AWB knew 'trucking fees' were bribes

February 22, 2006

Doug Lorimer

Evidence presented on February 15 to the Cole royal commission into wheat export monopoly AWB Ltd's $290 million in kickbacks to Saddam Hussein's regime indicate that the company's top executives were aware that $220 million in payments to Jordanian trucking company Alia were going to the Iraqi transport ministry.

Before the US-British-Australian invasion of Iraq in March 2003, the Australian Department of Foreign Affairs and Trade (DFAT) approved 41 AWB contracts worth $2.29 billion through the UN's post-1997 "oil-for-food" program. This allowed Iraq, which had been subject to a UN-imposed trade embargo since 1990, to sell some of its oil in return for importing food and medicines.

The new documents, three confidential Iraqi market reports from 2001 and 2002, show that AWB executives knew five years ago that the "trucking fees" paid to Alia were a cover for bribes to the Iraqi government to secure wheat export contracts for AWB rather than its US and Canadian rivals.

For the past month, AWB executives have told the Cole inquiry that they believed the payments to Alia were a legitimate transport cost, and they were unaware of any AWB kickbacks to Iraq. In each of the three documents it is noted that, "Inland transport fees are paid via Alia Transport Company in Jordan, who then pay the Ministry of Transport in Iraq".

Evidence now before the inquiry also suggests the market reports may have been sent to the federal government's regulator, the Wheat Export Authority, during the time when Warren Truss, now transport minister, was agriculture minister. The WEA was established in 1999, when the government-owned Australian Wheat Board was privatised as AWB Ltd.

WEA head Tim Besley told a Senate estimates committee on February 14 that there was nothing in the contracts presented by AWB to the WEA suggesting kickbacks to the Iraqi government.

Evidence has already emerged at the Cole inquiry that DFAT officials were also aware of the kickback arrangement through Alia. On February 7, AWB executive Charles Stott said in a written statement that Jane Drake-Brockman, then a DFAT assistant secretary, had written to him on November 2, 2000, granting DFAT's approval to make payments to Alia. Stott said that Drake-Brockman later told him that "DFAT had looked into Alia".

This contradicts foreign affairs minister Alexander Downer's claim that DFAT did not know about bribes being paid to Iraq via Alia until after the UN-commissioned Volcker Inquiry first investigated the company in 2004.

The Cole inquiry has also heard that DFAT was linked with a bribery deal involving BHP, the world's largest mining company, AWB and Tigris Petroleum, BHP's joint venture partner in Iraq. BHP financed a 20,000-tonne, $8 million grain shipment to Iraq in January 1996 as a "humanitarian donation". In 2001, BHP sought to get full payment from Iraq for the shipment, plus 10% compound interest, by assigning recovery of the debt to Tigris Petroleum. In turn, Tigris sought AWB's help in circumventing the UN sanctions regime by inflating the price of its wheat to recover the BHP debt.

"Tigris is an Aussie-registered company and enjoys the support of our friends at DFAT who, as I told you, are interested in the outcome of discussions to recover the obligation", Tigris executive Norman Davidson-Kelly told Stott in an email in September 2000.

Stott, who left AWB in 1996 for a five-year stint at BHP, told the inquiry that the shipment was designed to win contracts for BHP in the future development of Iraq's vast oil resources. BHP sought oil exploitation rights over an area of Iraq the size of Bass Strait.

The AWB wheat-for-bribes scandal and the BHP wheat-for-oil-rights scandal have further exposed what the 2003 invasion of Iraq was really all about — securing Western corporations' control over Iraq's markets and oil resources.

From Green Left Weekly, February 22, 2006.
Visit the Green Left Weekly home page.

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.