Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Hansard source

Yesterday the government claimed vindication by Mr Terence Cole’s report on his inquiry into certain Australia companies in relation to the UN oil for food program. Let me quote that raving leftie the economics editor of the Financial Review Alan Mitchell, who said today:

Howard’s vindication is primarily Terence Cole’s judgement that the government had no “actual knowledge” that AWB was hiding payments to the Iraqi regime by providing misleading information about its business arrangements.

But that is just one part of the broader judgement that the public must make.

“It is immaterial that the commonwealth may have had the means or ability to find out that the information was misleading, or that it ought reasonably to have known that the information was misleading,” Cole explains.

Immaterial to Cole with his narrow terms of reference, but not immaterial to the public.

I commend Mr Cole for his dedication in unearthing the truth about the corrupt conduct of AWB officials. He has done the Australian people a great service, but he could have done Australia an even greater service if he had been allowed to examine and report on every aspect of the AWB scandal. This scandal does not begin and end with the conduct of the AWB and its officials. The AWB did not act in a vacuum; the AWB is not just another private company. As the holder of a legal monopoly on the overseas sales of Australian wheat, the AWB was, in effect, an arm of the Australian government, even after it was privatised.

The conduct of the AWB, which Mr Cole thoroughly investigated, was only half of the story. The other half of the story was the legal and political environment in which the AWB operated and that was the responsibility of this government. AWB officials bribed people in Iraq. There is a devastating indictment in Mr Mitchell’s column today of the number of times Mr Cole cites Australian intelligence advising DFAT officials, and that all of them end with DFAT officials saying that ‘they do not recall having read, recalled or sought access to this intelligence that was provided to them’—all the way through to 2005.

In the Australian, I notice Mr Paul Kelly says that Cole judges that DFAT officials did not deliberately turn a blind eye to this bribing of the regime in Iraq. I contrast their insouciance with Colonel Mike Kelly, the deputy head of the Coalition Provisional Authority and a leading legal officer in the Australian Army, who after being just a few weeks in Iraq was able to work out what the AWB was up to—that is, that it had bribed the regime and was continuing to make these illegal payments. It is an amazing contrast.

The Prime Minister makes much of the fact that he told Mr Cole that he could ask for the terms of reference to be extended if he wanted, but that is a red herring. What the Prime Minister said was that Mr Cole could make the request if he believed that ministers or officials were engaged in criminal conduct. Criminal conduct is a very high bar to set. I do not know whether ministers or officials have engaged in criminal conduct. Quite possibly they have not, but that is not the real question. The real question is whether ministers bear responsibility for the alleged criminal conduct of AWB officials named in Mr Cole’s report.

The real issue was responsibility—political and administrative responsibility. The real questions were: first, did the Prime Minister, the Deputy Prime Minister and the foreign minister, through their omission or negligence, create a climate in which Wheat Board officials came to believe that their criminal conduct had the approval of the government; and second, did those ministers do enough, or in fact do anything, to discover what the Wheat Board was up to and take steps to prevent it once they were warned about it? Those are the real questions, but Mr Cole was not able to give us a direct answer because the Prime Minister deliberately wrote the terms of reference in such a way as to prevent him from doing so.

The Prime Minister has once again been very clever, perhaps too clever for his own good. In order to cover up the negligence, incompetence and complacency of the foreign minister and Deputy Prime Minister, he has made himself an accomplice to their misdeeds. He stands politically convicted of this scandal, just as they do, because even though Mr Cole has been prevented from making a direct finding on the conduct of the ministers, his report has allowed the Australian people to draw their own conclusions and to make their own report on the government’s behaviour.

Although Mr Cole was not allowed to make direct findings about the conduct of ministers, it is not hard to read between the lines of some of his comments. Of DFAT, for instance, he says:

The critical fact that emerges is that DFAT—

the minister’s department—

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—

that is, the oil for food program. There are two issues here. The first is the level of ministerial oversight of what DFAT was or was not doing in relation to monitoring AWB’s behaviour. The Minister for Foreign Affairs and the then Minister for Trade, the Deputy Prime Minister, were jointly responsible for that. Despite the fact that they received more than 30 warnings, as outlined by the member for Griffith, that Saddam Hussein was corrupting this program and specifically that he was demanding bribes from wheat exporters, we are expected to believe that they never saw any of these warnings, that no-one in their staff did and that it never occurred to them to ask or to find out whether the AWB, which after all was one of the largest wheat-marketing companies in the world, was in some way involved.

It is hard to tell whether these two ministers have been knaves or fools, but perhaps we will find out when, as threatened, Mr Flugge calls the Minister for Foreign Affairs as a defence witness if he is charged with a criminal offence. In a criminal trial, under the scrutiny no doubt of the best QC money can buy, the minister will not be able to do his Arthur Daley impersonation, ducking and diving, as the government’s automatic majority allows him to do in the House.

But that is not all. In this case there was a particular agenda at work with relation to the AWB. For decades the old Australian Wheat Board acted in effect as the marketing arm of the Country Party. Even after it was privatised it was stuffed with National Party mates with backgrounds in the wheat industry: ‘The National Party on tour’, as the opposition leader called it yesterday. The prize exhibit here is Mr Flugge, who in 1987 stood for the National Party for the seat of O’Connor. The member for O’Connor is thus something of an expert on Mr Flugge. Let me quote him yesterday:

The dogs have been barking about corruption for years. A number of people—who were not Liberals—were constantly out in the market place saying it was the way you did business in the Middle East. If our side of politics is guilty of anything, it’s of trusting a mob of agri-politicians—all of which have close connections to the National Party.

I do not often agree with the honourable member for O’Connor, but here he clearly knows what he is talking about. The key to this scandal is the long-established cosy relationship between National Party ministers and the leadership of the wheat industry who have been protected ever since World War I by the so-called single desk, a monopoly arrangement that like all monopolies is a breeding ground for corruption. I refer Liberal members opposite to every conservative economist from Adam Smith to Milton Friedman, who talk about the evils of monopoly, if they do not believe me. The spectacle of a Thatcherite government propping up a corrupt marketing monopoly is truly amazing. What has happened to economic rationalism?

The AWB scandal will damage Australia’s economic interests for years to come, particularly now that protectionist inclined Democrats are back in control of the US congress. I expect a devastating problem for Australia from Senator Harkin, who now controls the new Democrat dominated agriculture committee in the US Senate. As the Australian argued yesterday:

For a small country such as Australia with a heavy reliance on commodity exports, the benefits of honest world trade are self-evident. If Australia’s pleas are now met with increased scepticism on Capitol Hill, it will be because AWB was happy to pay bribes to Saddam and the Government did nothing to stop it.

The belief that bribery and corruption are acceptable ways of doing business, at least in the Middle East, is not confined to the National Party, however. This belief has been given a veneer of respectability by statements of certain academics and former diplomats, the people who form a too influential Arabist lobby within the Australian academic and diplomatic network. One of these is Dr Andrew Vincent, Director of the Centre for Middle East and North African Studies at Macquarie University, who on ABC radio in February opposed even having an inquiry into the AWB at all on the grounds that it would damage our wheat trade. Dr Vincent said:

... the bottom line is that in some parts of the world international trade is done with kickbacks, with considerations, with bribes, with whatever you want to call them. And if you don’t pay those kinds of considerations you won’t have a market.

Then we have Mr Bruce Haigh, the former Australian ambassador to Saudi Arabia, who wrote on his website—and he has been constantly writing in the Financial Reviewthat the Cole commission:

... has given trade competitors a blunt instrument with which to hit Australia over the head as well as injuring the AWB, which in the past secured wheat deals of $4 billion annually.

With views like this prevalent amongst Australian diplomats and in universities where Australian diplomats and DFAT officials learn about the Middle East, it is no wonder the current Minister for Trade, Mr Truss—perhaps not the brightest bulb in the government’s chandelier—thinks that the AWB payments to the Saddam Hussein regime were no worse than some sort of commission payment that you make to a real estate agent when you buy a house.

It is no wonder that Commissioner Cole singled out a leading Middle East DFAT official, Bob Bowker, referring to his failure to investigate intelligence relating to general rorts of the oil for food program. It will be very illuminating, as the member for Griffith recounted, if the recalcitrant Mr Davidson-Kelly is extradited to Australia and charged. He will have some very interesting things to say about the meeting that took place at the Point Restaurant in Albert Park between himself, the trade minister and Mr Bowker. I am sure the government does not want what went on at that meeting, in my electorate, to come out at that trial.

I think honourable members recognise that I know something about the Middle East, even if they do not always agree with me about it. One of the things that has angered me most about this whole affair is the complete indifference that seems to have been displayed by the AWB, by DFAT and by this government about the political context of AWB’s behaviour in relation to Iraq and particularly about the ultimate use to which Saddam Hussein put the $224 million he got from the AWB.

Saddam in the 1990s was a desperate man. Having lost both the Iran-Iraq War and the Gulf War, his regime was on the ropes, cut off by UN sanctions from oil revenues and arms imports. This was the precise juncture at which the AWB came to his rescue. As one of the leading participants in the rorting of the UN oil for food program, the AWB’s $224 million was one factor—and, in my opinion, a major factor—that allowed Saddam to recoup some of his losses and re-equip his forces. Saddam may not have had nuclear weapons, but the French and Russians will sell you a lot of conventional military hardware for $224 million. It was that re-equipping that emboldened Saddam to defy the UN over inspections of his suspected weapons stocks and programs, and of course it was Saddam’s defiance that led to the US led invasion in 2003 and to the current imbroglio in Iraq.

Saddam also had a program of making payments to the families of Palestinian suicide bombers, paid out of the same Rafidain Bank in Jordan into which the AWB made its payments to the bogus trucking company Alia, which was in fact controlled, owned and operated by the Ba’athist regime then in control of Iraq. I cannot prove that AWB money went to the families of the suicide bombers who have killed hundreds of innocent people since 2000, but neither can anyone prove that it did not. It was in the same bank, and it was probably transferred from one account to the other. This is where the geniuses, the 12 evil men from the AWB, had their worst effect—not that they would care. The AWB has a lot to answer for, and so do those ministers whose incompetence and complacency let the AWB get away with its corrupt actions for so long.

The Financial Review has an editorial on Mr Howard’s double standards in today’s paper. It begins by quoting that immortal television series Yes, Minister:

‘Decent chaps don’t check up on decent chaps to see that they’re behaving like decent chaps.’ That Prime Minister John Howard and Foreign Minister Alexander Downer have managed, in their defence of the government’s conduct in the AWB oil-for-food scandal, to make this quotation from Yes Minister seem relevant in 2006 is a tribute to their creative powers of spin.

I conclude by saying that this is a saga that is not over yet. The government think they have got off. They think, with this five-volume, narrowly focused report, that charges against these people will be delayed beyond the next election. This is not over though for the foreign minister, the Prime Minister or the former Minister for Trade. An aggrieved Mr Flugge is yet to sing but, when he does at his prospective trial, I am sure a lot more will come out on the incompetence and involvement of this government in this incredible scandal where an Australian monopoly benefited one of the most evil regimes in the world and stole the public money of the people of Iraq, put in a UN account. This was all done, as the member for Griffith has repeatedly pointed out, despite 35 warnings to this government. It is a record of shame which this government think they will survive because of the narrow terms of reference of this report. However, it is a record of shame that they will not survive because, in the long term, the Australian people will make a judgement about this. As I pointed out, this is not over yet. The criminal trials of these people will see much more evidence adduced.

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