An Australian enquiry into the UN oil-for-food programme to Iraq has recommended that 11 former executives of AWB, Australia’s monopoly wheat exporter, face criminal investigation for giving massive kickbacks to Saddam Hussein’s regime.
The inquiry by commissioner Terence Cole, a former judge, was established in January after a UN report led by former US Treasury chief Paul Volker said AWB paid $220 million in bribes to secure Iraqi wheat contracts worth some $2.3 billion between 1999 and 2003.
Overall, about 2,200 groups from 66 countries made illegal payments of around $1.8 billion under the scheme, which had been praised by the outgoing UN secretary general in 2003 “for accomplishing one of the largest, most complex and unusual tasks ever entrusted to the [UN] Secretariat”.
The Cole report, published today, cleared the Australian government of wrongdoing but could spell the end of AWB’s monopoly in arranging exports of wheat from Australia, the world’s third largest exporter.
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The consequences of AWB’s actions had been “immense”, Commisioner Cole said, with the company losing its reputation, shareholders losing half the value of their investment, and the wheat trade with Iraq forfeited.
“AWB has cast a shadow over Australia’s reputation in international trade,” he said.
John Howard, the Australian Prime Minister, who was called to give evidence before the Cole enquiry and has come under attack over the AWB affair ahead of elections next year, said he would launch an urgent review into AWB’s market position.
The inquiry said the 11 AWB executives that should be considered for prosecution included former chairman Trevor Flugge, former chief executive Murray Rogers and former chief financial officer Paul Ingleby.
The report also named Norman Kelly of Tigris Petroleum, a partner company of Anglo-Australian mining giant BHP Billiton. In response, BHP Billiton said this morning that it would analyse the Cole findings before issuing its own report.
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The Cole investigation was broadened to include BHP after allegations emerged that BHP lent $5 million to Iraq to pay for a 20,000 tonne wheat shipment in 1996.
BHP allegedly handed the debt to Tigris Petroleum, which in turn hired AWB to recover the money by inflating the price of wheat it was shipping to Iraq under the UN programme, the inquiry heard.
Chip Goodyear, the BHP chief executive, said: “Until we are able to complete a thorough review of the Commission’s findings, we will not be able to make any further comment.”
The AWB, formerly the government-owned Australian Wheat Board, was named in the UN report as the biggest offender among some 2,200 companies from 66 countries implicated in the corruption of the oil-for-food programme.
The oil-for-food scheme had been designed to allow Iraq to sell oil to buy food and medicine while maintaining economic sanctions on the country.
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Mr Howard said in a statement this morning: “The report of the Cole inquiry has clear implications for the operation of a single desk system for Australian wheat exports. The government will give urgent consideration to the future of marketing operations for the export of Australian wheat.”
Shares in AWB, which controlled around 14 per cent of the global wheat trade last year, have fallen by more than half this year since the Cole inquiry began on January 16, in part on fears the group would lose its monopoly status.
Its monopoly position has been attacked by wheat producers around the world, which have said it gives Australian farmers an unfair advantage in price negotiations.
In a statement to the stock exchange, AWB chairman Brendan Stewart expressed “deep regret” over the way the Melbourne-based company conducted the wheat trade with Iraq during the United Nation’s oil-for-food programme.