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Tuesday, 30 May 2006
Page: 92


Mr RUDD (8:44 PM) —The ‘wheat for weapons’ scandal is about three things: gross negligence, gross cover-up and grave damage to Australia’s national interests. Labor supports the Royal Commissions Amendment Bill 2006, but we do so with the second reading amendment proposed by the member for Gellibrand, which I also support in full. The obligations on UN members to enforce sanctions against Saddam Hussein’s regime have been clear since the inception of those sanctions in 1991. After the first Gulf War, the UN Security Council adopted resolution 661, which states:

[The Council] Decides that all States shall not make available to the Government of Iraq or to any commercial, industrial or public utility undertaking in Iraq ... any funds or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to—

The government of Iraq—

... except payments exclusively for strictly medical or humanitarian purposes and, in humanitarian circumstances, foodstuffs …

That is all in UN Security Council speak, but the intention is clear. In other words, the government of Australia was bound to prevent any payment by any Australian individual or any Australian company to the Iraq government, or to anyone acting on behalf of the government of Iraq. As Felicity Johnston, the UN customs inspector who blew the whistle on the entire oil for food program scandal globally and on AWB in particular, stated:

Mr Vaile may try to wash his hands of it but they—

the government of Australia—

do have a responsibility to ensure that their nationals abide by the rules and the regulations.

But the obligation on the government to approve AWB contracts did not stem just from its obligations under the UN charter or to uphold the specific provisions of UN Security Council resolution 661. It went much beyond that as well. The Minister for Foreign Affairs and the Minister for Trade have repeatedly said that this was all exclusively the UN’s responsibility because it was the UN that approved the contracts. What they consistently refuse to recognise is that they had an obligation under Australian domestic law to ensure that AWB’s contracts were not funnelling kickbacks to Saddam Hussein. That is the import of UN Security Council resolution 661, and the section I just read.

When the oil for food program was first established, the Australian government took steps to implement the obligations of this resolution and to incorporate them into Australian law through the Customs (Prohibited Exports) Regulations. Regulation 13CA provides that goods can only be exported to Iraq if the Minister for Foreign Affairs—nobody else—granted an export permit. And such a permit can only be issued if ‘the Minister is satisfied that permitting the exportation will not infringe the international obligations of Australia’.

There is no ambiguity whatsoever here. The buck stops with the foreign minister, and the foreign minister knows it. On 30 January this year, the Prime Minister said in relation to the AWB’s dealings with Saddam Hussein’s regime, ‘We had no suspicion, no suggestion there’d been any bribes.’ That was plainly untrue. In fact, the ‘wheat for weapons’ scandal has been a rolling story of Howard government negligence, with government ministers turning a blind eye to warning after warning on what the AWB was up to in Iraq.

To date, we have uncovered 29 separate warnings that the Howard government received on the AWB’s engagement with Saddam Hussein’s regime, an engagement which involved the payment of corrupt moneys to that regime. Let us take the intelligence warnings as examples in point. The first intelligence warning was dated in 1998 and said that Australian intelligence indicated that Alia Corporation—the front company for Saddam Hussein—based in Jordan, was part owned by the Iraqi government and that it was involved in circumventing United Nations sanctions on behalf of the Iraqi government. That was in 1998. The second intelligence warning said:

By the first quarter of 2000 the AIC held intelligence indicating that Alia received fees in Jordan for the discharge and inland transport within Iraq of goods purchased by Iraq under the Oil for Food Program. It received these fees as agent for the Iraqi Government. The fees, less a small commission, were paid into accounts accessible by Iraq in violation of sanctions. The amounts involved were very substantial.

That is the Australian intelligence community’s warning in the first quarter of 2000. The third intelligence warning came in November 2000, and stated:

... the IAC held intelligence indicating that Iraq’s transport charges for humanitarian goods under the OFFP had been very substantially increased. Alia was one means by which these transport fees were paid to Iraq. The AIC also held information that such fees would probably be used for procurement purposes outside Iraq.

The fourth warning from Australian intelligence, in March 2001, stated:

... the AIC held intelligence of endeavours by Iraq to breach sanctions by, amongst other methods, collecting commission on contracts for humanitarian goods imported into Iraq under the OFFP. It included information that Iraq violated sanctions by charging a “commission” of at least 10 per cent on imported humanitarian goods under the OFFP and that the 10 per cent commission was rigidly enforced.

The fifth intelligence community warning said:

By September 2001, the AIC held intelligence indicating that inland transport fees for humanitarian goods, including fees paid through Alia, were proposed to be increased very substantially ... This increase was on top of the 10 per cent commission already paid and the fees were payable in advance of delivery. The proposed increase in transport fees was to apply on all humanitarian goods delivered under the OFFP through the port of Um Qasr.

And the sixth intelligence community warning, which came in December 2002, stated:

... the AIC held intelligence that Iraq was enforcing the 10 per cent commission on imports under the OFFP and that one means by which it continued to be paid was by payment into accounts in Jordan.

These intelligence warnings were received by the Howard government prior to the decision to invade Iraq. These intelligence warnings all pointed to the corruption of the oil for food program and the use of Alia in the process of that corruption. We now know that several warnings from the United Nations to Australia were also received by the offices of the Prime Minister, the foreign minister and the trade minister and their respective departments. For example, in January 2000, the UN raised concerns with the Australian permanent mission in New York. A senior Department of Foreign Affairs and Trade official reported the meeting in which these concerns were raised by cable, explaining that another country had alleged that AWB had entered into an arrangement with Iraq where it would pay $14 per metric tonne to a Jordanian bank account of a company owned by a son of Saddam Hussein. The UN asked if Australia would make some ‘discreet, high-level inquiries’ to ensure that the AWB was not in breach of the sanctions. DFAT Canberra responded and said, ‘We think it is unlikely that AWB would be involved in a breach of the sanctions regime.’ This cable was sent without first contacting AWB. This cable was sent to Minister Downer’s office, and he has admitted in parliament that he read it.

In another cable, on 10 March 2000, a senior DFAT officer reported that ‘until we are able to provide a formal reassurance of this, there will remain a question mark over the matter from the point of view of both the OIP’—that is, the Office of the Iraq Program—‘and the third country’—in this case, the warnings received from the government of Canada. The foreign minister has admitted in parliament that he read this cable as well. On 11 March 2000, an Austrade representative in Washington reported to DFAT in Canberra that there were continuing concerns that the AWB had agreed to irregular payment terms with the Iraqi Grains Board and that Austrade was:

… concerned that AWB do not understand the seriousness nor the urgency of the matter. It may be necessary to advise the minister of the situation.

This cable was copied to the managing director of Austrade and to the Secretary of DFAT. The trade minister has since told parliament that he would have been briefed on this cable. On 20 October 2000, AWB Chairman Trevor Flugge wrote to the trade minister regarding AWB’s recent visit to Baghdad. AWB then had discussions with DFAT about its proposal to engage Jordanian trucking companies and on 30 October 2000 wrote to DFAT seeking approval for this arrangement. On 2 November—a few days later—DFAT replied to AWB giving its formal green light to this process. DFAT said:

We … can see no reason from an international legal perspective why you should not proceed—that is, this would not contravene the current sanctions regime on Iraq. International Legal Division has been consulted in the preparation of this response.

On 10 April 2001, a senior DFAT officer at the Australian Permanent Mission to the UN in New York sent a cable to Canberra which referred to ‘anecdotal and in some cases hard evidence of Iraqi purchasers and agents demanding fees and commissions in association with ... the import of humanitarian supplies’. The cable went on to say that the official had been approached by Iraqi officials in the UN corridors who had complained that the sanctions committee could ‘complicate the matter’. The official noted that ‘Iraq’s interest in keeping port fees outside the oil for food program appears self-evident from the Iraqi delegation’s approach to us’. The cable was sent to the offices of the Prime Minister, the foreign minister, the trade minister, the agriculture minister and a range of government departments, including ONA, DIO, A-G’s and Treasury. For 18 months after the Iraq War, the warnings on AWB’s activities in Iraq continued and the government continued to ignore them. So much for the record of negligence. There were 29 separate warnings which were systematically ignored by one government minister and official after another.

The other thing this scandal brings into focus is a systematic cover-up on the part of the government. On 15 February 2006, the Prime Minister said:

… the dam really burst on knowledge in relation to Saddam Hussein, and Volker bears this out. After the fall of Saddam Hussein authorities investigating these matters began to have full access to the documents of the former regime.

Of course, we now know that this was only half the story. After the ‘dam wall burst’, it is clear that the government engaged in a systematic attempt to cover up its complicity in the ‘wheat for weapons’ scandal. We now know: (1) that the government tried to avoid cooperation with the Volcker inquiry; (2) that the government attempted to pressure a US congressional inquiry into dropping its investigation into AWB’s activities in Iraq; (3) that the government severely limited the powers of Commissioner Cole to make findings of negligence or otherwise on the part of government ministers and officials; and (4) that government ministers have point-blank misled both the public and parliament.

The Prime Minister and the foreign minister have continually claimed that the government fully cooperated with the Volcker inquiry, which was established in April 2004 to examine allegations that UN sanctions against Saddam Hussein had been breached through the oil for food program. On 31 October 2005, the Prime Minister told parliament:

The government cooperated fully with the Volcker inquiry, providing all information requested by the committee.

Again on 31 October 2005, the Prime Minister told parliament:

… having received in the case of Australia full responses and cooperation and full documentation, if there were anything lacking in the behaviour of Australia in relation to her obligations the Volcker inquiry would have so reported.

However, the Prime Minister’s claims that his government cooperated fully with the Volcker inquiry are not underpinned by information contained in documents tabled at the Cole inquiry which reveal Mr Volcker’s frustration with the lack of cooperation he was receiving from the Howard government. On 23 March, it was revealed at the Cole inquiry that in February 2005 Australia’s ambassador to the UN met with Mr Volcker in New York at Mr Volcker’s request. A cable report back to Canberra following that meeting revealed that Mr Volcker expressed his concern that the government was not being sufficiently cooperative and described the government’s approach as ‘beyond reticent, even forbidding’. The cable also stated that Paul Volcker strongly indicated in the meeting that it would be in the government’s and AWB’s best interests to cooperate with the Volcker inquiry. You can add to that the fact that the opposition had established, before the release of the these cables from the UN, that the Volcker inquiry had not been provided with full documentation, because the Howard government had not provided Volcker with access to DFAT’s electronic files or any documents in the possession of the Wheat Export Authority.

The cover-up was not restricted to lack of government cooperation with the Volcker inquiry. It also extended to the government’s attempt to shut down the Coleman inquiry, which was being conducted by the United States Senate. During the 2004 federal election campaign, in the weeks leading up to the 9 October poll, the Howard government instructed its ambassador in Washington to exert pressure on the congressional inquiry not to investigate the actions of AWB in Iraq. This is a matter of documentary record. We now know that Australia’s ambassador met with Senator Norm Coleman, chairman of the Senate permanent subcommittee on investigations, in an attempt to dissuade him from pursuing allegations against AWB. This was despite the fact that by October 2004 the Howard government had received multiple warnings—29 warnings of a direct or indirect nature—about the AWB’s corrupt payments to Saddam Hussein’s regime.

Of course, the cover-up, and the pattern thereof, extends also to the government’s cooperation with the Cole inquiry itself. The Prime Minister and the foreign minister have repeatedly claimed that they have provided full documentation to the Cole inquiry. On 12 February this year, the Prime Minister said:

… we have unprecedented transparency here. We’ve got a full blooded Royal Commission effectively into this and Mr. Cole has access to something I don’t have access, you don’t do, Mr. Beazley and Mr. Rudd don’t, he has access to all of the documents. The bureaucracy’s documents and also the documents of AWB, so I think we should all wait until Mr. Cole has reported.

The Prime Minister went on to say:

… everybody respects Mr. Cole, he’s got all the powers of a Royal Commissioner, he’s got all of the documents, he will ask all of the questions …

We know now that Commissioner Cole did not have all the documents at all. On 3 February 2006, the Prime Minister said:

So far as the Government is concerned, it remains the case that we will continue to cooperate fully with the inquiry. Information sought will be provided, if I were asked to attend or any of my ministerial colleagues, we would do so. Any officials of the Government who are asked to attend will do so and my only request of everybody is that they tell the truth.

On 3 February 2006, the Prime Minister also said:

… I am advised that all of the documents directly relevant to the matters under investigation by the Inquiry, within the Department of Foreign Affairs and Trade, and I believe within my own Department, are in the hands of the commission. You can’t be more cooperative than that.

You can be more cooperative than that.

Debate interrupted.