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Corruption Down Under By: Sharon Lapkin
FrontPageMagazine.com | Wednesday, January 25, 2006

When Saddam Hussein threatened to terminate massive imports of Australian wheat in 2002, Australian Wheat Board (AWB) executives rushed to Iraq in a panic. Reuters reported that Iraq’s Minister wished “to resume and increase future business with AWB on the basis that the Australian government supports diplomatic solutions to the current situation in Iraq.”

Then a peculiar thing happened. Australia did not change its foreign policy but after the meeting with Iraqi officials, the AWB emerged with a new deal. Iraq had agreed not only to continue buying Australian wheat but also to pay more for it.

Australian Prime Minister John Howard ordered an Inquiry into AWB in late 2005, after it was named by the Volcker Inquiry as one of the companies paying kickbacks to the former Iraqi regime under the UN oil-for-food programme.

During the ongoing Cole Inquiry in Australia, AWB managing director, Andrew Lindberg was asked 12 times whether he agreed to deceive the UN by inflating the cost of wheat exported to Iraq. At the eleventh hour on the twelfth question, he replied, "We had to, we had to, we had no option."


According to evidence produced during the Inquiry, AWB paid bribes to corrupt Iraqi officials and wrote memos that it would "tell the Australian Government about the deal at the appropriate time". It allegedly added a $2 million bribe to the price of one shipment of wheat just months before Australian troops deployed to Iraq.


Lindberg told the Inquiry that Iraqi Trade Minister, Mohammed Medhi-Saleh had threatened to leave Australian wheat stranded in the port of Umm Qasr unless AWB paid the bribe. In the official version the trade minister had claimed the wheat was contaminated with iron ore and would cost $2 million to clean.


The Inquiry – which grows more scandalous each day – includes allegations that wheat marketer AWB profited from the $290 million in bribes it paid to Saddam Hussein’s regime. Documents have been produced that show a 10 percent fee charged by the Iraqis included a plan to extract money from the foreign exchange margin if the company paid the bribe in German franks. Lindberg admitted this had occurred and that AWB had profited from the Iraqi bribes. This fee was charged in addition to the existing kickback for Jordanian trucking services that were never provided. A report, produced at the Inquiry by two senior AWB executives, stated that the fees were a mechanism for “extracting more dollars from the (UN's) escrow account.”


While it simultaneously deceived the UN by secretly inflating its prices and breaching UN sanctions, the Inquiry is also investigating a paper trail that details how AWB apparently tricked the UN to retrieve a multimillion dollar debt owed by oil company BHP.


The Australian Wheat Board is looking dirtier and dirtier, but its murky relationship with Saddam Hussein’s regime began long before the oil-for-food program. In the 1980s Australia became the biggest exporter of wheat to Iraq. AWB – now a private company – was then a government body, and used government credit to finance its own risky trading. When Iraq defaulted on its foreign debt after invading Kuwait in 1990, AWB was left with a debt of $600 million. The Australian government was forced to bail them out.


Despite the government absorbing the debt on their behalf, AWB rushed back into Iraq on the day UN lifted its sanctions on food in 1991 and immediately signed new contracts with the Iraqi regime — without taking any action to recover the debt Iraq already owed. According to Australian media, the first AWB shipment of wheat to Iraq after the Gulf War in 1991 was allegedly paid for with 10 tonnes of gold bars.


On 20 April 2003, Australian newspaper, The Age in an article titled, “How our trade troops won the wheat war,” reported that “AWB was experienced in both operating in the fog of war and, when necessary, adapting to the unconventional ways of doing business in Iraq.” Many AWB staff, The Age said, had traveled to Iraq, “they spoke their language and had developed close friendships with their Iraqi counterparts.” In order to keep the market open in Iraq, the newspaper claimed, AWB employees had found themselves “cast in real-life cloak-and-dagger roles” where they had to take payment in “gold bars” or carry suitcases  “full of cash across borders.”


The newspaper informed the Australian public that Lindberg and his associates had “invaluable” contacts in Iraq who were able to smooth things over “after Baghdad announced it would halve Australian wheat imports to just one million tonnes annually.”


During an interview with The Age, AWB General Manager of Public Affairs, Darryl Hockey, stated they had “very close friends and associates” within the Iraqi Grains Board. He expressed concern for their safety and sympathized with their difficulty in carrying out their work during the United States air strikes, and he complained that the US had destroyed the telephone exchange in Baghdad. His Iraqi friends, he said, were “very committed”, and “I would think”, he added “it would be difficult with bombs going down to actually walk into work and do the work they did."


One close associate was former senior minister in Saddam Hussein’s cabinet, Mohammed Medhi Saleh, who told The Washington Post, that if the USA wanted to “change the political system in Iraq, they have to come to Baghdad. We will be waiting for them here,” he said. Saleh was the Six of Hearts in the USA’s pack of cards of “Most Wanted Iraqis.” He is now believed to be in Abu Ghraib prison.


It wasn’t the first time AWB opposed the allied forces in Iraq. They were also vocal opponents to the United State’s effort to drive Saddam Hussein out of Kuwait, after he invaded the country in 1990.


And, if AWB isn’t dirty enough, there is evidence to suggest the money paid in bribes to the Iraqi regime was used to finance a $10 million slush fund for the families of Palestinian suicide bombers. The Australian claimed “US Government and CIA documents revealed a trail of blood money flowing from companies now known to have taken bribes into bank accounts in Jordan.” These accounts, it claims, were emptied each evening into Iraqi Government accounts” – which were used for its international transactions – including payments of $25,000 rewards to the families of Palestinian suicide bombers.


On the fourth day of the Inquiry AWB was again accused of corruption. The Age reported allegations had emerged that the Wheat Board had bribed Pakistani officials when it paid an agent $4 million in fees. A consulting firm that had examined a one million tonne wheat shipment to Pakistan also claimed the commission of $5 million to be “high.”


And as the Inquiry delves deeper and deeper into the moral and ethical archives of AWB, it has also revealed that the company’s employees giving evidence at the Inquiry had been put under pressure. According to The Age, a deed of employment prepared by AWB informed their former and current employees that they “could be forced to repay their legal costs if they were found to have acted dishonestly.” Counsel assisting the Inquiry, John Agius, SC, asked AWB managing director, Lindberg whether he was aware this statement might amount to “a contempt of the commission.”


Lindberg – a careerist who, in his previous job, allegedly ran up huge debts on his government- funded credit card – has had a standard response to questioning during the Inquiry. “I don’t recall... I don’t know” and “ I don’t remember.”


“I had a million things to deal with,” he insisted, when probed about the allegations of corruption, bribes and deception amounting to hundreds of millions of dollars. The Inquiry is due to be completed by March 31, 2006.


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