telephone call?
Mr Besley —I cannot answer who asked what. The point was, to get to the bottom of it, it was raised at this board meeting—
Senator O’BRIEN —Hang on—we will get to the bottom of it; I just want to do this with some certainty. In your checking of all these documents, in all of the scrutiny that is going on in this matter, you cannot tell me in what form you requested information from AWB International or AWB Ltd?
Mr Besley —I cannot, but I could get that information for you—unless Mr Taylor can.
Mr Taylor —I believe that the request for that material was included in what we call an information requirement schedule, which is prepared annually by the Wheat Export Authority. I would like to confirm that, if I might take that on notice.
Senator O’BRIEN —Okay. So does that mean that you did not actually make a special request for the information about this matter; it was just part of your normal request for information?
Mr Besley —At the board meeting it was a specific request.
Senator O’BRIEN —But before that? I am trying to segment the process so that we can understand it.
Mr Besley —You will have to look at the answer that Mr Taylor has just said he would get on notice.
Senator O’BRIEN —When you made the request did you request particular documents?
Mr Taylor —I believe so, but I will also take that on notice.
Senator O’BRIEN —Can we have a copy of that request?
Mr Taylor —If we have no reason to not provide it, I believe we should be able to do so, yes.
Senator O’BRIEN —Thank you. Did AWB actually provide you with complete files on those 17 contracts or just a series of documents as requested?
Mr Besley —The person who examined the documents has retired, but we have his file note. As I understand it, he was given a folder in which the essential elements of the contracts were presented. Based on what he saw, we wrote what we did write in our PMR report to the minister which was delivered to him in October 2004.
Senator Abetz —Senator O’Brien, you asked whether the file was complete.
Senator O’BRIEN —No, complete files on the contracts.
Senator Abetz —I do not know that, but one would assume that that is the sort of the detail that the Cole inquiry is going to be determining—whether or not the AWB provided a complete file to the WEA or whether certain documents were missing from those files. They are the sort of matters that I think, with respect, are best left for the inquiry.
Senator FAULKNER —With respect, Minister, I have just heard evidence from Mr Besley in answer to Senator O’Brien’s question indicating that ‘essential elements’ of the contracts were provided in a folder. Quite clearly, the committee would like to know what that means. What are the essential elements? So let’s not talk about a complete record. What do you understand ‘essential elements’ to mean?
Senator Abetz —I am sorry, that was the question and that is what I was commenting on. I was not commenting on Mr Besley’s answer; I was commenting on Senator O’Brien’s question. I accept your intervention to try to get the pressure off Senator O’Brien, but that is a completely different issue.
Senator FAULKNER —I am sorry, it is not. It is in response to Senator O’Brien’s question to Mr Besley—
Senator Abetz —Was it a complete file or not? The Cole inquiry will undoubtedly determine that at the end of the day.
Senator FAULKNER —My question to Mr Besley—
Senator Abetz —Whether it included essential elements is a different question.
Senator FAULKNER —The evidence given to this committee is that the file contained essential elements.
Senator Abetz —You can provide essential elements without providing a complete file. That is logically obvious.
Senator FAULKNER —Let us ask Mr Besley, shall we, what ‘essential elements’ means.
Mr Besley —I assume—when I used that phrase it was not a legal term of art that I was trying to use. I believe that there was enough information in there for our inquiring officer to be satisfied that he knew enough about the contracts to conclude something about them.
Senator FAULKNER —I always worry, Mr Besley, when I hear the words ‘I assume’. Please assume nothing. Please just answer my question.
Mr Besley —I cannot answer your question.
Senator FAULKNER —I am sorry, I do not want assumptions. I am not being unfair. You would appreciate this is a committee of the parliament—
Mr Besley —I do.
Senator FAULKNER —and the committee requires not assumptions or presumptions but evidence. You used the term ‘essential elements’. I am asking you what you meant by that terminology—‘essential elements of the contracts’.
Senator Abetz —And he is telling you on what basis—
CHAIR —With great respect, as Eddie McGuire would say, ‘We’ll come back after the break.’
Proceedings suspended from 10.30 am to 10.46 am
Ms Hewitt —When Senator Ray asked earlier whether we had issued in the department any instructions to officers about how to handle their appearance before the committee today, I said no, that we had some oral discussion in preparation as a normal roundtable sharing of views about issues likely to arise and on which officers need to be prepared. I had not recalled that there was a brief written instruction in some of our papers for colleagues indicating that, as the Cole commission inquiry is continuing, it would not be appropriate for officers of the department to provide public comment. I wanted to be absolutely correct about that. I had forgotten that there was a brief line of guidance to staff in some written material.
Senator ROBERT RAY —Let us call a spade a spade: you got it wrong. You have corrected the record, which I very much appreciate. But every time one piece of information is given wrongly it may debar another couple of questions. If I may, Chair, I will just ask when that was issued, because that would have been my next question.
Ms Hewitt —I think it was probably two days ago or something like that.
Senator ROBERT RAY —Two days ago was Sunday, so I want you to think about that.
Ms Hewitt —Monday, yes. I am going to take advice from my colleague on when the written instruction would have been issued to colleagues. It was finalised towards the end of last week.
Senator ROBERT RAY —Towards the end of last week it went out?
Ms Hewitt —Yes. And could I add a further word in relation to your question about the department’s preparation of materials for forwarding to the relevant authorities—in our case, through DFAT to the Cole commission. We have continued to look for information that may be relevant as the inquiry has proceeded, so our collection of information is not fully complete and we are at the moment also looking at our email record. I am not suggesting that there will be more evidence, but I wanted to let you know that that process, while it is being undertaken, is in a sense continuing.
Senator FAULKNER —That process originally kicked off as a result of—
Ms Hewitt —Of a request.
Senator FAULKNER —a request from the Prime Minister in this instance, was it?
Ms Hewitt —I think it was a written request to me from my counterpart at DFAT, as I recall. That is my recollection. If that is not correct, could I come back to you in writing on that?
Senator FAULKNER —You understand that to be at least in part as a result of a need for DFAT to respond to a subpoena that was issued from the Cole royal commission?
Ms Hewitt —I understand so. But as the process has continued, just as a matter of good public policy practice, we have continued to make sure we are aware of anything that may be relevant to the process as it continues.
Senator O’BRIEN —Mr Besley, was the file with the essential elements of the contracts received before or after the joint meeting of the Wheat Export Authority?
Mr Besley —It was provided in the offices of AWBI after that meeting.
Senator O’BRIEN —It was provided in the offices?
Mr Besley —Yes.
Senator O’BRIEN —Who was it provided to?
Mr Besley —To an officer of the Wheat Export Authority.
Senator O’BRIEN —Was it a file that they could take away?
Mr Besley —No. It was looked at there and noted and then left.
Senator O’BRIEN —So the officer left without any documentary evidence to support the findings of the Wheat Export Authority?
Mr Besley —Only his own notes. He promptly wrote a note for file, which was the basis of what we put in our report to the minister.
Senator O’BRIEN —Do you know when that was?
Mr Besley —It was in August 2004.
Senator O’BRIEN —So from the commencement of the investigation in February, it took until August for AWB to supply this material?
Mr Besley —We got some material, but we did not believe we had enough. We kept chasing it and got what we decided was enough.
Senator O’BRIEN —When did you first get information? Was it just a trickle or did you get a bundle of information upon making the first request?
Mr Besley —I think I would have to take that on notice rather than speculate, just as I think I need to take on notice what I said in a sort of throwaway line about the ‘essential elements’. We look at contracts as required in order to check on the information they provide us with on an FOB basis so we can do our job. But this was a larger look than that. Rather than speculate, it would be much better if I was to take on notice what was in the file.
Senator ROBERT RAY —But your colleague, Mr Taylor—
ACTING CHAIR —Just a moment, Senator Ray, I do not think Mr Besley had finished his answer.
Senator ROBERT RAY —I am sorry.
Mr Besley —We could take on notice a request to provide specifically the information that was in that file that we saw. I cannot tell you what it was; I was not there. But a responsible officer went down, looked at it and wrote a note to file which was the basis of our inclusion of the statement about it in the report to the minister.
ACTING CHAIR —Senator Ray, do you want to make a comment?
Senator ROBERT RAY —I would like to assist Senator O’Brien with one question. If you do not know, Mr Besley, does Mr Taylor know? Whilst you are the head of the organisation you cannot be expected to know everything. I am asking a full-timer now what he knows about it.
Mr Besley —About the—
Senator ROBERT RAY —The question that Senator O’Brien asked.
Mr Taylor —The chairman’s response is consistent with my knowledge of it. There was a file that was provided to the Wheat Export Authority on the premises of AWB International. That file contained 17 contracts. There was subsequently a file note that was made by the senior officer within the Wheat Export Authority. That file note records what was viewed in those documents. From a WEA point of view, the essential component of the content of that file note is that we were there to check that the information had been provided to the Wheat Export Authority previously—in particular, FOB data—was consistent with what was in that file provided to WEA.
Senator ROBERT RAY —Thank you, that is helpful.
Senator FAULKNER —Could a copy of that file note be made available to the committee, please?
Mr Besley —The Cole inquiry has that document, but there is no reason why we could not provide it.
Senator FAULKNER —Eventually, as you know, the Cole inquiry lodges its documentation on its web site.
Mr Besley —I am reminded that it is an ingredient of a confidential report to the minister. We would need to be sure that he was happy for us to provide that document. But the Cole inquiry does have it.
ACTING CHAIR —Perhaps you could take that question on notice and come back a little later during your evidence and clarify it. Senator O’Brien, are you continuing?
Senator O’BRIEN —I am. In August, you got this file which had the 17 contracts in it—that is what you said, Mr Taylor?
Mr Taylor —Yes, it is my understanding that there were 17 contracts in a file that was provided from WEA.
Senator O’BRIEN —So that was what was in this file of the essential elements of the contracts—it was actually the contracts?
Mr Taylor —I do not know whether they were complete contracts. All we know is that there was a request from the Wheat Export Authority to view Iraq contracts and that there were 17 contracts. As to their completeness or otherwise I cannot respond to that, because I was not the party who did that assessment.
Senator O’BRIEN —Prior to that time you had been given some documents, which were AWB International’s explanation of the contracts but not the primary documents?
Mr Taylor —Data had been provided to the Wheat Export Authority about wheat sales to Iraq.
Senator O’BRIEN —But not the primary documents?
Mr Taylor —Not the primary documents.
Senator O’BRIEN —In August an officer from the Wheat Export Authority attended the premises of AWB International—
Mr Taylor —Correct.
Senator O’BRIEN —or AWB Ltd—
Mr Taylor —It is AWB International which the WEA deals with.
Senator O’BRIEN —That officer was given a file which contained either the 17 contracts in their entirety or parts of them.
Mr Taylor —Correct.
Senator O’BRIEN —But you are not sure which?
Mr Taylor —I do not know the actual content of those contracts—whether they were complete or not.
Mr Besley —We should take that on notice and provide answers to you, because neither Mr Taylor nor I were there. So, rather than try and speculate, I think it would be better if we did that.
Senator O’BRIEN —Thank you. This is in August. What was the next interface with AWB International? After the attendance of that officer and their bringing the material back to your premises, was there a further interchange between the Wheat Export Authority and AWB International about this matter?
Mr Besley —No. As I said, we came away being satisfied with what we had been told, and there was nothing untoward at our meeting here last November.
Senator O’BRIEN —So that was all that the Wheat Export Authority saw before it reported to the minister?
Mr Besley —Yes. And we reported that in our PMR report to the minister, which I said went to him in October 2004.
Senator O’BRIEN —Was it just a report or was there a covering letter with it?
Mr Besley —I think there was a covering letter saying, ‘Here’s our PMR report.’ It did not say, ‘And we invite your attention particularly to X, Y or Z.’
ACTING CHAIR —Some of these questions go to an amazing amount of detail.
Senator O’BRIEN —They do.
ACTING CHAIR —I think the officers at the table may need to take some of them on notice to get the recall that you are requiring.
Senator O’BRIEN —They are doing that where they need to. But thank you for your assistance, Madam Acting Chair. I am concerned with your answers in this regard: on 9 February, the minister, Peter McGauran, in a press release said:
The facts are quite clear. In February 2004 the WEA Board, aware of media reports of allegations of kickbacks regarding Australia’s wheat trade with Iraq resolved to look into the matter. There was liaison with AWB Limited, information was sought and provided and further details clarified.
That is on all fours with what you have said so far. He then went on to say:
Staff from the WEA subsequently attended the AWB offices and examined various records, contracts, certification of export details and authorization letters from the UN and verified that the details were consistent with information and data previously obtained by the WEA.
When the minister made his media statement, he apparently thought you saw, or your officers saw, a whole lot more information. How does the minister come to that view? Has the Wheat Export Authority given material to Minister McGauran in relation to this exercise?
Mr Besley —He would have seen the report. The report to the minister talked about the UN contracts and the certification. As I understand the system—
Senator O’BRIEN —You have read the report to the minister recently, have you?
Mr Besley —I have seen the extract that is the issue that is before us at the moment.
Senator O’BRIEN —Have you read the report recently?
Mr Besley —Not the whole report, no.
Senator O’BRIEN —You have read the part that relates to the Iraq contract?
Mr Besley —Yes.
Senator O’BRIEN —He is saying that your officer did not just get some data or just see contracts or extracts of contracts. He is saying that they attended the premises, that they examined various records, contracts, the certification of export details and the authorisation letters from the UN and that they verified that the details were consistent with the information and data previously provided.
Mr Besley —That is all in the report to the minister. That is nothing new.
Senator O’BRIEN —It is new in terms of the evidence you gave us earlier this morning, you see, because you talked only about this file containing contracts or extracts of contracts.
Mr Besley —With respect, I did not say that was all they got. I said the whole thing is disclosed in the report to the minister.
Senator O’BRIEN —You did say that is all they got.
Mr Besley —No, I did not say that at all.
Senator Abetz —Can I suggest this evidence be left off on the basis of, at best, a misunderstanding between Senator O’Brien and Mr Besley instead of descending into who said what, when and how, when the record will disclose it. If Senator O’Brien misunderstood or Mr Beazley misunderstood, so be it. I think the fact that it is out there in the media release from 8 or 9 February speaks for itself.
Senator O’BRIEN —It does speak for itself, thank you for that. Mr Besley, if the minister was of the view that your officer looked at various records, contracts, certification of export details and authorisation letters from the UN, were you not aware of this?
Mr Besley —Yes, I was, but I did not think it was relevant to the issue you were asking me about. You were asking me about the contracts.
Senator O’BRIEN —We were asking—I was not the only one—what was in this document which you described as essential elements of contracts.
Mr Besley —There appears to have been a misunderstanding. I thought you were talking about the contracts, and we were talking about essential elements. Senator Faulkner asked me what I meant by that and I have suggested that we put this on notice so that we can be clear that there is no debate about what essential elements mean. But in fact the document that went to the minister did have the information in it upon which Minister McGauran based his press release three or four days ago. That is not new information. It was in that PMR—performance monitoring report—that went to the minister in October 2004.
Senator O’BRIEN —So are you saying that, if indeed you said that all that was in the file was contracts, your answer was incomplete?
Mr Besley —If I said that, I did not intend to say that that was exclusively all he saw. If I have given you that impression, I apologise, because part of the deal was to understand the contract. There were two or three reasons. As I said before, let us get the thing on the Notice Paper and we can be quite specific about what was in there and what was the basis of what we said to the minister in the PMR.
Senator O’BRIEN —How long will you take to get the matter on the Notice Paper given that your letter to the chairman, which I will not deal with, took three months to arrive after your evidence on 1 November?
Mr Besley —That is me being remiss. Questions on notice go through a process over which I do not personally have control. I cannot answer that question.
Senator O’BRIEN —In your letter to the committee, you stated that you became aware in mid-2004 that AWB had engaged a Jordanian trucking company as part of these contracts. How did the Wheat Export Authority establish that to be the case?
Mr Besley —I have said before that we saw press reports that appear to have been based on that report from the UN or Defence—
ACTING CHAIR —I think you mean the Volcker report.
Mr Besley —No, the Defence report. That has been our only engagement with that report. We then said, ‘We ought to look into this.’ So that is what we did.
Senator O’BRIEN —I am still asking the question: how did you become aware that the AWB had engaged a Jordanian trucking company?
Mr Besley —From the AWB when our man went down there to look at the material—not just contracts. We had earlier had information about a Jordanian trucking company in May.
Senator ROBERT RAY —Where from?
Mr Besley —From AWB.
Senator O’BRIEN —So, in May 2004, in the material that the Wheat Export Authority had received, which you earlier described as data, was there information about a Jordanian trucking company?
Mr Besley —There was. I cannot tell you what form it was in. If you would like to find out what it is, I suggest we take that on notice as well. I do not want to guess about anything but I have just been reminded by Glen that there was an earlier reference to the Jordanian trucking company.
Senator FAULKNER —Would you mind, Senator O’Brien, if I interrupt you to check: in your letter relating to the issue of evidence at the additional estimates hearings on 1 November 2005, Mr Besley, you said:
The WEA was made aware in mid 2004 from material in its possession that AWB(I) was supplying wheat into Iraq under an arrangement that included over land transport by a Jordanian trucking company.
My question is: are we now talking about the same instances? It is the same instance?
Mr Besley —It may have been mid—
Senator ROBERT RAY —May or August—one of the two dates.
Mr Besley —Let us not be too precise about what the middle is.
Senator FAULKNER —You have written a letter dated 7 February 2006 indicating that the WEA ‘was made aware in mid 2004 from material in its possession that AWB’ et cetera. Given this is a very recent letter, are you able to say what the material in the possession of WEA was?
Mr Besley —Not here and now, but I can get it for you. That is the information that we were talking about with Senator O’Brien.
Senator FAULKNER —Yes, but I assume that in writing such a letter, indicating that you needed to correct the record for evidence given at a previous estimates hearing, you would have nailed this down pretty solidly a week or so ago, when you wrote the letter. I am surprised, given how contemporaneous these issues are, that you would not be able to give us more detail about the material in possession of WEA.
Mr Besley —There was, as I recall, a short brief from AWB(I) about their dealings with Iraq.
Senator FAULKNER —You recall a short brief?
Mr Besley —There was, as I recall, yes.
Senator Abetz —He has indicated that he wants to take it on notice and is trawling through his memory. The point you make is an appropriate one, but he has asked that it be taken on notice.
Senator FAULKNER —He did not actually ask that it be taken on notice.
Senator Abetz —He did.
Senator FAULKNER —I have just heard Mr Besley say that he recalls a short brief. But the point I am making—
Senator Abetz —He thinks he recalls.
Mr Besley —There was, as I recall, yes.
ACTING CHAIR —Senator Faulkner, he actually did say he would like to take the question on notice—
Mr Besley —I did.
ACTING CHAIR —so perhaps we can move on from that.
Senator ROBERT RAY —We had better get it very clear what the question is, Temporary Acting Chair.
ACTING CHAIR —I think I understand the question.
Senator ROBERT RAY —Note I do not say ‘deputy chair’ but ‘temporary acting chair’, because we have the deputy chair here.
ACTING CHAIR —Yes, thank you, Senator Ray.
Senator ROBERT RAY —Essentially, the WEA hears about this in both May and August. That is true?
Mr Besley —Yes, correct.
Senator ROBERT RAY —But there is also reference to documents within your possession which I imagine must exclude May and must relate to either August or October.
Mr Besley —October 2003?
Senator ROBERT RAY —2004.
Mr Besley —That was our report to the minister—the performance monitoring—
Senator ROBERT RAY —No, here in your letter, not the letter to the minister, you talk about material within your possession.
Mr Besley —Yes.
Senator ROBERT RAY —What is that? That is what I am trying to get to. If you need to take that on notice then we will get to that point.
Senator Abetz —Yes, that is what he was—
Senator ROBERT RAY —No, we have not got there.
Senator Abetz —That was the point.
Senator FAULKNER —No, my point is completely different. I will get to that in a moment. Are you going to answer Senator Ray’s question?
Senator Abetz —We do not know the point you are about to make, and I accept that—
Senator FAULKNER —It is not a point. These are questions.
Senator Abetz —but the point is about to be made some time down the track. We accept that. The specific question was how or in what way this information was made available, and that is what Mr Besley wanted to take on notice.
Senator ROBERT RAY —No, the question is double barrelled. What material did you have in your possession in 2004? That is a pretty tough question to go back and try to remember, but the fact that you make reference to it on 6 February 2006 means there must have been some research or some spark of knowledge.
Senator FAULKNER —Exactly.
Senator ROBERT RAY —It cannot have been forgotten from then until today. There is a reference in a letter of 10 days ago. We just want to know what that reference is.
Senator Abetz —When certain people have potentially gone through—I do not know—a lot of documents during this process, the fact that they do not have immediate recall as to the exact nature of a particular document that reference is made to is not that surprising.
Senator ROBERT RAY —If you had signed off a letter 10 days ago that made reference to this, I would imagine that you would not have forgotten it in the meantime. That is what we are asking. There may be a different explanation. Let us hear it from the witness.
Senator Abetz —He has taken it on notice.
Senator ROBERT RAY —I find it unbelievable that you could write something 10 days ago and forget it by now. Taking questions on notice is not a device through which to avoid questions.
CHAIR —Thank you, Senator Ray. He is entitled to take questions on notice.
Senator ROBERT RAY —No, he is not. I challenge that. He is entitled to take questions on notice for two reasons. The first is that he does not know the information and has to go and get it. The second is that he wants more time to consider the appropriateness of providing it. You are not entitled to do it because you do not want to provide it at the time.
CHAIR —He is also entitled to do it because he wants to make a complete answer.
Senator O’BRIEN —He can add to his answer on notice.
Senator FAULKNER —Can I follow up my question now, Chair?
CHAIR —You can do whatever you like.
Senator FAULKNER —I do not want to do whatever I like; I just want to follow up my question, which relates to the letter that Mr Besley sent. We have established that the material of mid-2004—the material in the possession of the Wheat Export Authority—is the material that was also referred to as being from May 2004. We have established that we are talking about one and the same matter. That is correct, isn’t it?
Mr Besley —That is correct.
Senator FAULKNER —My question is: having written to the committee about this, literally a week ago today, did you check the accuracy of this statement and check the material before you wrote in these terms to this committee? You have made the statement that WEA was made aware of a certain fact in mid-2004 by material in its possession. Did you check that before you wrote this in a letter to this committee correcting evidence you gave before this committee?
Mr Besley —Do you mean did I check what it was or whether we had it or both?
Senator FAULKNER —Both. I am concerned about the accuracy of the statement given. I am just following the evidence here and listening to what you are saying. But given that you have said something quite clear about the WEA’s role in mid-2004, in a letter to this committee—and I think I am a participating member of the committee; I hope I am, or actually I hope I am not, because I get far too much material as it is—I want to know whether you checked the material before you made the statement to the committee. You would not just write a sentence like this in a letter correcting the record, would you?
Mr Besley —No.
Senator FAULKNER —So you did check that that was accurate—that the WEA was made aware in mid-2004 from material in its possession. You did check the accuracy.
Mr Besley —I was satisfied that that was correct before I signed the letter, yes.
Senator FAULKNER —So when did you satisfy yourself—a week ago, just before you wrote the letter, or a little earlier? When?
Mr Besley —As I said to you before, I am concerned that I appear to have misled this committee and I apologise for that. I was not aware at the time that I had, and I explained that. Was it because I was not briefed or what? I do not know the answer to that, frankly. But, having gone through the records, as I say in this letter I thought it was appropriate to write a letter saying, ‘Look, that was not the whole story; here it is.’ In 2004, a number of things happened. We did get an early brief from the AWB about them trading with a Jordanian trucking company. We then sent this man down following a series of circumstances which I have already described. So we had two bits of information—one in May and the other one in August—which led to us writing what we wrote in the report to the minister.
Senator FAULKNER —You said you had gone through the records to satisfy yourself. When did you go through the records in order for you to write the letter?
Mr Besley —There was a lot of discussion about this whole issue at the time I thought I ought to write such a letter. I talked to Glen and his troops and I talked to the department, then wrote the letter.
Senator FAULKNER —I am asking you when you went through the records; that is all.
Mr Besley —It would have been just in the week before I wrote the letter.
Senator FAULKNER —So, if that was the circumstance, given that you have just gone through the records in the last fortnight, why aren’t you able to say to us what the material in the possession of the Wheat Export Authority was that enabled you to make this statement?
Mr Besley —I told you it was a brief from AWB(I). You apparently did not hear me, Senator.
Senator FAULKNER —I did hear.
Mr Besley —Well, that is what I said it was.
Senator O’BRIEN —If I could deal with that matter that you just raised: you said you talked to ‘Glen’—Mr Taylor—‘and the troops’. Do you mean by that other employees of the Wheat Export Authority or board members?
Mr Besley —Not board members. The board members are aware of the letter I have sent, but I did not speak to them about it.
Senator FAULKNER —And members of the department, you said.
Mr Besley —Yes.
CHAIR —Could I just raise a matter here?
Senator O’BRIEN —You just gave me the call—
Mr Besley —I did speak to a board member who is actually a member of the department.
Senator FAULKNER —Fair enough, but did you speak separately to members of the department?
Mr Besley —No, I did not.
Senator Abetz —Chair, it is very confusing when Labor senators are trying to steal the limelight from each other. Can I suggest that Senator O’Brien be given the call and be allowed to ask his questions? Otherwise it becomes very difficult: we have half a question from Senator O’Brien and then Senator Faulkner trying to gazump him. I think it would be a lot easier for the witnesses.
Senator O’BRIEN —Mr Besley, you talked about Mr Taylor and some of the troops. You were referring when you said ‘the troops’ to employees of the Wheat Export Authority and not members of the board?
Mr Besley —Only one member of the board.
Senator O’BRIEN —One member. Which board member did you discuss the matter with?
Mr Besley —I spoke to the departmental member of the board, the government representative on the board.
Senator O’BRIEN —Can we have the name?
Mr Besley —Yes. He is sitting right there.
Senator O’BRIEN —Mr Mortimer?
Mr Mortimer —Yes.
Senator O’BRIEN —You said you had talked to the department.
Mr Besley —I meant that. I did not speak to anybody else.
Senator O’BRIEN —You spoke to Mr Mortimer—
Mr Besley —In his dual role: really in his role as a member of the board, but also noting that he is a senior officer in the department.
Senator O’BRIEN —Was the conversation sort of a roundtable with Mr Taylor, Mr Mortimer and another member of the WEA staff when this letter was prepared for signing?
Mr Besley —No, it was not. As I recall the sequence of events, there were discussions between Mr Taylor and Mr Mortimer around about the third of this month. Mr Mortimer and I spoke over the weekend. That would be 5 or 6 February or whatever it was. We told the minister’s office on Monday, a week ago yesterday, and I signed the letter a week ago today. That was the recent history of the events leading to that letter.
Senator O’BRIEN —Before you were contemplating writing the letter, Mr Taylor and Mr Mortimer discussed the matter.
Mr Besley —Not for the purpose of saying, ‘Hey, Besley, you’d better write a letter’; there were issues around that needed to be addressed, and we were all trying to make sure that—
Senator O’BRIEN —Perhaps I should not ask you, because you were not in the conversation; you were aware of it. Mr Taylor, what was that conversation on 3 February?
Mr Taylor —There was a request to get copies of information together that had been provided to the Cole inquiry for PM&C, and it was in the course of gathering that information that I had the discussion with Mr Mortimer. The department was acting as the coordinator for providing that material to PM&C.
Senator O’BRIEN —So Mr Mortimer had asked you, as executive officer of the Wheat Export Authority, to provide copies of the documents that had been provided to the Cole inquiry or to get documents ready to go that Cole inquiry?
Mr Taylor —No. Documents had already been provided to the Cole inquiry.
Senator O’BRIEN —And you were being asked to collate those to provide them to PM&C?
Mr Taylor —Through the department.
Senator O’BRIEN —Through Mr Mortimer on behalf of the department?
Mr Taylor —Yes.
Senator O’BRIEN —And in the course of that conversation how did Mr Besley’s evidence arise?
Mr Taylor —The matter was raised in the context of having reviewed the material that had been prepared for the Cole inquiry again.
Senator O’BRIEN —Who raised it—you or Mr Mortimer?
Mr Taylor —I raised it.
Senator O’BRIEN —So you had reviewed the evidence and the material that went to the Cole inquiry and discovered that the evidence that Mr Besley had given was not on all fours with the material provided to the Cole inquiry?
Mr Taylor —No. All the material has been provided to the Cole inquiry that the Wheat Export Authority has relating to all wheat sales to Iraq. It was that same batch of material which I was discussing with Mr Mortimer when I identified that there may be an inconsistency or an incompleteness in the response that had been provided earlier.
Senator O’BRIEN —So when did you discover that? Was it 3 February or earlier?
Mr Taylor —It was around that date. Sorry, I do not have the exact date in my mind.
Senator O’BRIEN —So you raised the matter with Mr Mortimer. Had you raised it with Mr Besley before that?
Mr Taylor —I sought advice from Mr Mortimer to see if he also considered that that evidence may have been incomplete and whether it needed to be addressed.
Senator O’BRIEN —And did you draft the letter for Mr Besley?
Mr Taylor —Yes.
Senator O’BRIEN —Did you draw to Mr Besley’s attention particular material when you presented the letter to him?
Mr Taylor —Yes.
Senator O’BRIEN —Which material did you draw to his attention?
Mr Taylor —The material that Mr Besley has already put on the table that he was referring to.
Senator O’BRIEN —Could you describe it so that we are clear?
Mr Taylor —It was a short document received from AWB in May 2004—about a third of a page document—that outlined their approach to doing business in Iraq, and it made reference to them using a Jordanian trucking company.
Senator O’BRIEN —Did they name the company?
Mr Taylor —No.
Senator O’BRIEN —So it was just a Jordanian company?
Mr Taylor —In that brief; that is correct.
Senator O’BRIEN —And it was for the purpose of shipment of wheat in Iraq?
Mr Taylor —Yes.
Senator O’BRIEN —Were you not aware of this material prior to that date?
Mr Taylor —No. The Wheat Export Authority had compiled all the material that we had for the Cole inquiry and it was a subsequent review of a whole batch of material—and there was quite a bit of it—where I identified this matter.
Senator O’BRIEN —When the material was collated for the report to Minister Truss in 2004, did you play any role in the preparation of the report or the assembling of the material that went into the report?
Mr Taylor —Yes. The secretariat, on behalf of the members, draws all of the material together and prepare their draft report for the board to consider.
Senator O’BRIEN —In your position do you have a significant and primary responsibility for the coordination of that effort?
Mr Taylor —For the coordination of that; that is correct. The primary responsibility for the drafting of the report rested with the senior officer in the Wheat Export Authority who was responsible for our performance-monitoring function.
Senator O’BRIEN —But this is a very serious matter you were investigating. It was about allegations, as I understand it, of breach of the oil for food sanctions and supplying to Iraq. Did you apply any scrutiny to the material which underpinned the report to the minister?
Mr Taylor —I was aware of the material as it was being prepared and of the outcomes of the assessment or review of that material that WEA conducted in the offices of AWB at that time.
Senator O’BRIEN —So, when the report went to Minister Truss in October 2004, you had made yourself aware of the material on which the report was based?
Mr Taylor —At that point in time, correct.
Senator O’BRIEN —So you were aware that, irrespective of the date in 2004, the Wheat Export Authority knew of the involvement of a Jordanian company in the shipment of wheat within Iraq?
Mr Taylor —At that time, correct.
Senator O’BRIEN —When the matter was to be brought before the Cole inquiry, did you refresh your memory?
Mr Taylor —When the WEA received the notice from the Cole inquiry?
Senator O’BRIEN —No, I am asking about before that, when these matters were referred. AWB is the organisation which the Wheat Export Authority is charged with overseeing. What I want to know is: when these matters became public and the Volcker inquiry came out, leading to the establishment of the Cole inquiry, what steps did you—and, for that matter, members of the board of the Wheat Export Authority—take to ascertain what had taken place and what the Wheat Export Authority and its officers had overseen in their scrutiny of AWB? Any?
Mr Taylor —The process the WEA had gone through was to draw all material that the Wheat Export Authority had on Iraq wheat sales together and compile that for provision to the Cole inquiry.
Senator O’BRIEN —When the Volcker inquiry came out, what action did that prompt within the Wheat Export Authority—any? Was any action taken when the Volcker inquiry report came down?
Mr Besley —I think the issue there is the same as the issue about the defence thing. When stuff got in the press, which the Volcker thing obviously did—
Senator O’BRIEN —It did.
Mr Besley —that is what led us to pursue this issue so we were able to report on it to the minister.
Senator O’BRIEN —When was that?
Mr Besley —As I said, it started in mid-2004 and culminated in our getting that information when our senior officer went down to the AWB(I)—not AWB—offices in August of that year. We were able then in our report to the minister—and Glen has described how it is processed—to report to the minister what we did report. That document is now available to the Cole inquiry, and somebody has asked for a copy of that section of it. We have said we will take that on notice to see whether we are able to do so.
Senator ROBERT RAY —I think it was the—
Mr Besley —The file note, yes.
Senator FAULKNER —When you sent the confidential report to the minister, did it include a covering letter as well?
Mr Besley —Just ‘Here it is, Minister.’
Senator FAULKNER —So there was no covering letter from you, as chair, or anyone else?
Mr Besley —Bound into the report?
Senator FAULKNER —I understand the file. We have talked about a file note previously which I asked to be provided to the committee. You have taken that on notice. Let us leave that aside. It is not clear to me—I am not sure it is even clear to you—whether that forms part of the report, but the file note may or may not.
Mr Besley —No, it does not form part of it.
Senator FAULKNER —It does not. Thank you for that. Separately, then, is there a covering letter to the minister from your organisation, to which the confidential report in effect is appended? Is there a covering letter of any description?
Mr Besley —It is not bound into the report like reports of the parliament are.
Senator FAULKNER —Yes. I understand that. Thank you for that. Is there a covering letter to the minister that does not form part of the report?
Mr Besley —Just a transmittal letter. I have said this before—‘Here’s the report, Minister.’
Senator FAULKNER —But it is effectively only a courtesy letter, if you like.
Mr Besley —It is. It does not say ‘and I invite your attention in particular to X, Y and Z’. I think I said that earlier.
Senator O’BRIEN —The Volcker report postdates your report to the minister, doesn’t it?
Mr Taylor —Yes, it does.
Mr Besley —Yes, it does.
Senator O’BRIEN —What I was asking you was: what action did the release of the Volcker report prompt within the Wheat Export Authority? Was there any action that you took?
Mr Besley —Not specifically because of that, but we have, as Glen said, since provided to the Cole inquiry all of the information that—
Senator O’BRIEN —I know that. You have given that evidence. But I am really focusing on what, if anything, you did when the press reports came out that the Volcker inquiry had found out some pretty damaging things about the organisation that you were charged with scrutinising.
Mr Besley —As I recall, that report came out in late October, and it was only a matter of days after that that the Attorney-General announced the Cole inquiry. So, having done what we did before, we did nothing specific as a result of the publication of the Volcker report.
Senator O’BRIEN —As chairman, did you have a conversation with Mr Taylor and members of the board about the Volcker inquiry before the Attorney-General made his announcement?
Mr Besley —Before it came out?
Senator O’BRIEN —Before the Attorney General made his announcement about the Cole commission.
Mr Besley —We may have discussed it at a board meeting; I cannot recall.
Senator O’BRIEN —When was the board meeting in October 2005, Mr Taylor?
Mr Besley —I would have to look that up.
Senator O’BRIEN —Mr Taylor may know—I was asking Mr Taylor.
Mr Taylor —There was a meeting in October 2005. I apologise, the exact date escapes me at the moment.
Senator O’BRIEN —They are not a regular—
Mr Taylor —Board meetings are held regularly, but there are not set dates.
Senator O’BRIEN —After the Cole inquiry was announced, did the board meet to discuss the action that the Wheat Export Authority would take?
Mr Besley —No, because, by the time we next met, the Cole inquiry had asked the Wheat Export Authority to provide certain information and that was reported at our next board meeting. The CEO said, ‘We’ve had this request and we’ve provided it all,’ and so the board was informed.
Senator O’BRIEN —Was Mr Mortimer at all of these board meetings?
Mr Besley —He was at most of them. He was away once that I remember, but I think he was at that one.
Senator O’BRIEN —Mr Taylor, can you help us?
Mr Taylor —I believe the full board attended those later meetings where those issues were raised.
Senator O’BRIEN —So the board discussed the request from Mr Cole—was it a request or a subpoena?
Mr Taylor —There was a notice provided to the Wheat Export Authority for information.
Senator O’BRIEN —A notice to produce documents?
Mr Taylor —Correct.
Senator O’BRIEN —That material was collected and collated, which you presumably oversaw, Mr Taylor?
Mr Taylor —That is correct.
Senator O’BRIEN —So you were able to check the list to make sure that all the documents relevant to that request were provided?
Mr Taylor —To the best of my ability I checked that we drew every reference that the WEA had, in any record, to AWB(I) wheat sales to Iraq to date, which was to the date of the request.
Senator FAULKNER —And you defined ‘record’ broadly, I assume, Mr Taylor?
Mr Taylor —It was a very broad request or notice that was received via the Cole inquiry. It covered a vast range of material that the Wheat Export Authority had on hand.
Senator FAULKNER —Including hard copy and electronic records?
Mr Taylor —Hard copies, electronic copies, copies of data files that had been provided to the Wheat Export Authority, briefing material from the AWB.
Senator O’BRIEN —Did that include data showing the history of the inland transport component of the contracts that you investigated?
Mr Taylor —Yes, it would have. The inland transport component was not something that the WEA had any detail of. It was referred to in a number of briefs—the two briefs that the Chairman of the Wheat Export Authority has previously mentioned, of May and August. But the WEA was aware that there was some arrangement for inland trucking in Iraq.
Senator O’BRIEN —The US Defense report referred to its estimate of the inland transport component of contracts from port to final destination as being around $20 per metric ton, but that was not the average inland transport cost across the 17 AWB contracts considered in your inquiry, was it?
Mr Taylor —I did not know that the inland transport component was referred to in any of those contracts that the Wheat Export Authority saw.
Senator O’BRIEN —No. It was not in the contracts; it was in other material that you saw.
Mr Taylor —I do not have any record that shows that the Wheat Export Authority had any specific details on the costs of inland transport components in Iraq.
Senator O’BRIEN —You were aware from a document in May 2004 that there was a contract with a Jordanian trucking company for the purpose of transporting the wheat within Iraq.
Mr Taylor —Correct.
Senator O’BRIEN —But you are telling me that in your investigation in 2004, you were not aware of the cost of that contract.
Mr Besley —Perhaps I could come in. As I said before, our person went to the AWB(I) offices and asked the question straight up, ‘Are you paying bribes?’ They denied any wrongdoing, as I have already said. They said the reason why the cost of the wheat delivered—which is something we are not concerned within in our role under our act, incidentally—is so high is that it costs money to transport wheat in Iraq. But they did not say how much more.
Senator O’BRIEN —You were aware in February 2004, according to Minister McGauran, that there were allegations of kickbacks regarding Australia’s wheat trade with Iraq, and you resolved to look into the matter. In May 2004 you became aware that a Jordanian trucking company was involved in transport. I want to know what you actually did to inquire into the arrangements around that contract given that there were concerns about kickbacks and here was something quite unusual that was occurring.
Mr Besley —Can I just clarify that we are not a policing organisation. I do not hold with kickbacks or anything like that personally and I do not think any of us do, but our role is to monitor the performance of AWB(I) as it manages the grain pool. Once wheat leaves this country, charges of freight, insurance and so on are costs to the buyer. They do not impact on the pool, so we had no reason to go there.
Senator ROBERT RAY —But you did. You read press reports and then you went down there.
Mr Besley —We did because we thought we ought to know about it.
Senator ROBERT RAY —Even though it was not your business?
Mr Besley —The primary purpose was to check the data that we do need to do our job, which is: what are the FOB costs and how does that impact on the pool? From the contracts, which were also contracts which aroused the suspicion of graft and corruption, we were able to check the FOB costs, and they were consistent with the information they had previously given us.
Senator FAULKNER —It is not clear to me who made the decision to send your officer—
Mr Besley —The board did. The board said, ‘We should look into this; we should know about it.’
Senator FAULKNER —That was a formal decision of the board to send the officer?
Mr Besley —Yes, it was. The reason why we wanted to do that was to make sure that there was nothing we could see that impacted on the pool. One thing you could say is: if they were paying bribes, was that a disadvantage to the growers, with the pool paying them? As it has turned out, even if they were paying bribes—and that is for Cole to decide—that money came out of an escrow account and had no effect whatever on the pool costs.
Senator FAULKNER —I appreciate the material that the officer was provided with from AWB was a folder and so forth, but how formal was your officer’s report back to the board?
Mr Besley —He wrote a note to file, which you have already asked about, which was the basis upon which we then wrote our report to the minister.
Senator FAULKNER —I am aware of the note to file. Did the file note go to the board as well?
Mr Besley —I cannot remember whether it did at the time. Probably, but I could not answer that. I would like to check that. If you are interested in the order of events, I think we should check.
Senator FAULKNER —Included in the file note were details of things such as the 17 contracts and the like.
Mr Besley —Yes. That is right, including—and I regret that you did not think I was covering it—the sign-off by the UN on those contracts.
Senator FAULKNER —Did your official have any face-to-face discussions with AWB?
Mr Besley —I believe so but, again, I cannot tell you: I was not there. Glen was not there, but he has told you—
Senator FAULKNER —But is this sort of material included in the file note?
Mr Besley —It probably is, but it is best if we check it. I do not believe we should dump the file and then let people walk out. I would like to be sure.
Senator ROBERT RAY —Maybe Mr Taylor could recall this; maybe Mr Besley can. I understand that the WEA officer who went to visit has subsequently retired. Is that right?
Mr Besley —He has retired, yes.
Senator ROBERT RAY —Do you know who he met at the Wheat Board?
Mr Taylor —That is recorded on the file note.
Senator ROBERT RAY —Yes, I am asking: who did he meet there?
Mr Taylor —It was two officers from AWB who were officially involved in the meeting. If my memory is correct, if you are looking for names, the names are Mr Stephen Sheridan and Mr Dougal Heath.
Senator O’BRIEN —To go back to this issue of whether you actually looked at the cost of transport, you are telling us, Mr Besley, that you did not actually look at the cost of transport. Do I understand you correctly?
Mr Besley —You do.
Senator O’BRIEN —Mr Taylor, you have looked at the documentation. Are you able to tell us that there is no material about the cost of transport in the Wheat Export Authority material provided to the Cole inquiry?
Mr Taylor —I do not believe there is any material in WEA’s possession that identifies costs of inland transport in Iraq under the arrangement AWBI had with this Jordanian based trucking company. All of that material—everything the Wheat Export Authority has—is with the Cole inquiry.
Mr Besley —There is a reference, and I made this reference before, to transportation costs only in the context of an explanation by AWBI to our man of why the price of wheat seemed to be above the benchmark—that is, because it cost lots of money to ship the wheat upcountry. That is included in his note to file, but there is no specific measure of that cost.
Senator FAULKNER —In relation to the collection of material, I may have misunderstood this but I understand material has gone directly to the Cole royal commission. That is correct, isn’t it, Mr Taylor?
Mr Taylor —That is correct.
Senator FAULKNER —You have indicated that to the committee, and I believe Ms Hewitt gave that evidence a little earlier. Simply, has the material been provided elsewhere? In other words, has this material or summaries of it been provided anywhere else in government?
Mr Taylor —Yes.
Senator FAULKNER —DFAT, for example, has acted as a coordinating agency in government for some material. Anyway, you let us know.
Mr Taylor —Most recently there was a request, which I referred to earlier, I believe, from PM&C where the material that was provided to Mr Cole for his inquiry was also provided to PM&C through the Department of Agriculture, Fisheries and Forestry. That is an exact replication of the material that WEA has provided to Cole for his inquiry.
Senator FAULKNER —But, from WEA’s direct responsibility, you have supplied material directly to Cole and you probably have supplied material to PM&C but via your home department—via your portfolio, effectively.
Mr Taylor —It is my understanding of how the process would work.
Senator FAULKNER —You would know about the direct provision of material to Cole—
Mr Taylor —To Cole, yes. That is my understanding of how the process—
Senator FAULKNER —and, as far as you are concerned, you have provided material to the portfolio on which your agency rests.
Mr Taylor —Yes.
Senator FAULKNER —And that is all?
Mr Taylor —There was an earlier request in September 2005 for some information, a broader government request which DFAT coordinated, and we also provided material to DFAT as part of that process. That information has some overlap with material that was provided to Cole.
Senator FAULKNER —So effectively there were three, because the September 2005 request obviously predates the establishment of the Cole commission, doesn’t it?
Mr Taylor —Correct.
Senator FAULKNER —That was a request from DFAT.
Mr Taylor —Correct.
Senator FAULKNER —Did you adhere to that?
Mr Taylor —Yes.
Senator FAULKNER —Is that done by a decision of the board, Mr Besley, or is that just an administrative decision for WEA?
Mr Besley —It is an administrative decision. It is a normal process and it is reported to the board so that the board is aware of it.
Senator FAULKNER —So on three occasions and to three different faces there was a provision of documents relevant to the matters before the Cole royal commission, though one preceded the establishment of the commission?
Mr Taylor —Relevant to what material the WEA had in its possession.
Senator FAULKNER —Yes.
Senator O’BRIEN —Mr Taylor, the Volcker report was handed down on 27 October last year. Are you saying that you did not see the report, that you saw only the media reports of it?
Mr Taylor —No. We have seen the Volcker report.
Senator O’BRIEN —Did you see it shortly after its release, or some time after?
Mr Taylor —I believe it was shortly after the release. I requested staff in the secretariat to download it if it was available on their website so that we were able to review it.
Senator O’BRIEN —When did you review the material in the possession of the Wheat Export Authority in the context of the Volcker report?
Mr Taylor —May I take that on notice.
Mr Besley —Perhaps I should say something. At the estimates hearings in November I did say that I had read the Volcker report. The purpose of my saying that was to explain to the committee that as far as our role was concerned, which is to monitor the management of the single desk for the benefit of growers, it was clear from that report that any money being used for whatever purposes were coming out of the UN oil for food account and not being charged back—
Senator O’BRIEN —And you cleared them.
Mr Besley —What do you mean by ‘I cleared them’?
Senator O’BRIEN —The Wheat Export Authority had cleared AWB in its investigations—
Mr Besley —Of corruption?
Senator O’BRIEN —Yes.
Mr Besley —On the evidence we were given we had no reason not to say that.
Senator O’BRIEN —What seems to be remarkable, Mr Besley, is that you had evidence that there was a contract for the trucking of wheat within Iraq, allegedly, but you did not seem to investigate it or how much money was involved in it. According to Volcker, $2.3 billion in payments was made and there were ‘special contractual arrangements requiring AWB to assume the cost of inland transportation’—a matter which you purported to have investigated.
Mr Besley —Let me again state what our role in life is: our role in life is to monitor the management of the pool for the benefit of the growers. What happens offshore when people pay apparently exorbitant moneys to get wheat shipped from a port in Iraq to wherever it is going in Iraq has nothing to do with the pool. That is why we went down there to—
Senator O’BRIEN —I see, so if there is an illegal—
Mr Besley —May I finish this please, Senator? We went down there to check on whether these allegations of corruption which we had read about in the newspaper, following that Defence report, which we have not seen, were in any way affecting the costs being charged back to the pool. We were satisfied that they were not. But we were not there to clear AWBI of anything that Cole would be dealing with. That is a matter for him.
Senator O’BRIEN —So you were not looking into alleged kickbacks?
Mr Besley —We were. That is where we started, because we wanted to see whether there was anything that showed that the pool was being affected in some way. Apart from that, what turned out, lo and behold, was that they said there were no kickbacks.
Senator O’BRIEN —They would say that, wouldn’t they!
Mr Besley —I suppose they would. As I said earlier, I have been in business for many years and I work on the basis of trust until I find that that is wrong. We had developed, I believed, a trusting relationship and, on the basis of the information provided—
CHAIR —I want to impose a little equity on this committee. There will be plenty of time for everyone to get plenty of questions.
Senator SIEWERT —I want to go back to the timing issue. You said you checked the Volcker report. Was that prior to when you appeared before estimates on 1 November and said to me, ‘No, I know nothing about transport’?
Mr Besley —If you look at the Hansard you will see that I told the committee that I had read the Volcker report.
Senator SIEWERT —But that did not trigger in you any memory of the fact that in the previous year you had been investigating whether AWB had any contact with a Jordanian trucking company?
Mr Besley —No, it did not. I said to you I do not know why that was. I regret it. I do not come to mislead; I could not recall it and did not recall it. That is where it is.
Senator SIEWERT —Mr Taylor, in September 2005 you said you had collected some reports to give to DFAT, I understand.
Mr Taylor —That is correct.
Senator SIEWERT —Were you not reminded in September that in the previous year you had been looking at contact with a Jordanian trucking company? Did you recall at the time Mr Besley answered my question that you were aware of the fact that there had been contact with a Jordanian trucking company?
Mr Taylor —No, I absolutely did not recall that. I think your specific question was in the context of a Jordanian trucking company. At that time I did not have any recollection of that. It was not until I had gone back and was reviewing documents to provide to Mr Cole that it became clear that there was previous information WEA had on hand.
Senator SIEWERT —That was despite the fact that you had collected documents in September 2005—and I will come back to those documents. That did not come up in the documents that you sent in September 2005 to DFAT? That was not in the documentation?
Mr Taylor —I could not answer that question at the moment. A lot of information was included in that request from DFAT, so I could not answer whether that came up in that context.
Senator SIEWERT —When you provide us with the information about what was in the documents that we discussed earlier, can you also please provide us with a list of documents that was included in that brief in September 2005?
Mr Taylor —Yes.
Senator SIEWERT —So neither of you recalled on 1 November anything to do with this review that you had done in 2004?
Mr Taylor —That report was done over a year ago and I did not have a recollection that allowed me to correct the chairman to answer your question and respond more completely that he did at the time.
Senator SIEWERT —Can you take me through the sequence of events or the timing when you were collecting the documents for the Cole inquiry, because the letter that we have is from 7 February, which is in fact three months after I asked that question. Why did it take so long to get back to us? When were the documents that you collected sent to the Cole inquiry?
Mr Taylor —On 20 December.
Senator SIEWERT —Why did it then take from 20 December to 7 February to recollect that your answer was factually incomplete?
Mr Besley —It was not his answer, it was my answer. As the material that went to Cole became clearer and my memory was jogged, it was something that, in retrospect, I should have got onto earlier and written about earlier. But I was not seeking to deceive. In fact, as I see what we did at that time—even though we were probably misled—it was a good-news story. There was nothing in what we found that was of any consequence to a government minister or the government. That is one issue. I was not trying to hold off coming back and clarifying things. I ought to have focused on it earlier and done it earlier. There is nothing more to it than that. And it is not Mr Taylor; it is me.
Senator SIEWERT —I think you said that you started writing the letter on 3 February.
Mr Besley —No, I did not say that at all. I said that, as I remember the sequence of events, there were discussions between Mr Taylor and Mr Mortimer. Mr Mortimer and I spoke over the weekend—I think on Sunday the 5th. We told the minister about this on the Monday morning, and I signed off the letter on the 7th.
Senator SIEWERT —I want to understand why you talked to Mr Mortimer.
Mr Besley —He is a board member and he was rather easier to contact than my grower colleagues who were out harvesting wheat or something at the time.
Senator SIEWERT —So it was because he was a board member rather than a member of the department?
Mr Besley —He had a very interesting dual role but, yes, that is true.
Senator SIEWERT —The minister was then informed on the Monday?
Mr Besley —Yes.
Senator SIEWERT —As a matter of courtesy?
Mr Besley —I think as a matter of some importance, that I had apparently misled a Senate committee.
Senator ROBERT RAY —What I am uncertain about here is that the discovery of all the Cole documents is 20 December and presumably it was in that process, about then, you realised that the evidence you had given to the estimates committee was no longer extant. Is that right?
Mr Besley —It would have been shortly after that I was digesting things. You need to remember when it was. There were a lot of things on. People had gone away. I had a family reunion up in Queensland—which is no excuse, I know. I ought to have got on to it earlier than I did. That is what I have said several times today.
Senator ROBERT RAY —Not all witnesses understand this: did you understand that you had an obligation to correct the record at the first available opportunity?
Mr Besley —Yes. I was probably remiss in not having focused on it harder and earlier. I have already said that a number of times.
Senator ROBERT RAY —I have your letter here—and have read it—which focuses on one particular issue. Can I ask if you have reviewed all your evidence of 1 November last year? And are you satisfied that no further mistakes or factual incompleteness exist?
Mr Besley —There were two questions, which I referred to in my letter. They were the ones that I sought to correct. Hopefully, I have.
Senator ROBERT RAY —I understand that. Now I am asking: have you reviewed the rest of your evidence and are you satisfied that it is complete and accurate?
Mr Besley —Yes, I have and I am.
Senator ROBERT RAY —Did you prepare this letter or did you sign it off? That is not an implication, by the way.
Mr Besley —No, it was a letter which Mr Taylor originally drafted. I did some finetuning of it and signed it.
Senator ROBERT RAY —I want to ask, because this letter only made me angry in one aspect, who coined the phrase ‘factually incomplete?’
Mr Besley —I do not know whether I can claim authorship of that or not.
Senator ROBERT RAY —The evidence you gave was wrong. That is why we have rubbers on the end of pencils, Mr Besley—people make mistakes. But what exacerbates a mistake is when a phrase like ‘factually incomplete’ is used rather than: ‘I got it wrong.’ It implies that maybe around the margins there is a minor error here when it is basically, I think you would concede, a 180-degree swing.
Mr Besley —In retrospect, I think it was an unfortunate term.
Senator ROBERT RAY —I thank you for that. I think it is helpful that you have said that. Just going back to that evidence though, as I said, people make mistakes. Mr Taylor, did you realise Mr Besley was making a mistake at the time? You have given him a lot of advice here.
Mr Taylor —No. I already answered that question when I responded to Senator Siewert’s question.
Senator ROBERT RAY —I am wondering why not? You are being paid to do a job and be on top of it. Surely that sort of knowledge should have been within your reach if you were doing your job properly.
Mr Taylor —That information was within my reach in preparing for that particular Senate estimates. We did not review all the detail of the previous reports provided to the minister, so that recollection was not in my mind.
Senator ROBERT RAY —It is not as though you are covering a worldwide gamut of issues. I do not understand why you exist, but that is only my prejudice. But you are not covering a massive area. I cannot understand why corporate knowledge would not have covered this off by the chief executive officer of this organisation. I can understand it with the chairman, who has probably got a lot of other onerous duties and does those very well, but you should have known.
Mr Taylor —It is no excuse, but we had just lost two key staff from the performance monitoring area of the Wheat Export Authority, including our senior manager who, as we have already indicated, has retired. Unfortunately, when he and a colleague departed we lost a lot of corporate knowledge. In hindsight, had that individual been there this may not have happened. But I should have known.
Senator FAULKNER —When did he retire, Mr Taylor?
Mr Taylor —Sometime in September.
Senator FAULKNER —Last year?
Mr Taylor —Last year, 2005.
Senator ROBERT RAY —What I am trying to understand is that, yes, the chairman, Mr Besley, without actually attributing it, said it could have been through poor briefing—that is understandable in one sense if senior officers have left—or through memory lapse, which I accept. But then when it happens to two people I start to get doubtful. I am doubtful when the record is not corrected immediately or within a week or within a month; when it takes 3¼ months to correct the record. It does not assist this committee.
Mr Besley, you said you took the Australian Wheat Board on trust. Do you feel betrayed by that trust now, from your knowledge of what has happened since?
Mr Besley —I have already said to another question that I have been thinking about that and I will probably withhold final judgment until I see what comes out of Cole.
Senator ROBERT RAY —I see.
Senator SIEWERT —The minister commissioned a specific report—it is reported in the growers report of 2004 that ‘on 24 December 2003 the Minister for Agriculture, Fisheries and Forestry initiated the 2004 wheat marketing review’—which was looking at the AWB’s performance and examining the performance of the WEA. Is that a confidential report? I cannot find it on the website.
Mr Besley —There was a public report that the growers got and there was another report with some confidential information in it, simply, as I understand it—and I have not seen it—because those who made submissions to the panel asked that their submissions be kept confidential.
Senator SIEWERT —So it was a confidential report to the minister. Is that correct?
Mr Besley —Yes.
Senator SIEWERT —That you have not seen?
Mr Besley —There are parts of it that I have not seen because of that point I just made—that the people who made those submissions to the Alice Williams panel did so only on the basis that their comments would be kept confidential. So to the extent I have seen anything that the growers have not seen, I have seen part of that confidential report, without those bits.
Ms Hewitt —If you would like a little more information there, I think Mr Mortimer could assist. It is not a Cole related matter if you are asking just for factual background information in relation to the Williams review of 2004.
Senator SIEWERT —It says in the growers report:
The 2004 Panel also had open access to all of the WEA’s material.
What did it cover in its review?
Mr Mortimer —The terms of reference of the 2004 review were to report upon how well AWBI, as the company which holds the export monopoly under the legislation, was performing its job. We can get the terms of reference to you separately if you wish, but that is the nub of it.
Senator SIEWERT —Did it have access to all of WEA’s material, and did it cover any of these issues that we have been talking about today?
Mr Mortimer —I do not believe it covered Iraq. I do not think that was an issue at the time. It was a report to review the management arrangements of AWBI as a company set up to operate export pools and hold the export monopoly. It examined how the structural arrangements of the AWB group operated around that and it also examined issues about how well the arrangements were tracking in a marketing sense. It went on to examine issues such as the operation of the WEA itself—that was part of the terms of reference of the Williams 2004 review—as that was part of the arrangements for managing the export monopoly, and that included issues such as the giving and the conditions of giving of consent for export licences et cetera.
Senator SIEWERT —Have the findings of that review been fed back to WEA?
Mr Mortimer —Yes. The Williams review, as we call it, gave a report to the minister and government—I think in late 2004 or early 2005. The government made a decision on that, which was announced in April 2005 by Minister Truss. Effectively, the government endorsed the conclusions and recommendations of that report and asked AWBI and WEA in their respective capacities to implement the recommendations of the report.
Senator SIEWERT —That was in April 2005?
Mr Mortimer —Minister Truss announced the government’s decision on the matter in April 2005.
Senator SIEWERT —But did not actually release the report?
Mr Mortimer —Two reports were released: one, as has been referenced, was a public report that went to growers; the other was the confidential report that went behind that, which, again, in the same pattern as WEA’s annual reports, relied to a large degree on material provided in confidence by AWBI. Indeed, in July 2003, I think, the Wheat Marketing Act 1989 was amended to specifically provide for those arrangements.
Senator SIEWERT —It reviewed AWB and gave recommendations but did not cover Iraq—
Mr Mortimer —It was looking at the structural arrangements and broad performance of the wheat marketing arrangements.
Senator SIEWERT —In the report that AWB has on its website, when it is referring to the growers report it specifically refers to AWB’s performance in light of the Iraq situation.
Mr Mortimer —Sorry, which document is this?
Senator SIEWERT —There is a document on AWB’s website that makes a comment on the growers report. This is not the review but the growers report—the publicly available WEA one, as I understand it. But it does mention the fact that they had been particularly considering the international political issues, including the Iraq war. Were these things considered in that light?
Mr Mortimer —Can I make a clarification: the 2004 wheat marketing review gave a growers report, which I have here. Every year the WEA provides both a confidential report to the minister and also a growers report, which I have here. Which document are we talking about?
Senator SIEWERT —This document obviously talks to this one. The point I am making is that I find it hard to believe that—
Senator Abetz —The document you held up is not related to either of those.
Senator SIEWERT —Yes, it is. This is the AWB commentary on the big version of what Mr Mortimer just held up. In its comments, AWB refers to the Iraq situation. I find it hard to believe that in fact the 2004 review that was carried out would not have looked at the Iraq situation.
Mr Mortimer —As far as I know, it did not. I do not think that was considered to be within its terms of reference. It might be helpful if we get the terms of reference of that review to you, but it was essentially a broad based review of the operation of the structural arrangements and the particular outcomes of those resulting from AWBI holding the export monopoly under the legislation.
Senator SIEWERT —If you could get me the terms of reference, that would be useful.
Mr Mortimer —We are happy to do that.
Senator SIEWERT —To clarify, there are bits of that report that are confidential—is that right?
Mr Mortimer —Again, there are two reports. There is a confidential report that went to the minister and there is a growers report, which I have referenced here, that drew the conclusions of that report and brought out the outcomes and recommendations.
Senator O’BRIEN —What did the Grains Council get? Don’t the Grains Council get a copy of a report?
Mr Mortimer —The confidential report goes to the minister. It is confidential to the minister.
Senator SIEWERT —Does the Grains Council just get the growers report?
Mr Mortimer —In broad terms, yes.
Senator O’BRIEN —No, they get more than that.
Mr Mortimer —It would only be otherwise if the minister agreed.
Senator FAULKNER —But the Wheat Export Authority’s reporting mechanisms are to the minister and to the Grains Council. Is that right?
Mr Mortimer —That is right, but that reporting happens in different ways. As has been referenced, the legislation requires a report, which is colloquially referred to as the confidential report because of the nature of it, to the minister. There is a public report that goes to the growers.
Senator FAULKNER —So there are just two reporting mechanisms?
Mr Mortimer —Yes.
Senator SIEWERT —There were in fact three reports that year, weren’t there?
Mr Mortimer —The 2004 review was not a normal report. It was a specific review for a specific purpose—the sort of review that happens once every five or 10 years. It was not a normal, routine report. As I said, it was required in the legislation, which was amended in 2003 to give effect to it.
Ms Hewitt —Whereas I think the report you are referring to, Senator, the growers report, was the regular annual WEA report to growers.
Senator SIEWERT —My understanding of it is that there was the normal, regular growers report; there was what they call growers report that came out of the review, so that was a separate report; plus the performance review of 2004; plus this confidential review. So there were in fact four.
Mr Mortimer —I think this is quite simple. There are two functions going on there. Every year there is a performance report, and that performance report is expressed in two ways: the confidential report to the minister and the public report to growers. So that is two. Then, on the occasion of 2004, the government decided to do a separate broader structural review of the arrangements, and that review generated two reports: a confidential report to the minister and a public report to growers. So that is the four reports, and they are fully accounted.
Senator SIEWERT —But in that review, my understanding is that the review panel had access to all WEA’s material. What I would like to know is whether they had access to all the material that we have just been talking about as well.
Mr Besley —As Mr Mortimer has pointed out, the terms of reference—you need to see those and I cannot quote them off the top of my head—were about the structural arrangements: was AWBI managing the single desk correctly? It was not about the single desk as such. There was no discussion about whether there should be a single desk but, given that there is a single desk, was AWBI managing that properly? The other leg of it was about whether we were doing our job properly in terms of the structural arrangements that we have to give effect to our duties under the act of parliament which governs our operations. They were not looking for anything other than that. It was purely that sort of issue. I think the terms of reference will make that very clear to you.
Ms Hewitt —Senator, we will make arrangements to get you those terms of reference during the proceedings.
Senator SIEWERT —Okay. Is the material on the WEA publicly available? I understand the stuff on the AWB is not, but is the material on the WEA publicly available?
Mr Besley —The report by the 2004 panel?
Senator SIEWERT —Yes.
Mr Besley —Yes, it is.
Mr Mortimer —To the extent this is the public report—
Senator SIEWERT —To the extent of that, but anything beyond that?
Mr Mortimer —No, nothing but what is there.
Mr Besley —No, that is it.
Senator SIEWERT —Nothing beyond that is publicly available?
Mr Mortimer —No.
Senator SIEWERT —Why is that?
Mr Mortimer —Because the rest of it is in the confidential report. As I said, this document summarises and captures the findings of the review panel and the recommendations to government but does not go into the details, the facts and figures that the review panel examined in doing its review of AWBI’s performance in holding the export monopoly.
Senator SIEWERT —That is what I understood was the confidential bit of it. It was not clear that the WEA section of it was as well.
Mr Mortimer —The whole report was wrapped up as a confidential report.
Senator O’BRIEN —Mr Taylor, who was on the board in 2004? Who was the government member during 2004?
Mr Taylor —That was Mr David Mortimer.
Senator O’BRIEN —And who was the Grains Council representative?
Mr Besley —There are two growers who are appointed by the minister on the recommendation of the Grains Council. In 2004 it was Malcolm Heath, who has been replaced, and Jim Flockart, was it?
Mr Taylor —I think there was a change during 2004.
Mr Besley —Yes, I think Leith Cooper came on when Jim Flockart went off, but I would need to check the dates.
Senator O’BRIEN —Mr Mortimer was present at the board meetings when the issue of the allegations of kickbacks was raised and the discussions with AWB took place?
Mr Besley —Yes, Mr Mortimer never misses a board meeting unless there is a very good reason to do so.
Senator O’BRIEN —I am sure he does not. He is a very diligent officer.
Mr Besley —He is.
Senator O’BRIEN —So he would have been aware of the nature of the difficulties that WEA was having in gaining the material it needed from AWB?
Mr Besley —Yes, he would have.
Senator O’BRIEN —Does that mean the Grains Council would have been aware because the grower representatives were on the board? The act talks about a quorum. It says that three members must be present, one of whom is a member nominated by the Grains Council.
Mr Besley —Under the act we have to report to the Grains Council as well and we have to present our annual report to the Grains Council. We do that under the lofty title of a ‘meeting of report’. The format is that we run a bit of a program on a screen—what do you call those dreadful things where people turn up with a whole bunch of slides to show?—where we talk about what we are doing, what our financial status is and so on. Then formally once a year we are required to, and we do, present our annual report the Grains Council. So to the extent that the Grains Council reps feed back into the Grains Council, that it is a matter between them and it.
Senator O’BRIEN —When the authority attends the Grains Council meeting with the lofty title you have just described, particularly in 2004 was a report given on the investigation into the allegations of kickbacks?
Mr Besley —I would have to check that. I do not recall. We had such a meeting only last week. There was a lot of talk about the Cole inquiry, as you can imagine.
Senator O’BRIEN —I am asking about 2004 given that that is contemporaneous with the investigation, the joint meetings of the board, the documentation received in May which talked about contracts with a Jordanian trucking company, and the allegations which had been in the media the year before when Colin Powell raised the issue that US grain interests alleged that this kickback arrangement was taking place.
Mr Besley —I would need to get the agenda to you. I do not remember whether we discussed that.
Senator O’BRIEN —In terms of the process of the inquiry, is it fair to say that the Wheat Export Authority is the gatekeeper for AWB Ltd? Are you the only organisation with a statutory responsibility and a right to access—this is pre Cole inquiry, of course—the internal workings and material held by AWB Ltd and AWB International?
Mr Besley —We have the power to require information. It is a specific power in the act; we cannot just put a general inquiry out. We have used that power.
Senator Abetz —I am not sure who the chair is at the moment, but that is a very broad question to the witness and he is not necessarily qualified to answer it. As to what other organisations have the power to inquire into the internal workings of AWB, there is possibly ASIC and the Stock Exchange. I do not know. It could well be that there are a whole host of other regulatory bodies that would be entitled to do so, of which Mr Besley himself or WEA are not necessarily aware. That is the only point I am making.
Senator O’BRIEN —Let me put it this way: the Wheat Export Authority is specifically tasked with the scrutiny of AWB Ltd as to the performance of its export function.
Mr Besley —Let us be clear: not AWB Ltd, AWBI.
Senator O’BRIEN —But AWBI is nominated company B under the legislation.
Mr Besley —Yes, but that is an important point: it is not Ltd—we do not scrutinise it. To the extent that the listed company AWBL is, there are other organisations, as the minister has said—the Stock Exchange, the ACCC, ASIC and so on. But our role is to monitor how nominated company B, which is AWBI, manages the single desk for the benefit of growers. We have another role, which is to issue permits to non-AWBI exporters who may wish to export wheat. We do that only after consultation with AWBI, and that amounts, at the most, to four per cent of the exports in any one year.
Senator O’BRIEN —Section 5(1)(b) of the act says:
(1) The Authority has the following functions:
… … …
to monitor nominated company B’s—
That is AWB International—
performance in relation to the export of wheat
That is the first part—
and examine and report on the benefits to growers ...
That is the second part. So that is your charter, apart from control of the export of wheat.
Mr Hurley —Yes.
Senator O’BRIEN —And section 5(2) says:
The Authority has power to do all things that are necessary or convenient to be done in connection with the performance of its functions.
That is a very powerful authorisation under the act and a very general reference to the monitoring of company B’s performance in relation to the export of wheat. I take it from your letter and from the evidence you have given today that in 2004 you were investigating whether they were participating in kickbacks to the Iraqi regime.
Mr Besley —For the purpose of finding out, if they were, what impact if any it was having on the pool—not for the purpose of pursuing that issue itself.
Senator O’BRIEN —Did the Wheat Export Authority look at any period prior to 2004?
Mr Besley —In respect of what?
Senator O’BRIEN —In respect of the investigation into the allegation that AWB International was paying kickbacks to the Iraqi regime.
Mr Besley —I cannot tell you—I do not know because I was not there—what period the contract extracts—
Senator O’BRIEN —You have read the Volcker report. You know what period the contracts were for.
Mr Besley —Yes, but I do not know what it was that our man looked at, whether they were pre the date you asked for or post the date or what. I do not know.
Senator FAULKNER —You have the contract extracts on file, don’t you?
Mr Besley —No, we do not have them on file.
Senator FAULKNER —Do you have copies of them at all?
Mr Besley —No, we do not.
Senator FAULKNER —These were just sighted then by your officer?
Mr Besley —That is right. That is what I said before: they were sighted in the AWBI office. You have already heard that there were two people from AWBI present, and our man made a file note which is the basis upon which we put what we did in the report to the minister.
Senator FAULKNER —Were these contracts that were sighted by your officer—I assume that you would tell me; I do not want to make an assumption, as I said before—17 contracts selected by AWB itself? Does the file note make it clear whether these are contracts that your officer had been able to wheedle out of AWB, or whether they were ones provided by AWB?
Mr Besley —I think they were simply provided as an example of the way they were trading. As has emerged, and again I apologise if it appeared that I was not covering that point, these were contracts approved by the UN.
Senator FAULKNER —But the key point is that you have the statutory capacity, which I think you might, to go into AWB and wheedle out what you might—I do not want to get into a technical argument about that. You certainly have some powers in that regard—and those powers were not used. These were just selected contracts provided by AWB itself.
Mr Besley —They were. There is no obligation in the legislation for AWBI to provide us with anything. We have to do it by a discussion process. We do have a power to specifically request information, but that is a fairly limited power. We cannot just ask broad questions.
Senator FAULKNER —But that power was not invoked in relation to this matter.
Mr Besley —No, it was not.
Senator FAULKNER —This was done in a cooperative way.
Mr Besley —That is correct.
Senator FAULKNER —I now have the transcript of Mr Vaile’s comments made during a Sky News interview on 13 February 2006. As I understand it, from what was being said yesterday I think you have told me that there is no capacity for the Wheat Export Authority to monitor statements about the Wheat Export Authority in parliament. That is correct, isn’t it?
Mr Besley —I did not say there was no capacity. You asked me whether there was a system in place, and I did not answer.
Senator FAULKNER —Sorry, there is no monitoring of statements about the Wheat Export Authority in parliament?
Mr Besley —Not specifically.
Senator FAULKNER —Is there any effort made to monitor statements about the Wheat Export Authority in the media? I assume your officials would be accessing clipping services of relevance to the issues you are dealing with. I hope you would be, anyway.
Mr Besley —The answer to that question is yes.
Senator FAULKNER —So you do monitor what is said about the Wheat Export Authority in the media?
Mr Besley —We do.
Senator FAULKNER —But not in parliament?
Mr Besley —No, I guess we do not.
Mr Taylor —We have to keep up with comments that are being made more generally about the Wheat Export Authority but we obviously do not cover 100 per cent of public comments that are made that affect the WEA.
Senator FAULKNER —And you are quite clear as to the evidence that you have provided to this committee about the United States Defense Contract Audit Agency report of 2003? You are quite clear that the Wheat Export Authority did not have access to that document?
Mr Taylor —That is my recollection. I would like to take that on notice and absolutely confirm that beyond doubt. But my understanding is that the Wheat Export Authority does not have on hand a copy of that document. The WEA was certainly aware of it through media reports.
Senator FAULKNER —But you can say to this committee that you have not accessed it or read it? You can say that?
Mr Taylor —I can say that.
Senator FAULKNER —And you can say that too, Mr Besley? Can you?
Mr Besley —Yes, I can.
Senator FAULKNER —We have a situation where a minister makes—and you have had this transcript read to you; I want to be clear here; this is a media transcript and it is not a Hansard transcript, so I want to be very clear about the record here—a comment. The journalist says: ‘So you are saying that this report’—and I interpolate here that this is the US defense report we are talking about, so that you are clear on this—‘was not seen by the government?’ Mr Vaile says: ‘No, what I am saying is it was addressed by the Wheat Export Authority when they did that review of those contracts that were conducted by the AWB.’ I want to be absolutely clear as to whether that report was addressed by the Wheat Export Authority when you did the review.
Senator Abetz —You are interpolating, to use your words, this report as referring to a particular report. I am not sure—I have not got the transcript in front of me—as to whether that is necessarily the particular report to which the minister or in fact the journalist was referring.
Senator FAULKNER —For the sake of time and moving on, I am happy to accept that—so you are not sure, I am sure and the transcript is clear. But let us put that aside—
Senator ABETZ —This report does not identify that report, and that is why you had to interpolate and that is why you cannot be sure, because you yourself acknowledged and admitted you were interpolating and it is the subject—
Senator FAULKNER —But let us put that aside. Let us just deal with the report. I just want to be clear on one thing: the report, which is the United States Defense Contract Audit Agency report, was not used in the review of your agency’s review of contracts, the confidential report.
Mr Besley —I think, to put it into perspective—and I would like to have it checked, as Glen said we would, because I do not think we have a copy of the report—it was the press reports which referred to that report which led us to do the investigation we did. So our connection with that report was through a press comment. As far as I know, that is the only connection but we should check it.
Senator O’BRIEN —I wish to go back to the point I was raising earlier. The material that the Wheat Export Authority had—if I can be clear on this—did not contain material about the value of the contracts for the transportation of wheat within Iraq.
Mr Taylor —That is an answer I have given. I do not believe the WEA has any record that identifies those costs, but all that material is before Cole.
Senator O’BRIEN —Did the Wheat Export Authority’s officer ask for that material and AWB (International) refuse to provide it?
Mr Besley —We cannot answer that; we do not know. We could ask, if that is important.
Senator O’BRIEN —Was there any material on the file about the value of the contracts that were discovered to exist in May 2005—that is, with a Jordanian trucking company to transport wheat within Iraq?
Mr Besley —Do you mean any cost data?
Senator O’BRIEN —Yes.
Mr Besley —Not as far as I know. As I said before, the only reference by AWBI people to the Jordanian trucking company was to indicate why it was that the wheat price might seem to be above the benchmark. It was because the cost of transportation in Iraq was high. I think that is recorded in our senior officer’s note to file and is in turn recorded in the report we sent to the minister.
Senator O’BRIEN —But you do not know whether the officer requested that material. Did the board discuss the material it wanted from AWB International privately, or indeed when it met with the board of AWB International?
Mr Besley —As I recall, we said we wanted to understand what these allegations were about and we thought it would make sense if we were able to see some of the documents that the AWBI had. The upshot of that was an invitation to send somebody down to look.
Senator O’BRIEN —Was it as non-specific as that? Did you have any idea of the documents you wanted to see?
Mr Besley —I think it was as non-specific as that.
Senator O’BRIEN —This was an unusual arrangement, wasn’t it? It was not something you normally looked at. When the Wheat Export Authority became aware that there were contracts with a Jordanian company for the trucking of wheat in Iraq, and given that the allegation was about kickbacks, did that send any signals within the Wheat Export Authority that that might be something worth looking at?
Mr Besley —Again, let me repeat what I have already said a number of times today. We asked point blank: ‘Are the press reports correct; have you been paying bribes?’ This was for the purpose of understanding what impact, if any, that might have had on the operation of the pool. Their answer was: ‘No, we haven’t, and we have processes in the organisation which refer to agency payments.’ We asked, ‘Can we look at that register?’ They said, ‘Yes you can.’ As I said before, there were none recorded for Iraq. Our purpose was to find out whether anything that may have been going on was impacting on the pool and therefore the cost to growers. We were satisfied it was not. We cannot go beyond that; it is not our business.
Senator FAULKNER —Do you feel that you were duped?
Mr Besley —As I said before, I have thought about it and thought about it. I will have to withhold final judgment on whether I come to the conclusion that the answer to that question is yes until I see what Cole says.
Senator O’BRIEN —With respect, it really does seem as though in that period the authority was the three wise monkeys: you saw no evil, you heard no evil and you reported no evil to the minister.
Senator FERRIS —That is an unfortunate reflection, Senator O’Brien!
Senator O’BRIEN —That is not an unfortunate reflection at all. It is the fact. The Wheat Export Authority—
Senator Abetz —No.
Senator O’BRIEN —Do you want to give evidence? Do we want to have the public servants give evidence here?
Senator Abetz —Once again you are reaching conclusions before the Cole inquiry has been completed. We might as well tell the commissioner he can go home because Senator Kerry O’Brien has already determined the matter. Ask questions by all means, but these gratuitous conclusions are not assisting anyone, other than providing a cheap headline.
Senator O’BRIEN —The reality is that if the minister had any interest in this matter he would have known that I have been critical of the Wheat Export Authority for some time—indeed, dating from before Mr Besley’s chairmanship of the authority. Mr Taylor will know that. But, in this case, having decided to investigate kickbacks; to not inquire—apparently—about the value of the trucking contracts, which were an unusual arrangement; and to not inquire as to what sort of financial transactions were taking place completely; how could you possibly have had a proper insight into whether kickbacks were being paid? And do you seriously ask us to believe that you were happy to accept, given the allegations that were about, that a simple denial from AWB International was sufficient?
Senator Abetz —Mr Besley has answered this.
CHAIR —Do you want to invoke 5(2) in all of this?
Senator O’BRIEN —I have already mentioned it.
CHAIR —We could go down a path of assertion and jamming people’s mores down someone’s neck, but I do not see it serves any purpose.
Senator O’BRIEN —I will draw some Hansard of yours to your attention.
CHAIR —That is the unfortunate part—I am the chair.
Senator O’BRIEN —Yes, I agree—it is the unfortunate part. I put it to you that the authority has not done a job at all if it really was intending to investigate whether kickbacks took place. But not having inquired into an important aspect of the value of the transaction, and that is the trucking costs—
Senator Abetz —Mr Besley has already answered this.
CHAIR —This needs to be put in perspective today. There was the breakout at Taronga Zoo this morning with the gorillas. These blokes lobbed here with the full anticipation, as did the rest of the people in this building, that there would not be any questions answered here today. I think this committee has done a damn good job, and everyone ought to appreciate the fact that, despite all the bloody garbage that went on overnight and this morning, the Wheat Export Authority stepped up to the plate. No-one should forget that.
Senator Abetz —Mr Besley has already answered the question. He has indicated that his inquiry—and I am sure he will correct me if I am wrong—related to the impact on the pool, because that was the remit of the WEA. They investigated documents et cetera and a determination was made that it did not have an impact on the pool and, as far as the WEA were concerned, that was the end for them. Whether it was right, wrong or indifferent that they took that approach may well be a matter that Commissioner Cole will pass comment on, but you are asking them and drawing conclusions about that when they have already given you an answer as to why they took a certain approach and why they investigated to ensure that the pool was not impacted. Once they were satisfied with that—rightly, wrongly or indifferently—they did not pursue it further. I am sure Commissioner Cole will say that that interpretation was correct, possibly correct or whatever. That is for Commissioner Cole to determine.
Senator O’BRIEN —You are sure, are you? In terms of the investigation of the allegation of kickbacks, what steps were taken to ascertain the implications on the pool of the payment of kickbacks, any illegality that might bear upon the pool and the financial cost of such actions? What investigation actually took place into that aspect of the matter?
Mr Besley —The first action was to check that the FOB data, which is what is charged to the pool, was correct. We get FOB costs from AWBI—they do not have to give it to us, but they do give it to us because we have talked about how we are going to do our job. Where there is a contract that is not FOB, it is CNF—cost no insurance and freight—or CIF—cost insurance and freight. The primary purpose was to find out if what they had given us on FOB stuff was correct, and we satisfied ourselves that it was. The other purpose was to find, if there was something shady going on, whether that was impacting on the pool. As I said at the Senate estimates in November, before that meeting I had the chance to read the Volcker report and it was clear to me that, to the extent any payments were being made out of the oil for food fund, they were coming out of an escrow account and were not impacting back on the pool. That is what we were on about.
Senator O’BRIEN —In effect, you were the only gatekeepers of the performance of AWB in that period. You were the only ones conducting an inquiry into the allegation, were you not?
Mr Besley —Not really, because ours was specific. Do not forget that the Cole inquiry was announced—
Senator O’BRIEN —Someone else was inquiring, were they?
Mr Besley —Cole was announced—
Senator O’BRIEN —No, in 2004.
Mr Besley —In 2004?
Senator O’BRIEN —In 2004 you were the only ones inquiring into the kickback allegations and AWB, weren’t you?
Mr Besley —Volcker was inquiring in 2004.
Senator O’BRIEN —Did you provide any material for Volcker?
Mr Besley —We may have done through DFAT.
Mr Taylor —The WEA was requested through DFAT to provide information in support of the Volcker inquiry. Subsequently, the WEA did not provide any information through DFAT for the Volcker inquiry. It is understood that AWBI dealt directly in providing information to the Volcker inquiry.
Senator FAULKNER —Mr Besley, you have now had a significant opportunity to review a range of documentation and decisions that have been made. From the evidence you have given, it sounds like you have given some thought to that—perhaps considerable thought to that. I hope that is the case. Is your assessment now in relation to this matter that the Wheat Export Authority could have done better?
Mr Besley —It depends what you are addressing that to. If you are asking whether we could have done better in following an inquiry on corruption, we were not really doing that. That was not our role. We were concerned to see that—
Senator FAULKNER —Let me put it in a context. The context of this, obviously, is what has been developed into a massive and embarrassing public scandal. I am not including any political spin in this. Everyone knows that that is the case. It now, as a result of decisions made in the last few days, appears as though it is going to have a massive impact on Australian wheat producers. So I am not trying to apply political spin in this; I am asking you very seriously whether, on reflection, you think that WEA could have done better.
CHAIR —Senator Faulkner, for your benefit, I would say that anything that has happened in the last few days has not affected Iraq’s decision with the wheat. I can assure you that last September the Yanks told me that they were going to take every ‘goddamn market off you’.
Senator FAULKNER —That may be right, but you understand the question I am asking. I am asking a reasonable question and I am asking it without a political spin. I am asking you, Mr Besley—because you are before this committee now and it is the first opportunity you have had since November last year—if you could respond on reflection.
Senator Abetz —Mr Chair, these sorts of questions, with respect, are not getting us anywhere. I would have thought that each of us—if we were honest—if we were asked, ‘Could you have done better with the way you were questioning witnesses today or the way—
Senator FAULKNER —I did not ask that; I asked whether WEA could have done better.
Senator Abetz —we would all on reflection say, ‘Yes, chances are, we could have done better.’ Anybody who says, ‘I’m perfect’—
CHAIR —We can always do better at everything we do.
Senator Abetz —This is the sort of questioning that we are now descending to.
CHAIR —I will let the answer come, but we are getting to the circle work. We are starting to get to the circle work.
Senator FAULKNER —I though that was a reasonable question. I do not know if you care to answer it, Mr Besley. I will ask a specific question if you would prefer. I will ask a different question. Have you considered offering your resignation or have you offered your resignation to the board?
CHAIR —Thank you—
Senator FAULKNER —That is a serious question. You would not allow a different question, so I have asked this one.
CHAIR —You can ask whatever you like.
Senator FAULKNER —Well, I have asked that question.
Mr Besley —No.
Senator Abetz —Unlike Senator Faulkner, who did offer his resignation from the position of Australian Labor Party leadership of the Senate—probably for good reason.
Senator SIEWERT —I would like to pursue one of the questions that Senator O’Brien asked with regard to 2004 and when you were looking at whether you thought this was having an impact on the pool. I am a bit confused. You went on to refer to Volcker, but the Volcker report did not come out until 2005. So you could not have been using that information to review the impact on the pool in 2004.
Mr Taylor —That is correct.
Senator SIEWERT —Okay. So you could not have been using the fact that it was coming out of an escrow account. Or did you do that and then go on to talk about Volcker? You could not have used the information that was coming out of Volcker because they had not said that in 2005, so what else did you use to make your decision in 2004? Did you look at the allegations that were being made and that were circulating at the time and think, ‘Oh, they might have an impact’? Despite what AWB said, the fact was that information was coming from America—there was a lot of information that we know was on the record then. Did you look at that and think, ‘That might potentially have an impact on the pool’?
Mr Besley —What I said at the Senate estimates in November was that I had read the Volcker report by then, which I had. I said that it was clear to me that, to the extent that payments were being made out of the escrow account oil for food fund, they were not impacting on the pool. That is what I said.
Senator SIEWERT —But in 2004 WEA was making its decision on whether AWB was in fact involved in the kickbacks issue. What information did you use to judge whether what they were doing would have an impact on the pool?
Mr Besley —The information we got when our man went down there.
Senator SIEWERT —So just the information from AWB. You did not look at the allegations that were being made to see whether it would have an impact on the pool?
Mr Besley —The allegations being made by whom?
Senator SIEWERT —The allegations that kicked off your investigation in the first place.
Mr Besley —That is right. We went down there to satisfy ourselves as best we could—and I believe we did—that what they had told us about FOB prices was correct. They said that there were no bribes, and we took that at face value. What was happening was not impacting on the pool.
Senator SIEWERT —So you did not then look at what impact any kickbacks might have on the pool if they came to light? You did not look at any of that; you looked purely at what AWB said about FOB prices.
Mr Besley —Yes, but do not forget that what affects the pool is the FOB price. What happens once the wheat leaves the shores, which is the cartage and insurance and all that stuff, is a cost to the buyer.
CHAIR —If I can focus your mind, Senator Siewert—because Senator O’Brien has some questions to ask and we are approaching a convenient time for lunch—what would your last question be if it was the last question before lunch? That is the one I want you to ask.
Senator SIEWERT —The point I am getting to is that hasn’t all this ultimately impacted on the pool?
Mr Besley —Sorry?
Senator SIEWERT —Isn’t all that is going on now—the scandal and the inquiry—ultimately impacting on the pool?
Mr Besley —That is an issue which I cannot answer. The structure of the industry is an issue which is going to get some consideration by the people who should be considering it. The news that Iraq has said we are not going to deal with you for the moment is clearly an issue that must be of concern to AWB and the grain growers. But that is for people better than I to make a judgment on. I guess life will never be quite the same again.
CHAIR —Can I, to give a bit of colour and movement to this before I throw to Senator O’Brien, remind everyone what the goddamn Yanks said on Dateline the other night? The goddamn Yanks said, ‘We’ve gotta operate on a level playing field and we’ve gotta get rid of that goddamn single desk.’ When the lady said to the grower, ‘What about the farm subsidy?’ the Yank said, ‘We’ve gotta have ourselves a safety net or we couldn’t operate.’
Senator O’BRIEN —The accent is not getting any better, I must say. I am intent on understanding the purpose of the investigation. Mr McGauran, in his press release of 19 February, said:
In February 2004 the WEA Board, aware of media reports of allegations of kickbacks regarding Australia’s wheat trade with Iraq resolved to look into the matter.
I take it that is what would have been reported to Minister Truss in 2004 in the report to the minister.
Mr Besley —In the performance review report, yes.
Senator O’BRIEN —And the other material in that press release, I take it, is what you reported to the minister as to your method?
Mr Besley —Yes.
Senator O’BRIEN —So the report to the minister in October 2004 faithfully recorded that you were aware of the media reports, which you would have to say were potentially quite damaging to Australia’s wheat export trade, and you resolved to look into the matter of kickbacks. So is it fair to say that in February 2004 the board was concerned that if there were kickbacks it would affect Australia’s wheat export trade?
Mr Besley —No, I think that is putting too fine an interpretation on it. What we were concerned about was: if anything nefarious was going on, was that affecting the operation of the pool? We were not looking at the broader context of ‘is this going to mess up our international wheat trade?’
Senator O’BRIEN —So the board had made a decision that there would be a narrow inquiry?
Mr Besley —There would be an inquiry, which was directed towards the Wheat Export Authority, doing what it is required to do under the act of the parliament that governs its performance. We were not to be a policeman. We were not going out to investigate corruption. We were going out to find out, if anything like that had happened, whether it in fact impacted on the pool—nothing else. It is not our job to do that. Cole is going to do that.
Senator O’BRIEN —Volcker was going to do that.
Mr Besley —He has had a go too. But that is not our job. It never has been our role. ‘Look into it’ does not mean look into it in the sense you are implying. It means: ‘Look into it in terms of what impact, if any, it is having on the management by nominated company B on the operation of the pool for the benefit of the growers.’
Senator O’BRIEN —There is no provision in the act to monitor nominated company B’s performance in relation to the export of wheat that reads as narrowly as you have interpreted it. Were you given any instruction as to how the act should be interpreted or have you taken legal advice?
Mr Besley —I think the authority has had advice on interpretation of the act from time to time before my day, and from time to time we have sought advice as well. We have sought advice on use of the powers.
Senator O’BRIEN —A more accurate representation of what the board decided to do in February 2004 is to find out whether the media reports of allegations of kickbacks had reduced the return to the pool.
Mr Besley —You could put it that way, yes.
Senator O’BRIEN —I think that is what the board had decided.
Mr Besley —Yes. I keep saying that we have a role, which is to monitor the performance of nominated company B insofar as it operates the pool for the benefit of growers.
Senator O’BRIEN —So it was not so much a concern that the company might be involved in the payment of kickbacks, bribes, improper commissions or the like; it was whether, having done that, that might impact on the pool?
Mr Besley —I think, if you are implying that none of us cares about improper behaviour, then you are wrong. But the purpose of our going there was to see if what was allegedly happening was affecting our role, which is to monitor—
Senator O’BRIEN —Hang on, I was not asking a question to put an implication. I was asking a question to find out the basis of the decision that the board made in February 2004. I want to understand—given the process that you followed, which was ultimately reported to the minister—if the board’s decision was really intended to restrict the inquiry into whether the pool return was affected, and nothing more.
Mr Besley —Essentially, yes, because that is the role we have in life. We are not someone who goes out policing things.
CHAIR —If I take you to a role you have in life and there is no question of—
Senator O’BRIEN —You said you would give me the time—
CHAIR —And I will.
Senator O’BRIEN —You keep interrupting, as do others.
CHAIR —Can I just take you to the internal battle between the interests of the shareholders of AWB Limited and the interests of growers in AWB International. I have been a great critic of how you manage all that. Will you or have you looked at how a sale from Argentina—I presume through the Geneva desk to Iraq by AWB—impacted on the interests of Australia’s wheat growers?
Mr Besley —I am not aware of that specific sale. We do look at AWB Geneva, and we have reported on that. As I am sure you recall, the business rules are that AWBI must approve any sale proposed by AWB Geneva. In fact, it has vetoed a number—I think two. AWB Geneva does two things: it sells Australian wheat where the financial risk is a higher risk than AWBI is prepared to take, or it sells non-Australian wheat to preserve a customer when there is a lower supply of Australian wheat to supply that customer—in other words, to keep a long-term customer supplied.
CHAIR —Anyway, we will come to that at a later time.
Senator O’BRIEN —I am asking about the decision taken by the board in February 2004 and I have been asking how narrowly that decision was couched. Is the decision recorded in the board’s minutes?
Mr Besley —It would be. The board operates—and the minutes will demonstrate this—on a general basis. We do not resolve specific motions. We decided that we ought to go and have a look at it.
Senator O’BRIEN —So the board minutes will not reflect the nature of the discussion at the board.
Mr Besley —I would think nothing more than that. The board resolved that we ought to look at it. I think that is a fair assessment.
Senator O’BRIEN —I take it that it is correct to say that your representation of the intent of the board’s decision is indeed what the board intended when it made that decision—that is, to enquire only as to how any alleged kickbacks might affect the return of the pool?
Mr Besley —That is a fair interpretation.
Senator O’BRIEN —And no more?
Mr Besley —That is the context in which we made that decision.
Senator O’BRIEN —That might further justify the comment I made about the ‘hear no evil and see no evil’ approach that I suggest that the board has had.
Mr Besley —That is your interpretation.
Senator O’BRIEN —That is exactly what you have just told us.
Mr Besley —That is an utterly ridiculous statement.
CHAIR —Mr Besley, you do not have to respond to that sort of intimidation.
Senator Abetz —This is a situation where, like it or not, the WEA has indicated its approach, the reasons for its approach and the rationale. Whether that is legal, right, wrong or indifferent, the Cole inquiry may well tell us. But if somebody has—and this is a big ‘if’, and I am not sure that it is the case—misdirected themselves as to the law, that is different to asserting that they are deliberately not wanting to go down a particular road. That is where the political spin that is now trying to be put on this is, in my submission to the committee, unacceptable. Sure, ask your questions about the rationale et cetera—and Senator O’Brien has received the answers—but, having been given a full answer as to why they did not pursue it further, putting on that spin is unacceptable.
Senator O’BRIEN —Frankly, the statement is justified by the answer. What you have just told us, Mr Besley, is that you were not looking for anything beyond the simple financial returns of the pool. You were not looking at the morality of the approach or for the facts of what took place. As long as there could be no return on the pool—
Senator Abetz —He believes he operates under a charter in the act.
Senator O’BRIEN —As long as there would be no impact on the pool, your role would be satisfied. That is what you just told us, isn’t it, Mr Besley?
Mr Besley —I said to you that I was not commenting on my personal views about the alleged bribery and corruption; I was commenting as a practitioner who has to administer an act, which requires us to do certain things. The statement you made a moment ago was utterly ridiculous. I reject it and I am incensed by what you said. You are now getting into an area where, I have to say, it could well be that I will be called to the Cole commission, and we ought to stop this line of questioning right now.
Senator O’BRIEN —You may think that. We may stop for lunch.
CHAIR —I will seek some guidance here. I thank everyone for their cooperation this morning. Senator O’Brien, do you have any idea how much more circle work you need to do.
Senator O’BRIEN —I do not know what you are talking about with ‘circle work’, but I certainly have some more questions.
CHAIR —Didn’t you ever do any circle work when you were a young bloke?
Senator O’BRIEN —No.
Senator Abetz —He has been a union official.
CHAIR —I think this would be a convenient time to break for lunch.
Senator Abetz —He will get dizzy if we do not stop now. He is going around in circles.
Proceedings suspended from 1.00 pm to 2.00 pm
Senator MILNE —I want to follow up on the questions I was asking about the outperformance bonus. The bonus that was paid was around $19.4 million, and I understood from your earlier answer that if the Wheat Board met a certain benchmark then the outperformance bonus was paid. I assumed from your answer that the benchmark was purely financial. Is that correct?
Mr Besley —That is right. It is a financial benchmark.
Mr Taylor —That is correct. There is a financial benchmark that it struck which AWB Ltd, in providing services to AWBI, must outperform to entitle it to an outperformance incentive payment.
Senator MILNE —How can service delivery achieve an outperformance bonus? Explain it to me. If you are contracted for a service and you deliver the service, why would you get a performance bonus?
Mr Taylor —The remuneration model is based around the pool value, and that pool value is the basis against which the remuneration to AWB Ltd is assessed.
Senator MILNE —I will come back to that. How is the pool value impacted by the calculated volume of sales?
Mr Taylor —The pool value, as I understand it, is a calculation of the average pool return, per tonne, times volume.
Senator MILNE —Would that increase depending on the reporting of the Wheat Board? What I am getting at here is that the value of the Wheat Board sales, if you like, was inflated by virtue of the kickback arrangements. So would that increase the likelihood of them achieving or outperforming their benchmark?
Mr Taylor —I do not believe that it would, because the pool value is essentially based on the average APB price returned to the pool times the volume. So that would be exclusive of the kinds of costs that I think you are talking about.
Senator MILNE —So the pool costs have nothing to do with the additional service costs for which AWB is currently being investigated?
Mr Taylor —I believe that is correct.
CHAIR —That would not be to say, though, that the bonus arrangement works on the same set of figures. I clearly recall, as Senator O’Brien would, asking the CEO in Perth if he would have the courage to provide the committee with the logic and thinking behind how they arrived at the bonus for their executives. It could be that the bonus is worked on a different set of figures, couldn’t it?
Mr Taylor —If you are referring to individual bonuses—
CHAIR —Yes, the executive bonus package.
Mr Taylor —then that is possible.
Senator MILNE —So what you are telling me is that the bonus payment of $19.4 million was just related to the pool value, which was unrelated to the transport costs and other costs to the AWB?
Mr Taylor —Yes, that is essentially my understanding of what we know at this point in time of how things were working.
Senator MILNE —What do you mean ‘we know at this point in time’? What other considerations are there in relation to this?
Mr Taylor —Information coming out of the Cole inquiry.
Senator MILNE —Can I ask a different question?
CHAIR —You can do whatever you like.
Senator MILNE —On another matter, the export consent arrangements working group, can you tell me what this export consent arrangements working group actually does? What does it approve?
Mr Besley —It does not approve anything. There used to be a standing consultative committee, which was one of the committees that the review panel, which Mr Mortimer spoke about this morning, questioned. Was it doing what it should do? Should it be independently chaired? As a result of the consideration of that, we have established a specific working group to do specific things, one of which was this export consent arrangement. They were charged with looking at what we do about the recommendation from the review panel, which was advocating a somewhat longer period of consent than was currently the case. Working through all of that—and that group had members from the Grains Council, from the AWB, from the department and from the WEA—recommendations emerged that went to the minister, who signed off on them. In fact, in respect of that particular one, he asked for more work to be done by June next year. He wanted to know what the reasons were that the group had not recommended going completely as far as the Williams panel recommended. Because of perceived risks to the pool he wants more and better particulars, a report in June and any changes to be operative by October 2006.
Senator MILNE —So how long has this export consent arrangements working group been in place?
Mr Besley —I do not know; Glen, when did we establish it?
Mr Taylor —It was established shortly after the minister announced the government response to the review panel recommendations. The minister’s announcement was in April 2005, and it was shortly thereafter that this working group was established.
Senator MILNE —In April 2005 it was established. How often did it meet?
Mr Taylor —I could not give you the exact meeting numbers. I could take that on notice.
Senator MILNE —I will accept that on notice, but did it meet monthly or three-monthly or ad hoc as required?
Mr Besley —If I can come in, it was more as required. It was tasked with working out, in the interests of the industry, what the process for export consents ought to be with regard to what Williams recommended.
Senator MILNE —You mentioned that someone from the Department of Agriculture, Fisheries and Forestry was on that working group. Who was that?
Mr Taylor —The initial representative from the department was Mr Roland Pittar. He subsequently changed his role in the department, and that role was largely filled by a fellow officer from the department, Mr Andrew Wallace. There were also additional, more junior staff who would come along from time to time to those meetings.
Senator MILNE —So we had a member of the department presumably reporting to his minister on these export consent arrangements working group meetings from April last year onwards. What sort of informational documents would that export consent arrangements working group have been looking at?
Mr Mortimer —Can I make an intervention here? That working group was a working group established by the WEA under its authority, and so that did its job and then the WEA reported on the outcome to the minister. The minister made his judgment on that. While the departmental officer was there to advise and assist, they did not report on or prejudge the outcome until the WEA, which was the custodian of the process, came to its conclusion.
Senator MILNE —Thank you, Mr Mortimer. I appreciate that explanation but, nevertheless, the departmental officer representing the government on that group could at any stage have consulted with their minister, surely?
Mr Mortimer —I appreciate the point you are making, but I am just pointing out that the WEA as an organisation, as a separate statutory authority, ran that process. When the WEA had finalised the outcome at the management and board level, it was then reported to the minister.
Senator MILNE —What sorts of documents were the export consent arrangements working group provided with in order to make its decisions?
Mr Taylor —The working group would have had access to the recommendations on the announcement of the government response to the review panel recommendations. They also would have had access to statistical information from the Wheat Export Authority on the system existing at that point in time and how it was operating. They would have had access to views that had been conveyed to the Wheat Export Authority from the exporters who were consulted by the authority on what a revised system should look like.
Senator MILNE —So would the export consent arrangements working group have had quite a lot of access to documents from the AWB as well, in the context of all that?
Mr Taylor —We are talking more about a process. I do not believe there would have been much in the way of AWB documentation tabled at those group meetings given the purpose for which that group was formed, which was to look at options for implementing the recommendations from the Williams review and how to achieve the recommendation to make the export consent system work more efficiently.
Senator MILNE —Since the AWB was represented on the export consent arrangements working group, was there any discussion on that working group about the arrangements under way in Iraq and the transport arrangements and so on?
Mr Besley —I can answer that. No, there was not. As Mr Taylor said, it was a process working group to understand what reasons, if any, there were for not fully implementing the Williams recommendations, which the government had accepted in principle. The concern on the one hand was that some of the exporters—but not all of them—would have liked a longer consent period. On the other hand, people could see that if the period during which the exporter could exercise the consent given to him was too lengthy and the WEA did not have power to revoke a consent, it could conceivably cause risks to the pool. It is that aspect that we have to look at further in our second go at this. It is purely a process thing; it is not mechanical.
CHAIR —This is probably not a question for today. A picture paints a thousand words, they say: if someone is driving around in another market with a van full of suitcases full of cash, I would like to at an appropriate time—not today—come to some consideration of the implications of that. Who checks the till every night when they pull up at the pub? Is there some way that Australia’s wheat growers can ever be assured that one of those suitcases did not fall from the back of the van?
Mr Besley —Do you mean in Iraq?
CHAIR —Yes. A gold bar—oops, it fell out from the back of the van!
Mr Besley —I think you would have to ask AWB. We would not know.
CHAIR —We will in due course.
Senator O’BRIEN —And they will tell us, won’t they!
Mr Besley —It depends on how good your questions are.
Senator ROBERT RAY —They are not as trusting as you are.
CHAIR —With great respect to everyone in the room, we have asked a question which has always exercised my mind: how do you assess that a third party sale through the Geneva desk is in the best interests of Australia’s growers? I will give you an example. Someone rang me the other day and complained that they had been to China and identified a 5,000 tonne a month order for wheat from some Chinese identity there—everyone who is in the business knows about this. The bloke said, I’ll have to go back to Australia. I’ll probably get vetoed via the veto power of AWBL or AWBI.’ Sure enough, he came back and that is exactly what happened. So he rang the Chinese bloke in China and the Chinese bloke said, ‘Mr So-and-So, you’ve done us a great turn; AWBL are in my office now negotiating the sale.’ I do not know what the Chinese wall arrangements are. I know there is a peephole, as I mentioned in Perth in 2003, between Limited and International, but you can understand how this leaves a nasty taste in some people’s mouths when that is the way business is conducted. That is beyond the reach of your role, I presume?
Mr Besley —It is, and I once heard that sort of story. But I also recall the Chairman of AWBI expressing the view that if one of the non-AWBI exporters developed a market—and we have a role, as you know, under the act to assist in the development of niche markets which complement the operation of the pool et cetera—it would be a bit rough if AWBI came along and took it away from them.
CHAIR —Anyone who is in the business will know what I am talking about as soon as I say that this was rosella wheat which is, for Robert’s benefit, a low-protein biscuit wheat, which is rarely grown these days—some is grown on irrigation. When CBH got vetoed for that, I thought CBH were quite clever in getting those mills up in Asia, and I said that to the AWB at the time. I said, ‘I think these blokes have outsmarted you.’ Then CBH wanted to supply wheat to their own mills—50 per cent owned—in Indonesia. Did you, as it were, pass the parcel on the veto and that was the end of the section or did you give other considerations other than the veto decision by AWBL?
Mr Besley —It came in twice, the first time accompanied by a dossier of reasons why CBH thought it was appropriate to be given a permit. But on that occasion they said, ‘We don’t want you to give those reasons to AWBI.’ So AWBI exercised its power under the act to veto, and unless and until they give us a written agreement to a bulk export we just have to say no.
CHAIR —That is all I need to know.
Senator O’BRIEN —Your statutory authority is the Wheat Marketing Act. When did section 5(d) become part of that act?
Mr Besley —That is the section that deals with the compulsory acquisition of information?
Senator O’BRIEN —Yes.
Mr Besley —There was a consideration of it in, I think, 2003 in the Senate. It went into the parliament.
CHAIR —Did that follow the reflection by this committee of lack of capacity?
Senator O’BRIEN —It followed our reflection. So it was available to you in 2004?
Mr Besley —Yes.
Senator O’BRIEN —Under that power, you could direct AWB International to provide information, documents or copies of documents in the custody or under the control of AWBI or the related body corporate?
Mr Besley —Yes.
Senator O’BRIEN —Did you use those powers?
Mr Besley —We have used it once.
Senator O’BRIEN —Did you use them in 2004 in relation to this inquiry?
Mr Besley —No. I already said that this morning—no, we didn’t.
Senator O’BRIEN —I just want to be clear.
Mr Besley —I said no; and I repeat no.
Senator O’BRIEN —The value of the pool is impacted by the tax obligations of AWB International, isn’t it?
Mr Besley —I cannot answer that off the top of my head.
Mr Taylor —I do not know the answer to that question, I would say.
Senator O’BRIEN —Presumably, if AWB International claimed deductions from their income, they therefore claim not to be liable to pay tax on that part of the income. Is that fair comment?
Mr Taylor —I do not know that.
Mr Besley —That approach sounds as though it is the way the system works. But are you referring to the procedure under which people who did pay facilitation payments could claim that as a tax deduction until recently?
Senator O’BRIEN —Yes. That is the question that arises. Surely, if you are looking at the grower’s return you would have looked at whether illegal commissions had been claimed as tax deductions. Did you do that?
Mr Besley —I do not think that is a job for us.
Senator O’BRIEN —The return to the pool is affected by the amount of tax paid, isn’t it?
Mr Besley —Yes, but it is not up to us to get into the tax affairs of the company.
Senator O’BRIEN —But if the tax affairs of the company affect the pool why is it not your issue?
Senator Abetz —Chair, we are into the hypotheticals again.
Senator O’BRIEN —No, we are not. We are in a very strong area because it is illegal—
Senator Abetz —We are getting into the area of tax law.
Senator O’BRIEN —to make these kickback payments and they are not tax deductible, so it is not hypothetical at all.
CHAIR —I am having difficulty following your logic, Senator O’Brien. Are you talking about from the escrow account or from the pool?
Senator O’BRIEN —I am talking about the fact that AWB Ltd contracted to make certain payments to a Jordanian—
Senator O’BRIEN —You know who I mean—
CHAIR —AWBL or AWBI?
Senator O’BRIEN —trucking company. They contracted to make those payments. It is what you were told in May 2004. It turns out those payments were kickbacks. What I want to find out is this: did the Wheat Export Authority investigate the payment of kickbacks in the context of whether that had an effect on the tax liability of AWB International?
CHAIR —From my perspective, we are starting to wander into Mr Cole’s area of responsibility.
Senator Abetz —Exactly; very much so. I do not pretend to be an expert, but in relation to the moneys paid to the trucking company I understand there were actually—and correct me if I am wrong—trucks that did take the wheat—
CHAIR —With great respect to you, Minister, I think everyone has had a bloody good go today.
Senator Abetz —I fully agree.
Senator O’BRIEN —I have not finished yet.
Senator ROBERT RAY —Chair, on a point of clarification: earlier today we heard that, if in fact some money was remitted to a Jordanian or other company and it came out of the escrow account, it really is not the business of Mr Besley. His business would have been if the return to the growers had been paying a percentage off to someone else as a kickback. I think that is your position, Mr Besley; I am not verbalising you there.
Mr Besley —No, that is correct.
Senator ROBERT RAY —What Senator O’Brien is asking in terms of return to growers is this: if for some reason these were claimed as some sort of thing—not from the escrow account but just generally—is that their business? I think they have answered no.
CHAIR —So we have not established the facts on either account.
Senator ROBERT RAY —I think that just before you interrupted they were about to say, ‘No, we didn’t investigate that,’ and then we can move on.
Senator O’BRIEN —Is that what you were saying?
Mr Besley —We did not investigate that.
Senator O’BRIEN —Did the Wheat Export Authority consider whether it had obligations to report to the corporate regulator any issue which related to the nonreporting of these secret commission transactions?
Mr Besley —No, because in our inquiry at the time—and we took it on face value—they said they had not done it and their record of agency payments did not figure Iraq.
Senator O’BRIEN —But there were contracts?
Mr Besley —There were some contract documents. They did not apparently go as far as specifying the cost of inland transport, because we don’t seem to have that number.
Senator O’BRIEN —Which probably means you did not ask.
Mr Besley —As I said to you before, our job was to satisfy ourselves to the best of our ability that what they were doing was not unfavourably impacting on the pool We came away satisfied that that was not the case, that it was not unfavourably impacting on the pool.
Senator ROBERT RAY —Can I ask a more general question. This is to educate me, Chair, and nothing else. How many times have you found the Australian Wheat Board International take or commission acts or decisions that have unfavourably impacted on the growers’ position? How many times have you done that since you were set up?
Mr Taylor —There has been a number of issues that have been identified in previous grower reports where the Wheat Export Authority has reported that it felt that the arrangements between AWBI and AWBL should have been looked at to see if there could be some modification to improve the returns to growers. They are on the public record.
Senator ROBERT RAY —Mr Taylor, that is helpful but it does not quite answer my question. I am trying to find out when you have actually intervened to say, ‘They haven’t maximised it and it’s ended up maximising.’ In other words, to put it in simple language, how often have the wheat growers got extra money from your intervention?
Mr Taylor —There has been some response to WEA issues that have been identified. I think in the 2003 Growers’ Report we identified some changes which may or may not have been as a result of the WEA, but we know WEA did investigate those matters and there was a $6 million saving for the pool.
CHAIR —I seem to recall there was some discussion at one stage about the provisional financing package, which might not have been as competitive as it ought to have been. Senator Ray, I am pleased to see you have taken an interest in the poor old cockies.
Senator ROBERT RAY —Just from a total outsider’s point of view, I am looking at this authority—and it is no criticism of them—and trying to find out what value for money they are. The very threat of your existence has a salutary effect on the Australian Wheat Board, I have no doubt about that, but I am looking for instances where they have intervened and suddenly the wheat grower, who apparently pays all your expenses, is better off. I am trying to find one of those.
CHAIR —I think you should apply to get a permanent position on this committee.
Senator ROBERT RAY —If you disappear, I will! Make a deal. It is unanimous, I take it!
Senator O’BRIEN —What is the role of the government board member on the Wheat Export Authority?
Mr Besley —He is just a board member like everyone else, and all board members work for the good of the whole organisation. They do not represent the government or that sort of thing.
Senator ROBERT RAY —Can I just ask one more question, and then I will go.
Senator O’BRIEN —You did say earlier that what the grain growers on the board reported to the Grains Council was a matter for them.
Mr Besley —If they feel inclined to do so. They are nominated by the Grains Council and they are appointed by the minister, but they do not purely represent wheat growers. They are there to bring skills that the Wheat Export Authority board has available to it the skills of people who understand growing wheat.
Senator O’BRIEN —But you have an understanding that they will from time to time talk to their industry about the issues they hear on the board. That is the implication.
Mr Besley —I said they may; I cannot tell you if they do.
Senator O’BRIEN —Similarly, the government representative would be in the same boat, only in that case the connection with the government is the matter that—
Mr Besley —You could ask him but I—
Senator O’BRIEN —I cannot ask him, apparently.
Mr Besley —My view is that he—
Senator O’BRIEN —He might want to volunteer some information, but I am not allowed to ask him.
Senator Abetz —He appears here in his capacity as an official of the department, not as a board member.
CHAIR —I would like to raise the price of fertiliser, but I really cannot do that either.
Senator ROBERT RAY —If I could just ask one more and then I have got to go to DOFA’s estimates. What is the total cost of directors’ fees at WEA? I do not want to know it by individual. What is the total cost? What do we pay this board to be directors? I am sorry to ask that, Mr Mortimer, because I am sure you do it for the love. Do not comment: you are not allowed to!
Mr Mortimer —Zero, Senator!
CHAIR —They do not do it for the money.
Mr Besley —In round terms, about 180.
Senator ROBERT RAY —That is $180,000.
Mr Besley —Yes.
Senator SIEWERT —How many times have you sent people to AWB to investigate their contracts?
Mr Besley —Not offhand, no. I could dig that up for you. We have certainly done some detailed investigations down there at times, but I do not know just off the top of my head.
Senator SIEWERT —I want to go back to when I asked you about this in November. When we were talking generally about how WEA operates and had a discussion about what your role was, you said that just recently—I am interpreting that you meant just recently—you had sent somebody down to Melbourne to look at the contracts. Are you referring then to the time when you investigated the 17 contracts?
Mr Besley —That would be the time we have been talking about where our man went down to look at those Iraq contracts. But that is not the only time we have been down.
Senator SIEWERT —So you have been down to check on them before?
Mr Besley —We have.
Senator SIEWERT —In the past, had they done the same thing they did this time?
Mr Besley —Sorry, with respect to the Iraq contracts we only did that once.
Senator SIEWERT —When you were talking about that in November, were you talking about that specific instance?
Mr Besley —Yes, I would have been.
Senator SIEWERT —Why, when you clearly recalled that you had sent someone down to investigate, did you not draw the link to the Jordanian trucking company?
Mr Besley —I said before that I cannot say anything more than I have already said. I was either totally forgetful or poorly briefed. I do not want to go any further into it. As I said, I am embarrassed by it. I did not come here to mislead or tell fibs or whatever you would like to call it. I am embarrassed about it and I hope my letter has now put the record straight.
Senator SIEWERT —I want to go back to what Senator O’Brien was talking about just before lunch and which I raised last time, and that is the role of the WEA. My understanding of your role, and I have got this information from your website, is that:
The WEA is responsible under the Wheat Marketing Act 1989 to monitor, examine and report on the performance of AWB (International) Ltd (AWB(I)) and the benefits to growers.
My understanding of how you interpret that is how it impacts on the national pool.
Mr Besley —That is correct, yes.
Senator SIEWERT —But am I fair in saying that that is the way you, the WEA, interpret it but that we could interpret it in another way, in a broader sense—to take it literally, to monitor and examine and report on the performance of the AWB? Is that not a fair interpretation of the role of the WEA?
CHAIR —Should that be AWBI or AWBL?
Senator SIEWERT —AWBI.
CHAIR —People keep saying AWB, and it does not mean anything.
Mr Besley —I think you will find the words ‘and the benefits to growers’ in there as well.
Senator SIEWERT —‘And the benefits to growers’.
Mr Besley —That is continuous.
Senator SIEWERT —So you interpret that to mean both together whereas I read it as ‘performance’ and ‘benefit to growers’.
Mr Besley —That is the way you have interpreted it, but that is not the way we did.
Senator SIEWERT —I do not think we resolved this before lunch. I think you mentioned you have had legal interpretations several times. Have you had a legal interpretation of your role?
Mr Besley —I guess we have, yes.
Senator SIEWERT —Is that something that is able to be provided to the committee?
Mr Besley —AWB?
Senator SIEWERT —I beg your pardon—of your role. Have you had a legal interpretation of your role?
Mr Besley —Yes, we have.
Senator SIEWERT —Is that something that you could make available to the committee?
Mr Besley —I think we would have to check with the minister, because normally you do not just hand out legal advice from your lawyer without some proper process. That is the process we would have to go through. But, subject to his clearance of it, I would have no difficulty with it coming to you.
Senator SIEWERT —I would like to very clearly understand how you interpret your responsibility and why I, and I think others, interpret it differently.
Senator O’BRIEN —Mr Besley and Mr Taylor, did you have a conversation with the minister, someone from the minister’s office or the department about the giving of evidence here today and what you might say?
Mr Besley —We did not speak to the minister about it. Do you mean Minister McGauran?
Senator O’BRIEN —Yes, Minister McGauran.
Mr Besley —No, we did not speak to him.
Senator O’BRIEN —Or anyone from his office?
Mr Besley —I am just thinking. I had a conversation with his chief of staff this morning, but it was not about that. It was to make sure the minister was aware of the comments in the press, which I assumed that he would be. I wanted to make sure of what Harris had said, for example, which I found offensive. I wanted to just check that. But I did not talk about what I could or could not say. That was not an issue.
CHAIR —He, of course, gets paid to make those comments.
Mr Besley —Who, Harris?
Mr Besley —He writes regularly, so I assume he is on the payroll.
CHAIR —He is on the payroll.
Senator O’BRIEN —I would like to get the completeness of the answer. What about other discussions, other than this morning, with members of the minister’s staff or any discussions with offices of the department about the evidence?
Senator Abetz —That is where, if I could intervene, I was going to indicate to the committee that Mr Besley was in my office this morning, along with officials, and I indicated to them what the government’s position was and the statement that I would be reading but, of course, indicating to Mr Besley that, representing an independent statutory authority, that statement did not apply to him and it was up to him how he dealt with the questions before the committee. The fact is that no such discussion was had with Mr McGauran, but I would not want to leave the impression that no such discussion at all had taken place. I want to place that on the record.
Senator O’BRIEN —Mr Besley, the question I asked goes beyond the point that the minister just made. I want for completeness an answer from you and from Mr Taylor as to whether there have been discussions with Minister McGauran, Minister McGauran’s office or the department about the evidence you were going to give here today.
Mr Besley —Other than what you have already heard, no.
Mr Taylor —I concur with that.
Senator O’BRIEN —And no discussions with Mr Mortimer about the evidence that was to be given today, given that your evidence earlier was that you had discussions with Mr Mortimer about the letter which went to the committee secretariat last—
Mr Besley —Yes, but that was about correcting something that I had done.
CHAIR —Could I put something on the record? I think today, despite the expectation that today was going to be about something completely different to what it has been about—that is, it was going to be about no-one answering questions—I think it is eminently clear to everyone that the Wheat Export Authority made their own decision and fronted up and stumped up here and answered the questions. There is no great conspiracy here. Against the better judgment of everyone in the building that thought this was going to be some sort of cut-off at the pass by the government, it has not been. The money has been where the mouth is. I think everyone is to be commended.
Senator O’BRIEN —I am on the record as saying that I expected that they would turn up because they were obliged to.
Senator Abetz —There is a big difference between somebody turning up and the way they answer questions.
Senator O’BRIEN —I do not think we have had all the answers that we want.
Senator Abetz —Mr Mortimer was in my office this morning as well but it lasted for about five minutes maximum.
CHAIR —We are starting to get back into the circle work, or doughnuts.
Senator Abetz —Yes, there was the suggestion about discussions with Mr Mortimer.
CHAIR —There will be no blowing smoke.
Senator Abetz —I think I said all that occurred in that very brief meeting.
Senator O’BRIEN —You have taken a lot of questions on notice. When can we expect the answers to those questions?
Mr Besley —That is something over which I do not have control, but as fast as the system will allow.
Senator Abetz —Some of the questions will undoubtedly be able to be answered, I would have thought, very quickly and easily. Others will need more time and work and—I had better correct myself. Once the draft answers are ready, they go via Minister McGauran’s office, and therefore Mr Besley and the WEA are not able to determine when those answers will come before the committee.
Senator O’BRIEN —In whose control is the form of the answer after it has been to Mr McGauran’s office? I am keen to know whether the answer we receive is Mr McGauran’s version of the answer or Mr Taylor’s and Mr Besley’s version of the answer.
CHAIR —With great respect, you are now reflecting on the integrity of the people—
Senator O’BRIEN —No, I am not. There is no disrespect intended. I am asking a question on process. If they provide an answer, can that be altered by the minister without recourse to these witnesses?
Senator Abetz —I do not know how it operates in Minister McGauran’s office, but having had experience with an independent statutory authority—the Australian Electoral Commission—my answers used to be on the basis of: ‘I am advised that,’ and I would make it clear that it was the answer from the Australian Electoral Commission. But if I had some difficulty with the answer, or I thought it was not completely detailed enough or information was missing or extra information was needed, I could go back to the Australian Electoral Commission, suggesting that they might like to amplify it or whatever. That was my practice. I do not know how that applies in the offices of other ministers. At the end of the day, it was still the Australian Electoral Commission that had to be satisfied with the answer provided.
Senator O’BRIEN —Have you, Mr Taylor or Mr Besley, been invited to appear before the Cole inquiry?
Mr Besley —Not at this moment.
Senator O’BRIEN —When you say, ‘Not at this moment,’ have you been told to expect to be called?
Mr Besley —As I said before when my blood pressure was somewhat higher than my normal 130 over 70 or whatever it is—
CHAIR —You are a walking medical miracle, mate! You are a bragger.
Mr Besley —I rather resented your comments about my ears and eyes, and I then said, as you will recall, ‘I think we ought to stop this line of questioning; it is getting difficult because I may be summoned to appear before Cole.’ I do not know.
Senator O’BRIEN —I am simply asking for completeness.
Mr Besley —At this point I have not received a request to appear.
Senator Abetz —Do you have a crystal ball?
Senator O’BRIEN —Have you been told that you can expect to be invited, rather than having a crystal ball?
Mr Besley —I do not know where he is going.
Senator O’BRIEN —You have not been told to expect to be invited?
Mr Besley —No, I have not been told.
Senator O’BRIEN —Or that you will be invited or you might be invited?
Mr Besley —I am just speculating that that could occur.
CHAIR —Could I have a copy of your diet and exercise regime?
Senator O’BRIEN —I won’t do you any good. He will not follow it.
CHAIR —Thank you very much for your patience.
Senator Abetz —Is there nothing else?
CHAIR —No, I would get going while the going’s good. Thank you, Mr Besley and Mr Taylor.
Senator O’BRIEN —I have further questions in the area of food and agriculture. Table 1.10 on page 20 of the PAES shows that the estimated administered expenses for the Sugar Industry Reform Program 2004 have been revised upwards for 2005-06, from $84.026 million to $158.415 million. Can someone explain the variation?
Mr Mortimer —Yes. The bulk of that results from the fact that the second tranche of the sustainability grant, which was some $73 million, was not paid in the 2004-05 financial year as originally expected and that the second tranche of the sustainability grant was, therefore, paid in 2005-06, I think in September. As a consequence, that has now entered the revised estimate and it will be dealt with at additional estimates.
Senator O’BRIEN —As it is.
Mr Mortimer —Exactly, that is my point. I try to be complete!
Senator O’BRIEN —Don’t tempt me to enter into that. Perhaps you can give me an update on exactly where the implementation of the whole sugar package is up to.
Mr Mortimer —I will make a broad statement and if necessary get assistance from other officers on the details. The second tranche of the sustainability grant has been paid. The industry oversight group is now finalising its strategic plan, which we understand will go to the minister very shortly. There is one round of payments for regional community project grants—which I think you are aware of; we discussed it previously—and another round of those regional community project grants now in the process of consideration.
Senator O’BRIEN —How much of the $444 million allocated has now been spent?
Mr Mortimer —The total amount spent as at 3 February 2006 is $227 million.
Senator O’BRIEN —Can you break that down into components for us, please?
Mr Mortimer —The sustainability grant is the largest element at $146.1 million. Of the remainder, re-establishment grants are at $36.7 million; income support is at $17.9 million; restructuring grants are at $13.5 million; business planning support is at $3.9 million; regional community projects are at $0.82 million; business planning assistance to mills is at $0.8 million; crisis counselling is at $3.1 million; IOG and RAG support is at $3.9 million; retraining grants are at $0.24 million; and intergenerational transfer is at $0.162 million.
Senator O’BRIEN —How much of the $444 million do you now believe will remain unspent?
Mr Mortimer —That is an impossible question to answer. One key element of the project is demand driven by farmers, in particular re-establishment grants. I think it would be unhelpful to try to put a number on that at this point.
Senator O’BRIEN —How long are those grants available?
Mr Mortimer —Until the end of the 2006-07 financial year.
Senator O’BRIEN —How much in total is available?
Mr Mortimer —$96 million.
Senator O’BRIEN —So $13.5 million has been committed and $96 million is available; therefore $82.5 million is still available with 16 months remaining. I think the current sugar price is not that bad, which might drive people towards the re-establishment grants, mightn’t it?
Mr Mortimer —That is a fair comment.
Senator O’BRIEN —So would it be a reasonable assumption that a fair bit of that $82.5 million will remain unspent?
Mr Mortimer —That is possible.
Senator O’BRIEN —Is there another sustainability grant round available?
Mr Mortimer —No. The two tranches of the sustainability grant have both been paid. What I think you are referencing is the regional community projects program.
Senator O’BRIEN —How much is available in that?
Mr Mortimer —$75 million.
Senator O’BRIEN —I see that $1.1 million has been spent. Are there applications under consideration at the moment?
Mr Mortimer —Yes, that is the case.
Senator O’BRIEN —How many remain to be processed?
Mr Mortimer —I will ask Tanya Cvijanovic to give the details and tell us where that assessment process is at.
Ms Cvijanovic —The industry oversight group is currently considering round 2 applications. There are 47 applications in round 2.
Senator O’BRIEN —How many applications were there in round 1?
Ms Cvijanovic —Going off memory, I believe there were either 70 or 71.
Senator O’BRIEN —How much is available under each of those applications? What is the maximum grant?
Ms Cvijanovic —There is no maximum grant amount.
Senator O’BRIEN —How much in total is being sought under the current scheme through the applications currently awaiting processing?
Ms Cvijanovic —I am unaware of the exact figure in relation to that. I can take it on notice.
Senator O’BRIEN —Yes, please. So in re-establishment and the regional community grants there is $150-odd million still available?
Mr Mortimer —I think the point that is being made is that there is money available, as you said, under the re-establishment grants. That is available for the life of the program. There is money available for regional community projects—and you gave a number of—
Senator O’BRIEN —Roughly $155 million.
Mr Mortimer —I am just checking the numbers. I think the point you are making is that there is more than $70 million available for regional community projects and that there is about $60 million available for re-establishment grants.
Senator O’BRIEN —I thought it was $82½ million. You gave me a figure of $96 million in total and said that $13½ million had been committed.
Mr Mortimer —No. The restructuring grants were $13 million and the re-establishment grants were $36 million.
Senator O’BRIEN —I see.
Mr Mortimer —But I take your point. That gives you a figure of about $134 million that is potentially available.
Senator O’BRIEN —Are the sustainability grants processed by the industry oversight group?
Mr Mortimer —No. What happened there was that the minister sought advice from the industry oversight group as to whether the process of reform had advanced sufficiently to warrant the payment of the second tranche. The first tranche, you might remember, was paid when the government first announced the package a year or so back, and the government said at the time that it would pay a second tranche when it was satisfied of industry commitment to and progress on reform. The minister sought advice from the industry oversight group on that matter and, in the event, the industry oversight group advised the minister—I think it was as of September—that they were satisfied with the progress on that count, so the minister then made the second payment of the sustainability grant.
Senator O’BRIEN —The process of the assessment of all regional plans by the industry oversight group has been completed, I take it?
Mr Mortimer —The industry oversight group has now accepted the plans from the regional advisory groups.
Senator O’BRIEN —All of them?
Mr Mortimer —Yes.
Senator O’BRIEN —At supplementary estimates last November I asked a couple of questions related to an answer on notice from budget estimates numbered food and ag 10. The answer was in response to a question about concerns that the original regional plans were about a patching and repairing approach rather than genuine structural reform. The answer states that the industry oversight group believe that the plans needed to include:
- specific, realistic and measurable targets;
- detail on how structural change will occur, when changes will be completed by and what changes will achieve;
- quantification and provision of appropriate evidence of the added benefits to the region of changes being implemented; and
- contingency plans where identified strategies for change are not successfully implemented to provide regions with the flexibility to identify alternative paths to achieve the region’s goals.
At the November supplementary estimates I was promised copies of the industry plans, and seven documents were finally received in my office late on Friday. Am I missing a plan? I thought there were eight regions.
Ms Cvijanovic —There are seven regional advisory groups based in Queensland and one in New South Wales.
Senator O’BRIEN —So there are eight in total.
Ms Cvijanovic —Regional advisory groups in total.
Mr Mortimer —And seven regional plans.
Ms Cvijanovic —And seven regional plans.
Senator O’BRIEN —So these documents delivered are concise public versions. Are the actual plans more detailed?
Ms Cvijanovic —Yes, the actual plans are more detailed.
Senator O’BRIEN —Why were you not able to provide the committee with copies of the detailed plans?
Ms Cvijanovic —There was some sensitive commercial-in-confidence information within each of the regional plans. The regional plans are owned by the regional advisory group and they had concerns about some of the commercial information within those detailed plans.
Senator O’BRIEN —Did you inquire whether they would release them if there were an opportunity to release them in camera?
Ms Cvijanovic —No, I did not.
Senator O’BRIEN —At supplementary estimates I asked a number of questions related to the targets and measurable benchmarks that could be used to assess progress and success in the implementation of these plans. The answers to questions on notice 3 to 6 all say the same thing. They tell me that the information I require is contained in the copies of the regional plans provided. Unfortunately, not all the concise plans do provide details of benchmarks or targets. In some cases, even those which do provide targets are so vague as to be next to useless.
For example, the Herbert region plan has a goal of ‘fostering innovation’ and a strategy for achieving it of ‘learning opportunities and study tours’. Under ‘target dates’ it just says ‘annual’. It also has a goal of ‘identifying opportunities’ with a strategy of ‘monitoring market changes’ and a target date listed as ‘ongoing’—which is vague stuff indeed. Some of the plans provide even less information than this. Can you show me in budget estimates answer to question on notice No. 10, which relates to food, how these plans meet the full criteria set out in that answer? For example, I can find no mention of ‘contingency planning for strategies that are not successful’ in any of the plans you have provided.
Mr Mortimer —The plans are the creation and work of the regional advisory groups. The regional advisory groups bring together people in the regions to assess the situation and plan in the terms that best meet their needs and that they believe will take them forward. You have passed some comment about those plans, and you are allowed to make those comments, but essentially the regional visionary groups went through a process of working within their regions, consulting with the mills and the cane grower committees, to establish what they believed were effective plans that would deliver them the benefits that they were looking for. A lot of work was put into that process over a considerable period of time, and they were the ways that the regional advisory groups believed that they should express their targets and outcomes, and that is the nature of the plans as they are.
Senator O’BRIEN —The answer that we received earlier said that these plans, despite what now seems to be a revision of the expectation of these plans, would contain specific, realistic and measurable targets, detail on how structural change will occur, when change will be completed, what changes it will achieve, quantification and provision of appropriate evidence of the added benefits to the region of changes being implemented, and contingency plans et cetera. From the documentation we have been supplied, it does not seem that any of those plans meet the criteria that we were advised of in answer to question on notice No. 10 from the budget round.
Mr Mortimer —At the end of the day, a judgment was made about those plans. You have made a judgment that is on the table. There is nothing much more I can add to that, except to say what I said earlier that the plans were developed by the regions with considerable encouragement to make them as effective as possible, with interaction from an industry oversight group to guide them and assist them on that. At the end of the day, the plans were formulated and signed off by those regional advisory groups, and they are the plans that are now on the table and that have been put forward. Whatever one might think about those plans, you have made a judgment. I think it is a bit unreasonable to be entirely dismissive of them.
Senator O’BRIEN —A bit unreasonable to be entirely dismissive of them? What I said was that they do not appear to meet the benchmarks, the requirements, that the parliament was advised would be applied to those plans.
Mr Mortimer —I accept your point.
Senator O’BRIEN —I was inviting you to show me where that was wrong. What you are saying is that somehow, somewhere, someone might make a different judgment.
Mr Mortimer —I will ask Ms Cvijanovic to make some further elaborations.
Ms Cvijanovic —The regional advisory groups are also required to report on a biannual basis, and the plans will continue to be modified and refined through that process. So the regional advisory groups will report through to the IOG on a biannual basis.
Senator O’BRIEN —Are there no further financial incentives to improve the plan?
Mr Mortimer —There are no specific payments linked to the plans, but I think it is fair to say that the assessment of applications for regional and community projects, which I understand is done by the IOG, depends in part upon their consistency with the regional plans.
Senator O’BRIEN —Of the $8 million allocated for the IOGs and RAGs, $3.9 million has been spent. Over what period will the remainder be made available to those groups?
Ms Cvijanovic —It is over the life of the package, so to 2007-08.
Senator O’BRIEN —Is it to the end of that year or the beginning of it?
Ms Cvijanovic —It is until the end of the financial year 2007-08.
Senator O’BRIEN —Can you update us on the take-up of the exit grants?
Ms Cvijanovic —There are 368 applications granted. Did you also want applications received?
Senator O’BRIEN —Yes, please.
Ms Cvijanovic —There were 642 applications.
Senator O’BRIEN —How many were rejected?
Ms Cvijanovic —One hundred and seventy-five.
Senator O’BRIEN —I take it the remainder are yet to be processed.
Ms Cvijanovic —That is correct.
Senator O’BRIEN —How much longer have sugar producers got to lodge a claim for the exit grant?
Ms Cvijanovic —The exit grant is still available. The $100,000 exit grant is available to the end of this financial year, and then it will drop to $50,000 for the next financial year.
Senator O’BRIEN —So there are 368 growers who have exited the industry?
Ms Cvijanovic —Three hundred and sixty-eight have been granted re-establishment grant assistance.
Senator O’BRIEN —That does mean they leave the industry, doesn’t it?
Ms Cvijanovic —They need to leave the sugar industry; they do not necessarily need to leave agriculture altogether. I do not have numbers on that.
Senator O’BRIEN —I want to go to the issue of protecting the interests of the Australian taxpayer in relation to money provided to the South Johnston mill. Answers to questions on notice—food and ag—8 to 10 relate to the legal framework for the loan to the mill. In answer 9 we are advised that the terms of the settlement are enforceable, even on those growers who refuse to sign up. Is that based on legal advice?
Mr Mortimer —Could you repeat the question?
Senator O’BRIEN —In answer to question 9 you say:
Not every supplier signed up to the terms of settlement. A small number have not signed. Even though not all growers have signed, this does not impact on the enforceability of the terms of settlement.
Does that mean it is enforceable even on those who refuse to sign?
Mr Mortimer —I want to step through this carefully, just to refresh my memory. My understanding is that the arrangements around the South Johnston mill were negotiated between the mill and the grower-supplier committees. My understanding is that did not necessarily mean that all growers had to sign up on an individual or personal basis.
Senator O’BRIEN —Is that the subject of legal advice to the department?
Mr Mortimer —I expect it would have been, but I will have to take that on notice and check.
Senator O’BRIEN —Can you let us know who provided it and provide a copy to the committee?
Mr Mortimer —I will take it on notice.
Senator O’BRIEN —On 28 October Minister McGauran issued a press release entitled, ‘Minister approves new country-of-origin labelling laws.’ Mr McGauran also said FSANZ had been asked to do further work on extending these laws on labelling for packaged products. Has the department any ongoing role in the development of these new laws?
Mr Mortimer —The department is a member of the Food Regulation Standing Committee, which draws together all Commonwealth and state officials who are involved with the food safety arrangements. As noted in that press release, the ministerial council last year made a decision to ask for more work on the matter. As a consequence of that, FSANZ, Food Standards Australia and New Zealand, was asked to do some more investigation. FSANZ will then make a recommendation to its board, and that will then go to ministers for consideration at a further meeting of the Food Regulation Ministerial Council, comprising all relevant Commonwealth and state ministers.
Senator MILNE —In relation to that, when are you expecting that that additional information will be sought and that there may be a report back to ministers? When will it go to their board?
Mr Mortimer —FSANZ are doing the work at the moment. I cannot give an exact date. My understanding is that they are going to take it to their board shortly and then, after their board signs off on it, it goes to ministers.
Senator MILNE —So one could assume in the first half of this year.
Mr Mortimer —I think that is the expectation—my apologies: Mr Banfield has just reminded me that the board looks at the initial work by FSANZ, then they have a public consultation process whereby a draft report goes out and that is the subject of consultation for some period of time. Then it comes back to the board to finalise.
Senator O’BRIEN —So it is not going to be considered by ministers any time soon.
Mr Mortimer —Stepped through that process, I think—
Mr Banfield —The intention is that FSANZ will have a report for consideration by ministers at the meeting by the end of April but, as Mr Mortimer said, it is not the development of a standard per se; it is really an analysis and examination of the costs and benefits of various options associated with extending the existing country-of-origin labelling. The expectation would be that, on the basis of FSANZ’s advice, ministers would make a judgment about whether or not they want to extend the existing standards. If the answer was in the affirmative then there would be some additional work required to develop a standard then to go back to ministers for signoff.
Senator MILNE —Just to clarify, where in that process is the public consultation? If the ministers were to decide in April, is that the point it goes to public consultation, or when?
Mr Banfield —As Mr Mortimer said, FSANZ are envisaging a short public consultation process in relation to the costs and benefits of extending it, so that would occur before ministerial council in April. My expectation is that there would need to be at least one round of consultation, I would have thought. I will confirm if that is not the case, but my expectation is that, if ministers were to take a decision to extend the standard, there would need to be perhaps one round of consultations in the development of that standard.
Mr Mortimer —Essentially what happens is that, if ministers make an agreement to vary the standard, that then triggers statutory provisions in terms of what needs to be done under the relevant legislation for standard development, and that typically provides for public consultation.
Mr Banfield —I might just add that I think there was a unanimous agreement by federal and state ministers when this matter was last discussed that they did want to move as expeditiously as possible on all this, consistent with the requirements for proper consultation.
Senator O’BRIEN —I am just thinking it through. If there is a consultation process between now and April, it will only be pretty short.
Mr Mortimer —Yes. That is essentially in the hands of the FSANZ board, consistent with the requirements of the ministers.
Senator O’BRIEN —How often do the ministers meet?
Mr Mortimer —Typically about twice a year, I think.
Senator O’BRIEN —Can we expect another meeting towards Christmas?
Mr Mortimer —Yes. There is a meeting scheduled in April and I think there is another one for September or October, but do not hold me to the exact date.
Senator O’BRIEN —No. So there is a distinct possibility it will not get to the ministers before the end of the year?
Mr Mortimer —The option is also available to the ministers to do business by teleconference. They do that from time to time if there is urgent business or business that warrants quick attention. I could not say whether that would be the case here or not but I just point it out as an option that is available that the ministerial council has used in the past.
Senator MILNE —I wanted to ask about a broad policy issue in relation to food and agriculture on strategic planning for biofuels and bioenergy. There is quite a bit of evidence from countries such as Brazil where a large part of the sugar crop has gone across to ethanol production. That has obviously taken it out of food production and so increased the price of sugar globally. There is quite a lot of enthusiasm in rural Australia for supplementing rural incomes and certifying rural and regional areas to go into some sort of biofuel production. In terms of these regional plans—I obviously have not read them at this point—I just wanted to know whether you are starting to think in terms of a national strategy on biofuels and what the scenario planning is on the sort of impacts that might occur in relation to displacement of agricultural land from crop production to fuel production, particularly the potential to displace, again, small growers when agribusiness buys up large areas of land to serve a refinery and that sort of thing. I just wondered what sort of strategic planning has started in the department, if any, about those sorts of issues on food production and the mix around Australia.
Mr Mortimer —There are couple of parts to that. As you say, there is a lot of interest in biofuels and suchlike out there. There is work being done in a number of different parts of the department, so I will not try to represent them all. It is driven in part by interest in the sugar industry and also interest in providing benefits to the ecology in terms of climate change and so on. Clearly, the impact of that on farmers is far from clear because, essentially, we do not know what the pace of the uptake of the fuel will be and where that impact will land.
It is probably best to say that it is looked at within the context of the rural adjustment framework and the agriculture support framework and that we think about what mechanisms might be necessary in different programs to help farmers deal with the future, deal with change and suchlike. That is something that brings together a number of areas of the department and we do work on trying to keep in touch with that and also think about where it might take us.
I cannot give you any particular report at the moment because we do not have any sum report on it that we can put out to the public, but essentially it is part of our ongoing work. I would also reference that there is a biofuels task force that has operated in PM&C which has reported on this. If it is helpful we will see if we can provide that report to you.
Senator MILNE —Thank you. If it is available on the net, and I presume it would be, I can get it from there. The question was really in terms of trying to anticipate shifts in agricultural land going out of food and into fuel production. In some countries that has been quite a significant shift, and it has both good and adverse ecological consequences depending on what they do. I just wanted to know whether there are any signals in the department about starting to look at the strategic ramifications of that shift.
Mr Mortimer —I appreciate that, and that is entirely right. As I explained, we do look at that and do our best, accepting that interest in these fuels often does wax or wane with different industries, depending on the relative price in international markets.