The Cole inquiry’s mandate was to investigate allegations first made in the Volcker report that the Australian Wheat Board had knowingly breached United Nations sanctions against Iraq under the United Nations oil for food program by paying financial kickbacks to Saddam Hussein’s regime over the course of five years. The report now confirms that allegations of deliberate violations of the UN oil for food program are true and that the AWB is guilty of the most serious forms of corruption. As such, Australia now stands out as the biggest single contributor to kickbacks paid to Saddam’s regime. This is a reputation that has damaged our country’s reputation and standing in the eyes of the international community.
In 1995 the United Nations Security Council adopted resolution 986, which established Iraq’s oil for food program. Under the provisions set out in the oil for food program Iraq was allowed to trade its oil for basic humanitarian goods, such as food, in order, as we all know, to alleviate the widespread suffering that years of UN sanctions against Iraq had created for the country’s civilian population. We all remember the many images of children dying in hospitals because there was no money for medication—children dying in poverty. The people of Iraq have suffered horrendously over a long period of time and, unfortunately, continue to suffer.
From 1996 onwards, AWB began selling Australian wheat to the Iraqi Grains Board under the oil for food program. As the Cole report notes, by 1999 approximately 10 per cent of Australia’s annual wheat exports were being sold to Iraq—obviously this is significant for the Australian wheat industry. In June 1999 the Iraqi Grains Board introduced a new condition of tender in its contracts with the AWB, which required, as we have now learned, AWB to pay an additional fee of some $US12 for every metric tonne of Australian wheat delivered to Iraq. This additional fee was described as a ‘discharge and land transport fee’, although AWB was never under any obligation to arrange for the discharge and transport of Australian wheat exported to Iraq. In essence, this fee was the kickback that AWB was expected to pay to the Iraqi government if it wanted to continue exporting wheat to Iraq.
We now know that executives of AWB were well aware that this additional fee was paid as a kickback to Saddam’s regime and that it therefore breached UN resolution 661, which prohibited any funds being made available to the government of Iraq. In short, AWB entered into a series of short-term and long-term contracts with the Iraqi Grains Board in late 1999, the terms and conditions of which included this new $US12 discharge and transport fee. It drew the necessary funds for that additional fee from a United Nations escrow fund by concealing their true purpose and it then paid these funds to the government of Iraq via the Jordanian company Alia, which received these kickbacks on behalf of the Iraqi state company for water transport. Throughout all of this the AWB made no arrangements for either the discharge or transport of Australian wheat in Iraq once it arrived in the port of Umm Qasr.
Over the course of 2,000-plus pages, the Cole inquiry report goes into extensive detail over AWB’s duplicity in breaching UN sanctions against Saddam Hussein’s regime. However, as detailed as it is, the report handed down by the Cole inquiry provides us with only half the picture. The fault lies not with the inquiry itself but with the inquiry’s limited terms of reference, which purposely restricted the scope and reach of the inquiry and its investigations.
It is important to note that the Cole inquiry’s terms of reference were set by the Prime Minister and, as such, it was the Prime Minister himself who exercised full control of the parameters of this investigation. The terms of reference were conveniently limited to investigating criminal breaches of the law only. What the Cole inquiry was not empowered to do was to investigate either government negligence or ministerial responsibility regarding the AWB scandal.
Over the course of five years, AWB signed 41 contracts with Iraq that contained kickback payments to Saddam Hussein’s regime in breach of UN sanctions and each one was approved by the Minister for Foreign Affairs, Mr Downer. Let me make this clear: the foreign minister of Australia approved the 41 contracts AWB made with Iraq that stand at the very heart of this scandal. What is more, it was the foreign minister who was also charged with the ministerial responsibility to ensure that no Australian company breached the UN sanctions against Iraq pursuant to the Customs prohibited exports regulations.
Let me reiterate the point that the responsibility for ensuring that no Australian company breach UN sanctions against Iraq fell squarely on the shoulders of the Minister for Foreign Affairs. At the same time, it was the same minister who approved AWB’s kickback contract with Iraq. To all of us—except, it seems, the members of the government—the circumstances surrounding the AWB scandal signal a clear breach of ministerial responsibility on the part of Mr Downer and are a resounding example of sheer incompetence and negligence on the part of his department.
The foreign minister’s response, however, to allegations that he failed in his ministerial duties under both Australian and international law has been nothing short of absurd. In a nutshell, the minister’s only line of defence has been a pathetic attempt to portray himself as an innocent victim of deceit on the part of the AWB and its executives. His excuses continue to both insult the intelligence of the men and women of Australia and show complete contempt for the notion of ministerial responsibility, which I might say remains seminal to our Westminster system of government and Australia’s democratic rule of law.
I do not need to remind the government that it is currently pursuing the option of introducing a formal citizenship test into Australian law that will require new migrants to pledge their respect for democracy and the rule of law in Australia, which the Parliamentary Secretary to the Minister for Immigration and Multicultural Affairs lists as one of the defining values of Australians. What hypocrisy it therefore is when this government asks new migrants to respect Australian democracy when members of its own senior cabinet are unwilling to do the same but instead continue to show complete contempt when it comes to upholding the integrity of Australia’s democratic institutions and the foundations of transparency and accountability that they are built on. The foreign minister would resoundingly fail the very citizenship test being proposed by the Parliamentary Secretary to the Minister for Immigration and Multicultural Affairs.
Notwithstanding the Cole inquiry’s limited terms of reference, we still, however, get glimpses of DFAT’s gross negligence throughout the report. In volume 4 of the report we read:
The critical fact that emerges is that DFAT did very little in relation to the allegations or other information it received that either specifically related to AWB, or related generally to Iraq’s manipulation of the Programme.
The truth is that, at different times over the five years that AWB was paying kickbacks to Saddam Hussein’s regime, the Prime Minister, the foreign minister and the then Minister for Trade and Deputy Prime Minister between them received some 35 warnings that raised serious concerns over the conduct of AWB. The truth is that neither the Prime Minister nor the foreign minister nor the then Minister for Trade and Deputy Prime Minister made the slightest attempt to act on these warnings or to investigate the allegations being made about AWB and Iraq’s manipulation of the oil for food program.
What we have here is nothing less than an example of gross negligence right across three government departments and an unflagging case of a clear breach of ministerial responsibility on the part of the foreign minister, who took absolutely no action to investigate allegations of impropriety on the part of AWB—yet he was charged with ensuring that no Australian company breached the UN sanctions against Iraq. We also know that two officials from the government’s own trade body, Austrade, met with the 51 per cent owners of Alia, the al-Khawam family, and we know that just before the outbreak of the Iraq war AusAID took over an AWB wheat contract that included some 50,000 tonnes of wheat shipped to Iraq on board the Pearl of Fujairah. The Minister for Trade at the time, Mr Vaile, had a hand in convincing AusAID to take over the AWB wheat contract.
The government’s protestations of innocence in the face of AWB’s web of deceit is not the only excuse we have heard. We have also heard the excuse that the foreign minister does not read his memos, which begs the question of just exactly what the foreign minister does. Then, how can we forget the chorus of: ‘I don’t know; I can’t recall; I can’t remember’—that chorus that we heard from the trade minister when he was called to give testimony before the Cole commission. What all this spells is a web of negligence, incompetence and deceit on the part of the government that easily matches AWB’s own web of deception. What we have before us is a scandal that the Howard government is doing its very best to sweep under the carpet, but it is a scandal that will not go away.
The AWB’s wheat for weapons scandal has done enormous damage to Australia’s international reputation. It is one more example of the enormous damage that the Howard government has done to Australia’s international reputation over its 10 years in office. The Howard government’s appalling treatment of refugees, whom it used as a political football, singled out Australia as a looming international pariah on human rights. The Howard government’s refusal to sign the Kyoto protocol has isolated Australia on the international stage when it comes to climate change and the environment. The Prime Minister’s support for the war in Iraq—an illegal war based on deceit and one for which the people of Iraq continue to pay the highest price—has singled out Australia as an aggressor nation with scant regard for the international norms and laws pertaining to war. And now we have the AWB scandal, one which has damaged Australia’s international trade reputation and undermines the broad perception of Australia as a country free of corruption. The AWB scandal completely undermines Australia’s moral authority and credibility when it comes to our country’s role in helping our Pacific neighbours with the vexed issues of corruption in our region and corruption in their own levels of government.
It has cost Australian wheat farmers somewhere in the vicinity of $500 million in lost contracts so far, and for AWB shareholders it has seen the price of AWB shares cut in half. The government’s continued attempt to duck and weave its way out of acknowledging its own negligence and its own share of responsibility for the AWB scandal has only deepened the cynicism ordinary Australians feel about those who are elected to represent them in this place.
The government now claims that the report handed down by the Cole inquiry somehow exonerates it from any responsibility for the wheat for weapons scandal, but it does nothing of the sort. Rather, the Cole inquiry shields the government from any criticism, and the Australian public, I am absolutely certain, will see through this shield. The question of what the government knew about the AWB scandal remains unanswered. We on this side of the House will continue to pursue the Howard government for honest answers rather than glib PR and spin, and I can assure you that we look forward to Mr Flugge’s testimony because I am certain, as my colleague the member for Melbourne Ports indicated before me, that Mr Flugge’s testimony will open up a whole new world into the practices, attitudes and perceptions of the Howard government.
