Kevin Rudd (Griffith, Australian Labor Party, Shadow Minister for Foreign Affairs and Trade and International Security) Share this | Hansard source

This wheat for weapons scandal demonstrates three things: that this government was guilty of gross negligence on an important matter of national security; that this government subsequently engaged in a gross attempt at cover-up once its negligence became known; and, on top of that, this scandal resulted in a great cost to the Australian community and, in particular, to our hardworking wheat farmers. The government’s defence in relation to this scandal is a defence which rests on, in turn, three propositions: we were ignorant, we were incompetent and we were negligent. They are the three elements of the government’s defence—a defence of ignorance, a defence of incompetence and a defence of negligence. The reason they chose that defence was that if you were to argue that the government knew what the AWB was doing then at that point, at the admission of that, they became complicit in one way or another in potential criminality on the part of AWB operations in relation to Saddam Hussein’s regime. So the government chose instead a defence resting on ignorance, incompetence and negligence.

How does this defence stack up against the record which has emerged, the factual material which was presented during the course of the Cole inquiry—noting that the commissioner was not asked to make determinations in any respect in relation to the incompetence or negligence of ministers in discharging their obligations under Australian administrative law, most particularly in respect of the foreign minister and his obligations under the Customs Regulations to give effect to Australia’s international obligations to enforce UN sanctions against Iraq? We have documented a total of 25 warnings prior to the Iraq war which this government received by one means or another. There were a further 10 warnings which the government received after the Iraq war and before this tawdry scandal, the largest corruption scandal in Australia’s history which saw $300 million filter through to the enemy, was finally brought to a halt.

Warning No. 1 was in 1998. The Australian intelligence community held intelligence indicating that Alia Corporation, based in Jordan, was part owned by the Iraqi government and was involved in circumventing UN sanctions on behalf of the Iraqi government. This intelligence was distributed to DFAT, DOD and PM&C.

Warning No. 2, in September 1999. Australia’s senior trade commissioner in Amman was advised by the Iraqi Ministry of Trade that AWB Ltd was an exception to the usual Iraqi practice of not buying exports from non-favoured nations.

Warning No. 3, in November 1999. The Australian Embassy in Amman learned that AWB had been sending laboratory equipment to Iraq without UN approval. A series of internal DFAT emails revealed that DFAT believed that AWB’s actions were in breach of sanctions. One email says, ‘I believe this action to be in breach of UN sanctions.’ Another says: ‘AWB may have been doing this for some time but there is no benefit in launching a witch-hunt at this stage.’

Warning No. 4, in December 1999. Shell approached Austrade in Amman and expressed interest in taking any oil paid to the AWB for wheat at a premium. Shell were interested in an arrangement by which Shell would pay for AWB wheat shipments to Iraq. DFAT notes: ‘What is being considered here might breach UN sanctions.’

Warning No. 5, December 1999. On 21 December 1999 the Canadian permanent mission to the UN asked the UN Office of the Iraq Program about a proposed contract between the Iraqi Grain Board and the Canadian Wheat Board. Iraq was asking the Canadian Wheat Board to deposit $700,000 into a Jordanian bank account to cover transportation costs in Iraq. The Canadians told the UN, in December 1999, they understood that the Australian Wheat Board had already entered into this kind of arrangement.

Warning No. 6, in the first quarter of 2000. For the first quarter of 2000 the Australian intelligence community had intelligence indicating that Alia received fees in Jordan for inland transport within Iraq of goods purchased under the oil for food program. It received these fees as an agent for the Iraqi government. The fees, less a small commission, were paid into accounts accessible by Iraq in violation of sanctions. The amounts involved were substantial. This intelligence was distributed to DFAT, the Department of Defence, the Office of the Inspector-General of Intelligence and Security and PM&C.

Warning No. 7, in 13 January 2000. The UN raised concerns with the Australian permanent mission to the UN in New York. On 13 January the mission reported the meeting by cable, explaining that another country had alleged that AWB had entered into an arrangement with Iraq where it would pay $14 per metric tonne to a Jordanian bank account to a company owned by a son of Saddam Hussein. The UN asked if Australia would make some discrete high-level inquiries to ensure that the AWB was not in breach of sanctions. UN official Felicity Johnston said that she told our mission that the payments were for inland transportation. DFAT Canberra responded saying, ‘We think it is unlikely that AWB would be involved in a breach of UN sanctions.’ The cable was sent without first contacting AWB.

Warning No. 8, on 10 March 2000. On 10 March 2000, our UN mission reports that, ‘Until we are able to provide a formal reassurance of this there will remain a question mark over the matter from the point of view of both the Office of the Iraq Program and the third country in question.’ We now know that third country to be Canada.

Warning No. 9, on 11 March 2000. Austrade’s representative in Washington reports that there are continuing concerns that the AWB had agreed to ‘irregular payment’ terms with the Iraqi Grains Board and that Austrade was ‘concerned that AWB do not understand the seriousness nor the urgency of the matter. It may be necessary to advise the minister of the situation’. This cable is copied to the Managing Director of Austrade and the Secretary of the Department of Foreign Affairs and Trade.

Warning No. 10, in March 2000. The Austrade representative in Washington met with AWB Chairman Trevor Flugge and AWB’s New York representative, Tim Snowball, to discuss the Canadian complaint. According to Snowball, Austrade indicated that there was ‘a big problem around the trucking fee and some exposure’.

Warning No. 11, on 22 March 2000. On 22 March 2000, DFAT Canberra reports by cable that AWB will provide the UN with a copy of its standard terms and conditions with Iraq. The cable, which mentions allegations of irregularities by AWB, is copied to the Prime Minister and the ministers for foreign affairs, defence and trade.

Warning No. 12, on 13 September 2000. On 15 September 2000, Mr Davidson Kelly from Tigris emails Charles Stott at the AWB saying:

For your information, 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. It was good to see you, Mark Vaile and Bob Bowker in Melbourne yesterday.

Mr Vaile has denied that he met Mr Davidson Kelly in Melbourne on 14 September 2000 as he was in Sydney. However, his spokesman later admitted that he was in Melbourne at a function for the launch of BHP’s sponsored report on trade and the Middle East on 13 September 2000 and may have met with Mr Davidson Kelly and Mr Stott.

Warning No. 13, in October-November 2000. On 20 October 2000, AWB Chairman Trevor Flugge wrote to trade minister Mark Vaile regarding AWB’s recent visit to Baghdad. AWB then had discussions with DFAT about its proposal to engage Jordanian trucking companies and then wrote to DFAT on 30 October 2000 seeking DFAT’s approval for this arrangement. On 2 November DFAT replies to AWB giving it the green light to proceed on this process, saying that it—that is, DFAT—‘can see no reason from an international legal perspective why you should not proceed. That is, this would not contravene the current sanctions regime on Iraq. International Legal Division has been consulted in the preparation of this response’.

Warning No. 14, in November 2000. By November 2000 the Australian intelligence community held intelligence indicating that Iraq’s transport charges for humanitarian goods under the oil for food program had been substantially increased. Alia was one of the means by which fees were paid to Iraq. The Australian intelligence community also had information that such fees would probably have been used for procurement purposes outside Iraq. This information was forwarded to DFAT and Defence. Some of this information was sent to IGIS and PM&C.

Warning No. 15, in March 2001. By March 2001 the Australian intelligence community held intelligence of endeavours by Iraq to breach sanctions by, amongst other methods, collecting commission on contracts for humanitarian goods imported into Iraq under the oil for food program. This included information that Iraq violated sanctions by charging a commission of at least 10 per cent on imported humanitarian goods under the oil for food program and that the 10 per cent was rigidly enforced. This information was sent to DFAT, Defence and IGIS. One report was forwarded to PM&C.

Warning No. 16, on 7 March 2001. The New York Times carried a front-page article which outlined in accurate detail Saddam Hussein’s misuse of the oil for food program. The article reported Saddam’s use of bogus additional charges like inland transportation on commodity contracts, including wheat. It also reported concerns that Saddam was using the money earned through the scheme to buy weapons. The sources for the article included diplomats and United Nations officials.

Warning No. 17, on 8 March 2001. The US Acting Permanent Representative, Ambassador Cunningham, told the UN Security Council:

We have evidence that kickbacks have been requested. We don’t have any good evidence that they’ve been paid but one assumes this is happening. It has been going on for some time. We don’t have any means of assessing as I said yesterday, what the degree is, because obviously the companies that are doing this and violating the law are not going to come forward and admit they are doing it.

Wasn’t he right?

Warning No. 18, on 9 March 2001. The Australian Permanent Mission to the UN in New York sent a cable to Canberra which reported that, according to UN officials, Iraq had begun demanding kickbacks and illegal commissions on contracts for humanitarian supplies. During a debate in the Security Council the UK had called on Iraq to ‘stop manipulating the program and stop blackmailing companies by demanding surcharges’. Norway had said that ‘everybody knows about the kickbacks’. The cable was sent to the Prime Minister, the foreign minister and the trade minister.

In a supplementary statement to the Cole inquiry, Mr Downer said that the cable had been opened by his chief of staff and forwarded to his Adelaide office but that he could not recall reading it. According to this cable access log, 71 DFAT employees read this cable, some of them on multiple occasions.

Warning No. 19, in April 2001. On 10 April, the Australian Permanent Mission to the UN in New York sent a cable to Canberra which refers to:

... anecdotal and in some cases hard evidence of Iraqi purchasers and agents demanding fees and commissions in association with the export of oil and the import of humanitarian supplies ...

The cable goes on to say that the mission had been approached by Iraqi officials in UN corridors who had complained that the sanctions committee could ‘complicate the matter’. The UN mission noted in its cable:

Iraq’s interest in keeping port fees outside the oil-for-food program appears self-evident from the Iraqi delegation to us ...

The cable was sent to offices of the Prime Minister, the foreign minister, the trade minister, the agriculture minister and a range of government departments including ONA, DIO, the Attorney-General’s Department and the Treasury.

Warning No. 20, in August 2001. Michael Wallbanks, from the British shipping giant P&O Nedlloyd, said that when his office was advised about the 10 per cent ‘after-sales tax’ levied by Iraq in 2001 he contacted the US and British navies, as well as the British embassy in Dubai. He said that the impost was common knowledge among anyone in the shipping industry who had dealings with Iraq.

Warning No. 21, in September 2001. The Australian intelligence community held intelligence indicating that inland transport fees for humanitarian goods, including fees paid through Alia, were proposed to be increased substantially by Iraq. This increase was on top of the 10 per cent commission already paid and the fees were payable in advance of delivery. The proposed increase in transport fees was to apply to all humanitarian goods delivered under the oil for food program through the port of Umm Qasr. This information was distributed to DFAT, the Department of Defence and IGIS.

Warning No. 22, in May 2002. The US General Accounting Office presented its report Weapons of Mass Destruction: UN Confronts Significant Challenges in Implementing Sanctions against Iraq to the Hon. Tom Harkin of the US Senate. The report sets out in detail Saddam’s misuse of the oil for food program, including the imposition of a 10 per cent levy on commodity contracts.

Warning No. 23, in August 2002. It was reported that at this time the agriculture minister, Mr Truss, was warned by prominent Victorian grain merchant Mr Ray Brooks that AWB was paying bribes to Saddam Hussein’s regime, at an occasion at the Mallee machinery field day in north-west Victoria. But according to this report he was told by Mr Truss to ‘stop peddling stories like that around’. According to Mr Brooks, Mr Truss said: ‘Ray, don’t give me that bull. The Wheat Board is run by farmers of great integrity and honesty. They wouldn’t do that sort of thing.’

Warning No. 24, on 21 August 2002. The Weekly Times reported that the dispute between the AWB and the Iraqi Grains Board was resolved through payments for inland transport. The article said:

An industry source said Iraqi negotiators extracted a $7 million saving out of AWB Ltd as part of the deal. The source said it involved the AWB subsidising transport of the grain from the Iraqi port of Umm Qasr to further inland and supplying grain testing equipment.

Warning No. 25, in December 2002. By December 2002 the Australian intelligence community held intelligence that Iraq was enforcing the 10 per cent commission on imports under the oil for food program. One means by which it was to be continued to be paid was by payment into accounts in Jordan. This intelligence was distributed to the office of the foreign minister, the office of the Minister for Trade and the Prime Minister’s office, apart from the usual AIC and DFAT regulations. It was also distributed to the Australian Federal Police.

These were the 25 warnings which the Australian government received prior to the Iraq war about what the AWB was up to in Iraq, yet this government’s defence was that it knew nothing. It was ignorant! It had no information at its disposal! It was therefore, on any reasonable man’s conclusion, incompetent and negligent.

We are left with this question, and it goes to the heart of public administration in this country: how is it that we spend hundreds of millions of dollars each year on our intelligence community and a diplomatic network to receive information of this calibre and quality into Canberra and nobody—I repeat: nobody—across the entire system of government here was capable of drawing upon these 25 warnings to at least proceed with a robust investigation of what was going on? That is the outstanding question here. It is a failure of public administration, at worst, of which this government is grossly culpable and negligent.

See this speech in context