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Tuesday, 19 June 2007
Page: 89


Mr McCLELLAND (8:41 PM) —The member for Barker, whom I have considerable time for in the House, indicated that wheat growers in his electorate had in recent times suffered some hard knocks. They should be aware that these hard knocks, and indeed the bill that we are considering, arise directly from the activities of the Australian Wheat Board during the now infamous wheat for weapons scandal that was the subject of the Cole commission of inquiry.

In my remarks I wish to address in particular the second reading amendment that was moved by the member for Hotham earlier in this debate. I will be focusing on the clauses of that proposed amendment. The first clause of the amendment notes that the bill that we are considering, the Wheat Marketing Amendment Bill 2007, arises directly from the Australian Wheat Board’s role in the now infamous wheat for weapons scandal, as I have indicated. Members would be aware that the scandal involved illicit payments of approximately $300 million to the regime of Saddam Hussein. The wheat for weapons scandal is a national disgrace. The AWB were in fact world-champion bribers. No other company paid more to the regime of Saddam Hussein than the Australian Wheat Board.

The second clause of the member for Hotham’s amendment calls for the government to be held accountable for its role in the Australian Wheat Board scandal. In particular, the member for Hotham’s amendment refers to the fact that the government failed to act on at least 34 substantial warnings about the role of the Australian Wheat Board in the scandal. Those warnings have been documented partly in the text of the report of the Cole commission of inquiry, but I would also refer interested listeners and readers to the work of Caroline Overington, in her book titled Kickback, which documents those warnings.

Evidence before the Cole commission of inquiry established that the Australian intelligence community, for instance, knew as far back as 1998 that Alia, the Jordanian trucking company at the heart of the AWB scandal, was part owned by the Iraqi government—indeed, by a member of Saddam Hussein’s family. They were also aware that Alia was involved in circumventing United Nations sanctions.

Cables documenting the knowledge of our intelligence community were sent to the Department of Foreign Affairs and Trade, the Department of Defence and the Department of the Prime Minister and Cabinet. There is no suggestion that our intelligence officers did not do the work that was required of them nor communicate appropriately to the government of the day, as was their duty.

The evidence indicates that many public servants also had access to and were aware of information on the activities of AWB in the oil for food scandal. As early as 1999, Australian diplomats in Amman knew that AWB was getting favoured treatment for undisclosed help to the Iraq regime. In 2000, Austrade representatives in Washington reported continuing concerns about ‘irregular’ payments between AWB and the Iraq Grains Board. In 2003, an Australian representative on the coalition provincial authority in Iraq received a memorandum of instructions requiring him to investigate potential kickbacks to the regime of Saddam Hussein—in other words, there was certainly, at that stage, at the very least lukewarm knowledge. As a result of those investigations, intelligence and other information, it became generally known in the coalition provincial authority that AWB was rorting the weapons for food program. In 2004, another Australian representative on the coalition provincial authority, Colonel Mike Kelly, informed the Australian Embassy in Baghdad:

… the jig is up on AWB …

Specifically, Colonel Kelly told the Iraq task force:

… AWB were ‘up to their eyeballs’ in the illicit payments …

Colonel Kelly referred to the fact that AWB had an understanding of where the money was going—and that was to the regime of Saddam Hussein.

Last week in the Main Committee, the Minister for Foreign Affairs regrettably misrepresented the nature of Colonel Kelly’s warnings. If repeated outside the parliament, I dare say there is a possibility that he would be impugning the motives and character of Colonel Kelly, and in respect of that would be regarded with grave concern. The foreign minister claimed that Colonel Kelly was not called before the Cole commission of inquiry because other evidence contradicted his. The minister also, unfortunately, as I have indicated, impugned the motivations of Colonel Kelly. In fact, an examination of the report of the Cole commission expressly contradicts the minister’s account of the actual situation. I refer listeners and readers to page 75 of volume 4 of the report by the Cole commission of inquiry, where it clearly establishes that Colonel Kelly was not called because:

… officers of both DFAT and Attorney General’s Department were well aware of the allegations relating to the manipulation of the Oil-for-Food Programme …

We are talking about 2004 here and it was therefore unnecessary in Commissioner Cole’s view to resolve:

… marginally differing recollections about what Colonel Kelly said …

If a senior military officer provides advice about the activities of AWB—advice provided in the clearest of terms—why didn’t the minister’s department act at the highest level? According to any standard of basic ministerial administrative competence, it should have done so. Time does not permit me to detail the numerous other warnings from the United Nations, including several from Bronte Moules, an Australian representative with the Australian Permanent Mission to the United Nations. In addition, the Department of Foreign Affairs was put on notice numerous times. In 2000, the Iraq task force within DFAT wrote to the United Nations noting that phase VIII, for instance, of the oil for food program had been ‘identified by the coalition provincial authority as the phase when the so-called 10 per cent kickback came in’.

Also in 2004, DFAT prepared a ministerial submission for the Minister for Foreign Affairs and also the Minister for Trade warning of the impending United Nations inquiry and that AWB was likely to face scrutiny. In fact, the memo said: ‘AWB concedes, however, that the Jordanian company handling local transport might, of its own volition, have provided kickbacks to the regime.’ The fact that no action was taken in the light of such specific advice is nothing short of a national disgrace. More outrageous is the fact that no minister has been held accountable for that inaction.

The amendment moved by my colleague the member for Hotham also states the government:

(ii)   failed to utilise the clear mechanism available to insist that the AWB reveal all information in its possession regarding its role in the AWB scandal …

As Commissioner Cole noted in his report, the minister had clear power under the Customs (Prohibited Exports) Regulations. Commissioner Cole said:

Although DFAT did not have any specific investigatory powers conferred on it, one avenue open to it in the event that it received information suggesting a breach or potential breach of sanctions was to request specific information from the relevant exporting company. If the information was not forthcoming, it would be open to the Minister to refuse to grant permission to export or to revoke an existing permission on the basis that, without the information, he could not be satisfied that the exportation would not infringe Australia’s international obligations. This was potentially a powerful threat that could have been effectively used by DFAT in order to investigate allegations had its suspicions been aroused that AWB was acting in breach of United Nations sanctions.

Again, for the reasons I have given, clearly suspicions should have been more than aroused. On any reasonable analysis of the facts, that was the case. Clearly, the minister had power under regulation 13CA to require not only the provision of oral information but also access to documentation in order to find out precisely what AWB was up to.

Any competent decision maker is required to make a decision based on ‘findings or inferences of fact which are supported by some probative material or logical grounds’. Despite ample evidence that would have evoked any reasonable person’s suspicion, the minister failed in this very basic of responsibilities. In the face of overwhelming and direct evidence of AWB’s involvement in the wheat for weapons scandal, the simple denial that the minister received from AWB was totally inadequate. Clearly he should have exercised the powers that were available to him under the Customs (Prohibited Exports) Regulations. It constitutes gross neglect of duty, which enabled the greatest bribery scandal in Australia’s history to continue to unfold.

The next issue raised in the motion from the member for Hotham is that the government failed to adopt practical and sensible measures to oversee the role of AWB during the period of the wheat for weapons scandal. Commissioner Cole noted at paragraph 12.41 of his report that a December 1996 pamphlet issued by DFAT provided that DFAT would submit the notification and contract documentation to the United Nations overseeing committee ‘once satisfied’—this is a quote from the 1996 pamphlet—‘that the form has been properly completed and that the transaction does not infringe the sanctions regime’. The commissioner indicated the impression gained from that documentation. He said:

DFAT would form a view that the contract did not infringe the sanctions.

Commissioner Cole indicated:

… one would expect that this would require, at the very least, an examination of the contract terms.

Commissioner Cole noted, further, that in fact there was no such examination of the contract documentation undertaken by DFAT as a matter of practice and that in January 2001 a new version of the pamphlet was issued to, if you like, justify their inaction in examining the terms of the contracts. Commissioner Cole noted that the new pamphlet ‘stated that DFAT would submit the documentation to the United Nations once it was satisfied that the form had been properly completed and that the transaction did not appear to infringe the UN sanctions regime’. In noting that, the commissioner himself highlighted the word ‘appear’. He said in his report that the change in wording gave a new impression. He said:

… DFAT’s scrutiny of the transaction was limited to seeing if anything in the documentation obviously suggested that the transaction was in breach of the sanctions. The instruction suggests that it was unnecessary for DFAT to positively satisfy itself that the transaction did not infringe the sanctions, only that it did not appear to do so.

In that context it is quite remarkable that there has been no explanation by the minister or his department for the change of wording in those pamphlets. Clearly, if the terms of the original 1996 pamphlet had been complied with by the minister’s department there is every likelihood that the wheat for weapons scandal would not have unfolded as it regrettably did.

The next clause of the member for Hotham’s motion that I wish to discuss is the notation that the government limited the terms of reference of the Cole inquiry to such an extent that it was unable to meaningfully evaluate the culpability of the government in the wheat for weapons scandal. In fact, all government ministers including the Prime Minister rely on the findings of the Cole royal commission as exonerating or vindicating the position they took during the wheat for weapons scandal. In fact, an examination of the report shows that nothing could be further from the truth. It is simply the case that, under its terms of reference, the Cole royal commission was not charged with the responsibility for examining misconduct, neglect of duty or worse on the part of public servants and ministers of the Crown.

Again the report of Commissioner Cole makes this point very clear. At paragraph 30.7 on page 22 of volume 4 of the report, Commissioner Cole states:

It is immaterial—

under the terms of reference—

that the Commonwealth may have had the means or ability to find out that the information was misleading, or that it ought reasonably to have known that the information was misleading.

That is, the information provided by AWB. He continued:

It is also immaterial that the Commonwealth, at the time it conferred the benefit or advantage, suspected but did not know that the information was misleading … accordingly, the question whether the Commonwealth may have had constructive knowledge (in the sense that it ought reasonably to have known the truth or that it have the means and ability to find out the truth) is immaterial.

The reference by Commissioner Cole to the concept of constructive knowledge is significant. In the 1992 case of Baden it was determined:

Constructive knowledge may be imputed where a person wilfully shuts his or her eyes to the obvious, wilfully and recklessly fails to make such inquiries as an honest and reasonable person would make, has knowledge of circumstances that would indicate the facts to an honest and reasonable person, or has knowledge of the circumstances which would put an honest and reasonable person on inquiry.

I will leave it to others to judge whether the Commonwealth, through its departments and its ministers, had such constructive knowledge. I would have thought that the case was compelling.

Before concluding I would like to underline the seriousness of the conduct and the failure of senior public servants and ministers to take the necessary action to shut down the wheat for weapons scandal. I refer in particular to section 11(2) of the Commonwealth Criminal Code, which provides:

A person who aids, abets, counsels or procures the commission of an offence by another person is taken to have committed that offence and is punishable accordingly.

In fact, a recent criminal text says:

Where a person has a duty to act and fails to do so, the omission may make them liable as an accessory. A person may be liable for a failure to act where he or she is in a position of power or control, is aware that an offence is about to be committed or is being committed, has reasonable opportunity to intervene, and fails to take reasonable steps to prevent the offence being committed.

Again, I will leave it to others to draw their own conclusions regarding the inaction of senior public servants, and indeed ministers, in the face of what I have said is a very strong case of constructive knowledge of the activities of AWB.

At the end of the day, despite technical responsibility and despite neglect of duty, we have seen principles that we would expect to be held not being held by the government. Indeed, in the book to which I have referred, The Foundations of Governance in the Australian Public Service, produced by the Public Service Commission, Caroline Overington states:

Under the Australian system of responsible government, ministers are responsible to P arliament for the overall administration of their portfolios …

She goes on:

Under normal, or at least, the historical rules of ministerial accountability, Downer—

I apologise for the quote— (Time expired)