Australia inquiry into Iraq ‘kickbacks’

AWB Ltd told Australia’s oil-for-food inquiry on Tuesday that it had regular contact with the Australian government and specifically with Alexander Downer, the foreign minister, over wheat deals with Iraq and over allegations of kickbacks to Saddam.
   
But the AWB has said consistently that it had no knowledge of illicit payments after a UN report last October accused it of channelling $221.7 million to Saddam’s government.

Andrew Lindberg, AWB managing director, giving evidence on day two of the inquiry on Tuesday, denied any knowledge of 10% “service fees” as kickbacks in wheat sales, repeatedly saying “I don’t know” and “I can’t recall” in answers to questions.
   
But internal AWB documents tendered on Tuesday showed that the group knew of the 10% fee and at one stage may have earned profits from some of the kickbacks paid to the Saddam government as part of wheat sales in the 1990s and early 2000s.

Hogan document

Dominic Hogan, former AWB marketing officer, said in an email dated 2 November  2000 to other AWB executives: “Ten per cent will be added to px [price] and included into trucking fee … This has been approved by UN as per IGB [Iraqi Grain Board].”
   
A trip report on Iraq by Hogan in February 2001  stated that a trucking fee of US$25.00 per tonne applied, with a 10% service fee.
   
“We believe the increase in trucking fee and addition of the service charge is a mechanism of extracting more dollars from the escrow account,” it said.

“Ten per cent will be added to px [price] and included into trucking fee … This has been approved by UN as per IGB [Iraqi Grain Board]” Dominic Hogan, former AWB marketing officer

The “escrow account” refers to UN oil-for-food funds from limited oil exports permitted by Iraq at the time to pay for food imports, mainly Australian wheat.
   
The Hogan document goes on to suggest that the AWB may profit from the trucking and service fee. 
  
“Please note this [payment arrangement] gives AWB treasury an opportunity to make a margin on the foreign exchange hedge, consequently any margin will assist our business costs,” it said.
   
Under the now-defunct UN oil-for-food programme, Iraq sold US$64.2 billion worth of oil to 248 companies to pay for imports of food and humanitarian supplies.
   
The companies involved came from 66 nations and included large corporations in the United States, Russia, France and Germany.

The biggest seller to Iraq was Australia’s AWB, which sold US$2.2 billion worth of wheat to the country under the deal.   

Last October, Lindberg denied any knowledge of Iraqi service fees in a written report to the UN investigation.

“No one has ever suggested to AWB that the trucking costs included ‘after sales service fees’, and AWB never paid fees characterised in that way,” Lindberg told the United Nations. 

Widening the investigation
   
On Tuesday, Lindberg said he learnt of the 10% service fee only in recent months and that the Iraqis had said the service fee had been approved by the United Nations. 
   

“This is a world-class scandal … which is damaging to Australia’s international reputation. We must get to the bottom of it” Kevin Rudd, Labour foreign affairs spokesman

John Agius, senior counsel assisting the inquiry, said the sale contracts sent by the AWB to the United Nations for approval specified a wheat price, but did not disclose a service fee.
   
Lindberg said the service fee was now “a problem”, but it may not have been seen that way by AWB officials in 2001.

“It would have been better if the contracts had identified the explicit amounts and had received explicit approval,” he said.
   
Lindberg said he had met Downer several times over arrangements with the Iraqi Grain Board, but said he did not discuss contract details.
   
Australia’s opposition Labour party called on Tuesday for the inquiry to be widened to investigate any government involvement.

Kevin Rudd, foreign affairs spokesman, said: “This is a world-class scandal … which is damaging to Australia’s international reputation. We must get to the bottom of it”.