Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

The Royal Commissions Amendment Bill 2006 can be summed up in four short words: too little too late. It is too little because it does nothing to address the key obstacle to Commissioner Terence Cole uncovering the whole truth about the ‘wheat for weapons’ scandal—that is, his restrictive terms of reference. It is too late because the little it does do really should have been done months ago. Labor recognised the problem in March, only to be scoffed at by the Attorney-General. If the Attorney had been doing his job he could have acted to deal with this issue three months ago, avoiding the expense and delay of the Federal Court case which told the government what Labor had told them for free—that we need action to stop the abuse of legal professional privilege to obstruct the inquiry.

Having recognised the problem in the first place, Labor of course supports the bill to remedy the problem. However, it should be clear to all members of this House that this bill is no solution to the real problem affecting Commissioner Cole—that is, his restricted terms of reference. This bill will make amendments to the Royal Commissions Act 1902 and the amendments will have effect for the current inquiry into the involvement of Australian companies in the UN oil for food program. That is why we are dealing with this legislation urgently.

But the bill will also have a more lasting effect for all commissions exercising powers under the act, and I want to use this opportunity to consider some of the implications of that. First, let me explain what this bill does and why it has the opposition’s support. It is a relatively straightforward bill that will provide a special procedure for commissions to determine the validity of claims for legal professional privilege over documents that a commission seeks. Legal professional privilege, as many in this House would know, is a common law rule of evidence that prevents courts from requiring the production of evidence that would disclose confidential communications between a lawyer and a client.

This is an important principle of justice, as clients should feel free to provide full instructions to their lawyer so that the lawyer can provide complete and accurate advice. This freedom is compromised if clients fear that their instructions could subsequently be used against them in court. However, legal professional privilege does not apply to all communications between a lawyer and their client. In order to attract the privilege, the communication must have been made either with the dominant purpose of obtaining legal advice or in relation to actual, pending or reasonably anticipated litigation. As a result, not every claim for legal professional privilege is a valid one. It concerns me that we may be seeing an increasing trend for some companies and some lawyers to make exaggerated claims for privilege or to conduct certain business affairs in the presence of lawyers simply to form the basis for a later claim for privilege. We have seen examples of this in the current AWB case and, to some extent, in the James Hardie case before that and in a number of other cases that have been in the media over the past few years.

The parliament needs to send a strong message that this is not on. To protect the privilege, we cannot allow it to be misused. Legal professional privilege is intended to be a safeguard in our system of justice, which relies on candour between lawyers and clients. But it is not meant to be a cloak to hide unlawful conduct. So this bill goes some way to sending the message that, by streamlining the process for assessing claims of privilege in the context of royal commissions, this can be achieved. This should be a disincentive to trumped up claims by ensuring that the onus to pursue privilege claims lies with the claimant, not with the commission.

The bill will provide that legal professional privilege remains a reasonable excuse for failing to provide a requested document to a commission only if either a court or a member of the commission has accepted that the document is privileged. However, under this bill a member of the commission would be empowered to demand by written notice the document for inspection. Inspection could be made either by the member or by a person authorised by the member—for example, some type of adviser. If the claim is accepted, the commission would be required to disregard the document for the purposes of any report or decision that the commission makes.

The bill also creates new penalties for failing to produce a document once a commissioner has rejected a claim for privilege or for failing to produce a document required for determination of a privilege claim. In both cases the penalty would be $1,000 or six months imprisonment, which is consistent with existing penalties for failures to produce documents. It would be a reasonable excuse for not providing the documents if a court had previously found that they were subject to legal professional privilege.

Why is this bill necessary? It is necessary because of issues that have already been discussed widely in the AWB case, and it is necessary expressly because of the Federal Court case involving the Cole commission—that of AWB Ltd and Cole. This case involves precisely the sort of exaggerated claim for privilege I have been talking about. AWB claimed privilege over the now infamous ‘draft statement of contrition’, which had been produced in December 2005. Commissioner Cole determined that privilege did not attach to the document and that there was no reasonable excuse for it to be withheld. AWB then applied to the Federal Court to order Commissioner Cole not to use the document. The Federal Court found that the document was not subject to privilege, on the rudimentary ground that it had not been produced and circulated for the dominant purpose of obtaining legal advice. In short, it was produced for the purposes of public relations advice, not legal advice.

The court also agreed with Commissioner Cole that the Royal Commissions Act empowers the commission to determine whether or not a document is subject to privilege. However, the court cast serious doubt over whether the commissioner also has the power to demand to inspect a document in order to make a determination on the claim of privilege. Ultimately, the court did not make a binding determination on this issue. But it did point out that, in principle, the privilege would prevent the commission from inspecting a document over which the privilege is claimed and that any abrogation of legal professional privilege to allow such inspection could only be made by ‘clear and unmistakable language’ in the Royal Commissions Act, not merely by implication.

So that is the vital change this bill makes, using the clear and unmistakable language referred to by the court. In providing a special process, it makes it crystal clear that a commissioner can demand to see a document in order to make his determination over whether it can be admitted into evidence. The fact is that determining whether or not a document meets the ‘dominant purpose’ test of legal professional privilege often requires the decision maker to see the document itself. This is not an uncommon process in the courts.

I note that the Law Council has raised some concerns about this process. It is worried that inspection of a document that is later held to be privileged could nonetheless ‘pollute the mind’ of the commissioner when he comes to write his report. This is a valid concern, and so some caution is sensible. It is also sensible to be concerned about the potential removal of this protection, when you consider the conduct of the Howard government in using very politicised commissions of inquiry on other matters. When forced to establish a commission into an area that could expose wrongdoing or incompetence by coalition members, the government have restricted the terms of reference to keep the inquiry away from sensitive areas. But they were quite open to using commissions of inquiry as witch-hunts to harass the labour movement, such as in the building industry royal commission or in the Centenary House inquiry. When the executive uses commissions of inquiry as partisan tools, I am very wary about granting them too many powers.

On the other hand, I am convinced that the bill comes with enough safeguards to protect against the particular problem the Law Council refers to. I want to touch on those protections. Firstly, the bill makes it clear that the commissioner must disregard the contents of a document for later decisions once it has decided that it is actually a privileged document. As I said, this is similar to the process used by judges in other courts. Secondly, the bill allows the commissioner to authorise a third party to inspect the document in order to advise the commission on whether or not a document is privileged. This option could be exercised where it is a sensitive issue and the commissioner is concerned about the live possibility that inspection of the document could compromise the inquiry. Again, that can be referred to an adviser or someone else—similar to the common process in which judges may refer claims of privilege to other judges for determination when matters are in their courts.

Finally, and most importantly, the bill makes no attempt to limit the claimant’s right to have the privilege determined once and for all by a court. The bill provides very clearly that privilege determined by a court is definitive on the issue and is a reasonable excuse for refusing to provide a document to a commission. Accordingly, if a party genuinely believes that a document is privileged and would compromise the inquiry, they may seek a court order to protect them. This erects a hurdle that exaggerated claims will rarely overcome, but it does not undermine those genuine claims that might be made.

So, on balance, I am convinced that the bill merely streamlines the process by putting the onus for commencing litigation on the claimant, not the commission. This should deter false and exaggerated claims as well as reduce the incidence of litigation during the life of the commission and the expense and delays that go with it. I want to emphasise that the bill does not in any way affect the substance of legal professional privilege or the protection it affords lawyer-client communications if it is properly claimed.

According to the government, Commissioner Cole has said he expects to need more documents that are subject to privilege claims, so the passage of this bill will have an immediate streamlining effect for the remainder of the commission’s life. If that is so, Labor is prepared to offer its support for the urgent passage of the bill—and that is why we are debating it tonight after it was introduced only last week. The bill is correct in policy so, if it is helpful to Commissioner Cole for it to be passed quickly, it ought to be passed quickly.

Having described what the bill does, I want to make it absolutely clear to the House what the bill does not do. The bill does not remove the obstacles to a full investigation by Commissioner Cole into the ‘wheat for weapons’ scandal. The bill does not address the restrictive terms of reference through which the government has restricted the inquiry. The bill does not demonstrate any serious commitment to a full, open and transparent inquiry into what really happened behind the Iraq kickbacks scandal and how deeply the government was embroiled. So, at this point, I move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House notes:

(1)

that the Opposition demanded action to prevent the abuse of legal professional privilege in the Inquiry into certain Australian companies in relation to the UN Oil-For-Food Program (the Cole Commission) in March;

(2)

that the Attorney-General arrogantly rejected that demand at the time and incompetently waited almost three months, after a Federal Court case, before taking action with this bill;

(3)

that, while this bill proposes a sensible, albeit late, change to the law, it will not solve the broader problem that the Cole Commission’s Terms of Reference are limited;

(4)

that the current Terms of Reference do not allow the Cole Commission to make findings on whether or not Ministers, their offices and departments have discharged their duties under Australian administrative law and under international law (in particular UN Security Council Resolution 661);

(5)

that the Cole Commission has provided written advice that a change to the current Terms of Reference which would allow the Cole Commission to make such determinations is a matter that would be ‘significantly different to the existing Terms of Reference’ and is therefore a matter for the executive; and

(6)

that if the Howard Government had nothing to hide in the $300 million ‘wheat for weapons’ scandal, it would expand the Cole Commission’s Terms of Reference to allow Commissioner Cole to make such determinations”.

Whether this bill passes or not, Australians can have no faith that the Cole royal commission will get to the whole truth of this shameful episode. The reason for that is that the government has imposed terms of reference that restrict the inquiry. These terms are blinkers designed to deprive the inquiry of its peripheral vision, where, if it focused its attention, it would discover coalition ministers everywhere—the Minister for Foreign Affairs, the Minister for Trade and even the Prime Minister himself—failing in their responsibility to protect the good name of Australia. The commission cannot inquire into whether the Australian government or its officers or ministers breached administrative law or international law. In other words, Commissioner Cole is not looking into whether government ministers turned a blind eye to, or were involved in, a systematic operation to undermine the Iraq sanctions regime. That is the question which should preoccupy this House. It is an issue which goes to the heart of the integrity and competence of this tired, old government.

Let us not forget what happened. An Australian company—not just any old company, but a company which was for some of the time Commonwealth owned and which to this day retains a Commonwealth-sanctioned monopoly on the export of wheat—paid over $300 million in kickbacks to the regime of Saddam Hussein. At the same time, Australia was party to the United Nations sanctions against Iraq and the Australian government was preparing for war against Iraq to remove its dictator. The bottom line is that, while the Australian government was asking our young men and women in the Navy to participate in a blockade against Iraq, AWB was undermining the efforts of those sailors by paying kickbacks to prop up the very same regime. What an insult to the sacrifices those sailors made! They were serving our country—many thousands of kilometres from home, many thousands of kilometres from loved ones—and trying to enforce sanctions.

Pat Farmer (Macarthur, Liberal Party, Parliamentary Secretary to the Minister for Education, Science and Training) Share this | Link to this | Hansard source

Hardly! That’s speculation.

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

It is not speculation. They were there doing the job that your government sent them to do, and a major Australian company was simultaneously flouting those sanctions. As those sailors served us, money was being funnelled from the wheat exporter, right through their blockade, into the coffers of Saddam Hussein—money that would eventually be spent on weapons, potentially to be used against Australian soldiers.

What Australia really needs to know is what role our government played in this scandal. Was it just a case of sheer incompetence? That is the government’s best defence. Was it a failure to read the cables? Was it a failure to pick up the 29 warning signs or to take the necessary action? Or was it even a failure by the Minister for Foreign Affairs to follow up on his own requests for more information, which he had scribbled in the margin of one of the cables that he bothered to read? The government’s best argument for the behaviour of its ministers is that they were lazy, incompetent or just plain stupid. These are ministers with front-line responsibility for our national security and economic wellbeing, but they were too lazy to read the cables they were sent. Should we accept the ‘incompetence’ defence or was it even more sinister? Was it wilful blindness—the ‘don’t tell me, I don’t want to know’ excuse? Or was it more than that—a sideways nod, a wink-wink, nudge-nudge, she’ll be right signal to AWB? Or was there even direct knowledge and acquiescence?

In all scenarios, it is no exaggeration to say this is one of the most appalling scandals, if not the most appalling scandal, in the history of the Commonwealth. And yet we have an inquiry that is prevented from examining the most pressing and serious question of the affair: how did the Australian government betray Australian sailors and soldiers by letting money flow past their blockade and into the treasury of one of the world’s most ruthless tyrants? One thing we do know is that, whatever happened, the Howard government has been committed to covering up the scandal. That is not changed one iota by this bill. It is a sensible bill that makes a modest procedural change, but it does not go to the core mechanism of the cover-up: the restrictive terms of reference of the Cole inquiry.

Even this little change is not something that the government did willingly. It took the expense and delay of a Federal Court action to show them what action was needed. Labor gave the government the same advice for free. On 12 March the member for Griffith and I issued a statement calling on the government to take action to resolve the problem of AWB’s exaggerated claims for legal professional privilege, which threatened to stymie the work of the inquiry. Typical of his arrogance, the Attorney responded with a withering press release calling our demand for a solution to the legal professional privilege problem ‘misconceived’.

In this place we sometimes might overlook, if not forgive, arrogance when it is displayed by someone gifted with extraordinary ability, but that does not seem to apply in this case. This press release was an example of how the Attorney’s arrogance is in inverse proportion to his competence. The self-righteous, lecturing tone was a sure sign that he was about to stuff this up. In fact, the Attorney seems to have the temperament of a BASE-jumper—if he is going to take a fall, he will make it all the more spectacular by talking himself up to great heights beforehand.

Almost three months and an expensive Federal Court case later, the Attorney-General finally dealt with the problem that he had ridiculed Labor for recognising. In presenting this bill, he has had to face up to his own incompetence. This extreme sports approach to governance may give the Attorney-General an adrenalin rush, but it leaves the rest of Australia cold. We would prefer that he got it right in the first place, even if it does mean admitting that Labor occasionally has a good idea.

To make matters worse, today we have learnt more of the consequences of the Attorney-General’s failure to take action in March when Labor urged him to do so. We learnt that AWB is now applying to the Federal Court for a declaration that 1,240 extra documents sought by the inquiry and subject to privilege. This looks like being yet another delay and another expense in this increasingly drawn-out inquiry. We have to wonder what the point is of streamlining the process for assessing privilege claims when those claims have already escalated into litigation of this level.

If the Attorney had taken our advice in March rather than issued his silly press release, a streamlined process might have been in operation some time ago. Of course, this bill would not have prevented AWB from taking court action to assert their privilege over the documents, but it would have meant the question was addressed at least two months earlier and, potentially, through a simpler and less expensive process. Now we are faced with an utter mess: a dispute over the status of over 1,200 documents at a time when the commission of inquiry should be nearing its end. What is even more frustrating is that it is not the first example of Mr Ruddock’s unique blend of arrogance and incompetence, nor, it seems, should we expect it to be the last.

Just yesterday we saw another classic example, when the Australian Law Reform Commission carpeted the Attorney’s sedition laws, saying sedition ‘should be removed from the federal statute books’. This followed the Attorney’s heavy-handed manner last year when pushing the antiterrorism laws through parliament. He ignored Labor at that time, but he also ignored his own backbenchers and the recommendations of a Senate committee, who joined in our warnings that the sedition laws were a mistake. Only last week, Mr Ruddock was back in this place parading like a peacock about the chamber and attacking me and others on this side for opposing those laws on the basis that they only scared journalists and artists, not the purveyors of violent propaganda.

Then yesterday, again from the heights of hubris, came the fall. The study by the Law Reform Commission of the laws he had commissioned told him what the rest of us had been saying for six months: the sedition laws were a mistake. Mind you, the Attorney’s conceit was only amplified in the face of this extraordinary criticism. He pretended it was all part of a cunning plan. I am not sure, Mr Deputy Speaker McMullan, whether you listened to The World Today on ABC radio this morning, where, staggeringly, Mr Ruddock said:

This is no embarrassment to me. It was the result that I anticipated and expected.

You have to ask: why on earth did the Attorney ram through the sedition laws if he ‘anticipated and expected’ such stinging criticism from the Law Reform Commission? Why did he not simply accept the view of Labor, of his backbench, of the Senate committee and, now, of the ALRC that 14th century sedition laws designed to stifle criticism of the government are not the right vehicle to deal with the 21st century problems of terrorism and community violence? If that is the best spin he can put on this exposure of his ineptitude, then the Attorney’s career has truly descended, almost into the realms of some sort of tragicomedy.

We saw the same pattern on the bankruptcy anti-avoidance laws. Early in 2005, the Attorney opposed outright Labor’s plan to improve the clawback provisions against those high-flying bankrupts who hide their assets in the names of families and related entities. Early in 2006, the Attorney’s own plan included Labor’s suggestion that he had opposed 12 months before—again, the height of arrogance and the fall of incompetence. Now we are seeing something similar with the family relationship centres. The Attorney has been swanning about the country talking about these centres and plans a trip in July to open all of these new centres.

Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

Really?

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Really. Managed properly, this could actually give him something to be proud of. Indeed, it would be sad for him—

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. The bill before the House is the Royal Commissions Amendment Bill 2006, not the family centres bill, nor does it concern the travel details of the Attorney-General. I ask you to draw the member back to the bill.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I thank the Parliamentary Secretary to the Minister for Industry, Tourism and Resources. I have been listening to the rather wide-ranging address from the member for Gellibrand, but she has been making a point of continuity with regard to her attitude to the bill. I regard it as in order, if somewhat wide-ranging, and I will allow it to continue.

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Thank you. Both you, Mr Deputy Speaker, and the parliamentary secretary might be assisted by the fact that the second reading amendment I have moved does indeed deal with the Attorney’s approach to a number of these issues. I am simply using it to highlight what is unfortunately a consistent pattern that we see running right through this bill, through his approach to bankruptcy, through his approach to sedition and now through his approach to the family relationship centres in a way that causes us on this side of the House some grave concerns.

I am particularly concerned with the family relationship centres because, if they are managed properly, this indeed will be something that the Attorney could and should be proud of. It would be sad for him to leave the parliament after such a long career if he were not able to say that this was one of his great achievements. But if it is mismanaged, as we think it has been along the way, despite warnings from Labor, like those warnings that were given on this royal commissions bill—and the government was too arrogant to accept any of our recommendations and advice—then we are going to see a system fail that could actually be a good one. So even this worthy plan could be undermined by his incompetence. At estimates we learnt that the contracts for many of these centres had not even been signed, only five weeks from opening day.

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I have just had a look at the amendment moved to the royal commissions bill. There is no such provision in there for the wide-ranging debate—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I thank the parliamentary secretary. I do not consider that the amendment helps the member for Gellibrand in her debate either. Why I ruled her in order was not for that reason, although I accept that she raised it and you are entitled to raise a point of order. I do not consider that it helps the member for Gellibrand. The member for Gellibrand is in order because she has been making a connection in a pattern of behaviour that relates to this bill. But I do hope that she will make that pattern a bit clearer and promptly draw it back to the bill.

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

It is important to us because we are concerned that, on 13 March this year, when Labor put forward a proposal and called on the government to deal with the issue of legal professional privilege, as it was taxing the mind of Commissioner Cole at that time, the Attorney scoffed and sneered at us. But here we are, two months later, with the full backflip by the Attorney, finally taking action to address this issue of legal professional privilege. We have learnt not to take his arrogance seriously, because we know it is nothing more than a bravura performance to cover up his incompetence. But my concerns, and the concerns that should actually worry the parliamentary secretary, because I think he might be getting a family relationship centre in his area—

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

No.

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

He is not? He must be one of the very unlucky nonfavourites of the Attorney in that case. I am not sure why you are defending him so strongly. Those of your colleagues who are getting a centre do not want to be standing up here and having us say, ‘We told you so months ago,’ in the same way that we are doing here with the bill, because we can see that problems are arising. The information that we got in Senate estimates this week showed that the centres are not able to set up properly, that they are being rushed to start. In poor old Townsville, where they have been hit by the effects of Cyclone Larry, they are being told that they have to open in a tent, if that is what it takes to be open by 1 July—

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I have just had a reread through the amendment. I understand what you have said about a wide-ranging debate. But the member opposite has not referred back to the issues contained in her own amendments, which are in relation to the Cole inquiry, or indeed to the various aspects of that inquiry. Her whole speech seems to be about family relationship centres, which bear no resemblance at all to a royal commission, to a royal commission bill or to the Cole inquiry. I ask you to exercise your judgment and bring her back to the bill. If she has nothing further to say about the bill then perhaps she should sit down.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I thank the parliamentary secretary. I previously indicated that I do not consider the question of whether or not this part of the member for Gellibrand’s contribution is in order to be related to the amendment, which I agree with you does not help her in this matter. The member for Gellibrand has made the connection. It goes to what she is trying to establish as a pattern of behaviour that is reflected in this bill. It is not the longest bow I have heard drawn in this House. I will allow her to continue but I do ask her to continue, to refer to the bill.

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

We are concerned that before this House is a bill that is actually affecting a commission of inquiry that is under way now—in fact, due to report exactly a month from today. We want the commission to be able to complete its job and we want it to be able to do it quickly. We are happy to support the bill, because we think it is going to help the commission do its job, but we are still disappointed that we were not having this debate weeks or months ago, when the issue was first raised, which would have enabled the commission to do its job more quickly. We would also prefer to be here addressing a change that would actually go to the substantive problem that Commissioner Cole faces, which is the very restricted terms of reference that this government has given the commission.

We are pleased to be supporting the bill. We are happy to facilitate its urgent passage through the parliament, so that Commissioner Cole can continue his work with minimal further interruptions, but the government cannot be allowed to continue its ruse that this bill demonstrates its commitment to helping Commissioner Cole to find the truth. As we all know, the truth is that Commissioner Cole is hamstrung by restrictive terms of reference that prevent him looking at the question Australia needs to know the answer to: exactly what role did Howard government ministers play in this shameful betrayal of our sailors and soldiers who served our country in the Persian Gulf and in Iraq when these sanctions were in place?

Unfortunately, even with the modest change that is before the House, we will not get an answer to that question. And unfortunately, I fear, it will not be the last time I am in this House criticising the Attorney for failing to take any advice, either from the public—from those advocates who raised concerns with the approach he was taking—or from our side of this House, when we see mismanagement or incompetence or laws that could be improved or changed and the Attorney persisting with his standard behaviour, which is that he is the only person who can be right and he will not accept any sort of recommendation from anybody else. I do not want that to happen with this bill. I do not want it to happen with the family relationship centres, which could offer so much to the community. I do not want it to happen with every other debate that we have in this House. So I trust that the Attorney will by now have learnt that lesson. While supporting this bill, I hope that we do not have to be here again in the future to tidy up yet another one of his messes.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

In the closing remarks of the member for Gellibrand, she made what I thought was a rather interesting comment. She referred to Commissioner Cole as being ‘hamstrung’—and I guess that might be the truth when one looks at the reasons for the Royal Commissions Amendment Bill 2006.

The major reason that the commissioner is hamstrung is the total lack of cooperation by AWB Ltd. This issue arose only because AWB Ltd accidentally provided a piece of information that was supposed to have been shredded. I have no sympathy for AWB Ltd. I am not going to pronounce on any aspect of what the commissioner might eventually decide, but I point out to this House that the view of many people in my electorate is that AWB Ltd is a form of public property. It portrays itself as a servant of the wheat growers. I do not know how often it has told them the truth or what it has failed to disclose, and in a moment I will return to that matter.

The legislation that is before us today certainly has merit. On reading the pious amendment moved by the opposition, I am pleased that it in no way suggests that the bill should not proceed. So I welcome the remarks by the member for Gellibrand in that regard. The purpose of the bill is to respond to a highlighted set of circumstances where a raft of information of substance might be available to assist a royal commissioner in a determination that the parliament expects them to make. In fact, as things stand after the Federal Court ruling, unless the commissioner is aware of certain information, in each case the excuse available to companies like AWB is to say nothing and hope nobody finds out. What is now becoming obvious and will be facilitated by this legislation is that a royal commissioner can oblige those witnesses that he or she calls to provide all the documentation. If there is a suggestion of legal professional privilege, the commissioner will make a determination, which is still contestable in another jurisdiction.

This makes a huge difference to discovering something by accident—that is, unless the commissioner has some knowledge that information has not been disclosed, there is no opportunity to have the matter decided in, say, the Federal Court because no-one knows about it. It does not alter the fact that a company which requests the trust of 7,000 wheat growers in Western Australia—the majority of whom live in my electorate—and which expects that trust has behaved in the fashion that it has.

I refer back to the document I mentioned earlier. It is no longer a secret; it was published after the ruling of the Federal Court. What is it about? It is about the company making some admissions to a guru in America who apparently has a very high reputation for advising people who find themselves in a situation like that of AWB Ltd. What did he tell them? He said: ‘Confess. Get in there on day one and confess, and apologise.’ What a good idea that might have been 20 days later or whenever it was into the hearing. A few shareholders might contest other statements that AWB made to the Stock Exchange and question the legal costs—which were published in financial reports in the papers on 25 May—of some $9 million that has been spent already. I should think some shareholders might be interested to know how much more of their dividends will be diluted by the procedure that AWB decided to adopt.

I also take this opportunity to make a defence of two parties: the Wheat Export Authority and, with howls of possible derision, the government. The government’s responsibility—and I will put it in the words of the parliament—goes back to 1989 when it endorsed and modified a piece of legislation that put a certain company virtually above the law. We gave it a licence for exploitation and corruption. Why did we do that? Because it was going to belong to the farmers and, to quote the Prime Minister in the earlier moments of this issue: ‘Oh, they’re good people.’ I am pleased to say that most of them are, and I know who the villains are. I have dealt with them for years. If you look at the scruffiest farms in my electorate, you will find them directing AWB Ltd.

The fact of life is that, throughout this period of privatisation, the major source of influence came from a certain group of people. This goes back further than 1998; it goes back to 1989 when, with my endorsement, the then Labor government commenced the deregulation process. They deregulated the domestic market and, when I put my hand up and said, ‘While you are about it, you had better deregulate the transport market’—which was a disgrace—they did so, and great benefits flowed from that. We continued with the export monopoly and, in the end, the legislation was passed to corporatise that activity, having extracted $600 million from wheat growers. Many of them could not afford it. For many it represented a quarter of their disposable income—two per cent at the farm gate of growers.

We accumulated this money and the people who had suggested that be done were the first to be elected to the board. We discovered the other day that the company’s chairman, a wheat grower from the state that produces for export by far the lowest quantity—that is Queensland, which produced about three million tonnes out of the last 75 million tonnes—is the chair of that board. His salary and entitlements are $220,000 a year, and he and his fellow directors put a motion before the annual general meeting to increase that by 36 per cent. When I exposed those figures to the media, a storm erupted and he and the board changed their minds about doing that. But did they have a good chance of getting it passed? Bearing all costs, they flew 200 shareholders to Melbourne for the annual general meeting. I would like to run the book on that. The company that we are talking about is still fighting the royal commission to have the rest of the facts involved in this matter exposed.

We all know—and I appreciate and support this—that, if you have correspondence with your lawyer who gives you advice and you give them certain evidence upon which they will give you that advice, that is privileged. That has always been the rule. But just to stand up and say, ‘This was transacted or handed to our lawyers,’ is a bit like Premier Peter Beattie putting all the tough stuff into cabinet so that no-one can read it for 30 years. But it is a fact of life that this legislation will differentiate that argument. Maybe it should have come before us sooner, but it has happened. It was probably appropriate to let that matter first be tested in the court so that we have clear evidence of how we now might go about it.

Apparently, the other day, the Wheat Export Authority was questioned by a Senate estimates committee for eight or 10 hours. It only has one defence and it happens to be true: this parliament denied it—a statutory authority and the watchdog, if you like—every opportunity to have some influence on the behaviour of AWB Ltd. My objection is much more about the fact that it had no control or means of stopping AWB price gouging the farmers that I represent. If somebody wants some evidence of how that has been happening, they should look to the financial announcement that AWB made the other day. It has boasted over the years of its huge profits from futures trading. The reason it can participate so strongly in the US is that it has a security—that is, all the wheat belonging to all the wheat growers who have tipped into that pool but for which the AWB has not paid. The AWB has all this wheat, it is its property and it gives you an undertaking that it will pay you one day at whatever price it can get. That is what the pool is about. To quote one of AWB’s competitors: ‘Mr Tuckey, I’d love to run that pool. That is where the farmers take all the risk.’

The AWB bets with that money. It bets on the futures exchange and it delivers profits to its shareholders—not back to the farmers. But this year, as reported, it lost money instead of making a profit on the futures exchange. Then some time ago it invested $825 million to buy a big agricultural service firm, currently known as Landmark, from Wesfarmers. Wesfarmers has a reputation, particularly under Michael Chaney, as one of the smartest businesses in Australia and Mr Chaney got the transaction through in a week. He thought all his Christmases had come at once—$825 million. What does its report tell us? It tells us that it had a drop in profits for the year of 17 per cent and it was well behind the targets by which it had justified the $825 million. So it did not make much money there.

Then we get to item No. 3, which is a 74 per cent jump in profits from servicing and marketing wheat. AWB is not allowed to make a profit on the actual sale of the wheat; it sells that virtually as an agent. These are just the fees it levies. AWB has a sycophant called AWBI—AWB International—which is supposed to run the pool, but up until recently it had no staff and the board of directors, as such, was dominated by the executive and the board of directors of AWB Ltd. They were doing business together. They settled down and decided that no matter how little wheat in a drought, for instance, was delivered to the pool, they would get $65 million for managing it and then they would get bonuses. Guess who set the benchmarks for the bonuses? It was AWB Ltd.

This is the situation that this parliament created. But it gets worse. With some credit to Labor senators 2½ years ago we had the Williams inquiry. What is more, we had to change the law to force AWB Ltd to give even reasonable information to WEA. But then we were bludgeoned again into agreeing that, when that report was written and given to the minister, the minister was not to tell anybody else about it—and we wonder how the government was supposed to find out what AWB Ltd was up to in terms of its sales of wheat to Iraq.

As I have said, we now should change that legislation. I have listened to the Labor Party’s criticism of the current arrangements and I sincerely hope that an effort is made—and I will make it myself, if no-one else will—to change these rules and put in a statutory authority with adequate powers to control the activities of a virtual monopolist, who I do not think should have that total monopoly. The best power to give the wheat authority is what was proposed.

Members might have forgotten but when a bill for corporatisation was brought to the parliament, this so-called veto power was covered under clauses 57(3), 57(3A) and 57(3B). But the bill which passed this chamber, having been endorsed by the executive, had a subsection (3C). Subsections (3A) and (3B) do not apply to a consent given by the authority on or after 1 July 2004. That is what we voted for in this place. The vetos presently in place with AWB created a circumstance of some three months to get someone else to sell some wheat to Iraq on behalf of Australia. When one looks at the act, one finds that that particular clause, which deals with the situation after 1 July 2004, is missing. When one reads that legislation today, one finds it contains subsections (3A), (3B), and (3D).

The House and the Senate removed subclause (3C) because they were bullied by the agripoliticians. I fought it to the end, as would be recognised by those present in my party room. You do not give that sort of monopoly power to any corporation anywhere in Australia, and we did, collectively. Then we made it exempt from the Trade Practices Act and the Financial Services Act. You wonder why it got a bit arrogant. It is outrageous to think that this parliament has not fixed this already. It has nothing in particular to do with the UN. It is a matter of process and it is a matter of a company having a right to extort money from wheat growers. It is all because they think, are told and are preached to that there is some special advantage in their overseas marketing. That has never been supported by the seven or eight inquiries that have been put forward, including one that included on the panel the then chairman of the Grains Council of Australia. One of them in particular was commissioned by the government. A couple said they could not see where that benefit existed; the rest gave evidence of up to tens of millions of dollars of benefits that would accrue if it ceased.

This legislation may not have come about if this government and this parliament, years ago, had recognised some fundamentals about people doing business. That does not mean that you cannot have a restricted and regulated export market. I might add that under Labor’s competition policy, which we support wholeheartedly, every state has been told to deregulate their coarse grains selling. Some, such as Western Australia, have got a halfway sort of zone, which does not seem to be working too badly. Victoria just cleaned the thing out and the farmers are receiving $30 more a tonne for their barley than the South Australians whose government, under pressure from farmers or farmers’ organisations, actually took a $3 million competition policy hit to keep regulation.

What is their farmers’ federation doing now? They are running to WA to look at the program over there where the barley is up 50 bucks on South Australia, because suddenly all of the single deskers have got their calculators out. They are the worst paid farmers in Australia for barley production. If we do not do something soon, I invite the Labor Party to do it. They can stop chatting and they can address the core problem because it is outrageous; it was wrong at the time and, unfortunately, there are honest farmers and dishonest farmers. I am not going to say who they are but Mr Cole might want to say something about that in due course. The most amazing thing is that when they all got into the Cole royal commission they never said they did anything. They were getting between 90 and 220 grand a year and they did nothing. Excuse me! I have never been so annoyed about anything in my life and I am pleased to have had the opportunity to talk about it.

Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Link to this | Hansard source

I have to say I have never had much in common with the member for O’Connor but there is no doubt that he is very well versed in the ways of the wheat industry. I think that to listen to him on topics to do with AWB is something which will bring wisdom to those of us who have the opportunity. The Royal Commissions Amendment Bill 2006 is a response to problems that have arisen in the Cole commission on the oil for food program. It will, however, also affect future inquiries and royal commissions.

The bill will amend the Royal Commissions Act 1902 to ensure that claims for legal professional privilege over documents sought by a commission exercising royal commission type powers can be determined by a member of the commission, including the power to require production of the document in order for the claim of legal professional privilege to be determined. This follows a Federal Court case that put in doubt Commissioner Cole’s power to inspect documents in order to determine a claim of legal professional privilege.

I support the bill and the second reading amendment moved by the member for Gellibrand, which points out that Labor demanded action on this issue back in March and also that this bill will not solve the broader problem that Commissioner Cole’s terms of reference are too narrow. It notes that the current terms do not allow Commissioner Cole to make findings of whether or not ministers, their offices and departments have discharged their duties under Australian administrative law and under international law, in particular United Nations Security Council resolution 661. Of course, Commissioner Cole has provided formal written advice that a change to the current terms of reference, which would allow the commission to make such determinations, is outside his powers and can only be done by the executive. Furthermore, if the Howard government had nothing to hide in the $300 million ‘wheat for weapons’ scandal, it would expand Cole’s terms of reference to allow the commissioner to make such determinations.

Commissions exercising royal commission powers will have the power to determine claims of legal professional privilege, including the power to demand to inspect the relevant documents in order to determine the claim. Given the outcome of AWB Ltd v Cole it is now not clear that commissioners currently enjoy this power. This can frustrate commissions with delays and additional costs as legal professional privilege claims are tested in courts, which do have the power to see the documents and to determine legal professional privilege claims.

The bill does not remove or diminish the protection of legal professional privilege, which is an important principle of justice. It simply affects how the determination is made as to whether a claimed privilege actually exists. It would not take away the right of the claimant to seek judicial review of a commissioner’s decision to reject legal professional privilege. It is important to give commissioners exercising these powers the power to effectively determine legal professional privilege claims in order to keep commissions running with minimal cost and delay caused by litigation. Legal professional privilege should be preserved, but the onus should be on the claimant to pursue it, including commencing litigation if necessary. Such a change could be a deterrent to exaggerated claims of legal professional privilege being used to hide wrongdoings. I think the misuse of legal professional privilege has been seen in some high-profile cases in recent times, including this one—the AWB case—and the James Hardie case. The parliament should send a clear message that legal professional privilege is an important principle but that it should not be claimed without grounds in order to obstruct commissions.

In the course of the Cole inquiry, AWB claimed legal professional privilege over a draft statement of contrition which was produced in December 2005. The commissioner determined that legal professional privilege did not attach to the document and that there was no reasonable excuse for it to be withheld. AWB then applied to the Federal Court to order Commissioner Cole not to use the document on the grounds that it was protected by legal professional privilege. The Federal Court found that legal professional privilege did not attach to the document because it had not been produced and circulated for the dominant purpose of obtaining legal advice. In short, it was produced for the purposes of public relations, not legal advice.

Ultimately, the court did not make a binding determination on the issue of whether the commissioner has the power to demand to inspect a document in order to make a determination on a claim of legal professional privilege. It is clear from this case that commissions can decide whether to accept or reject a claim of legal professional privilege and this bill is providing a special process for determining whether legal professional privilege is a reasonable excuse for failing to produce a document. It provides that legal professional privilege remains a reasonable excuse if a court has decided that the document is subject to legal professional privilege or a member of the commission has accepted that the document is subject to legal professional privilege. A member of the commission would be empowered to demand the document for inspection by written notice. Inspection could be made either by the member or by a person authorised by the member, such as an adviser. If the claim is accepted, the commission would be required to disregard the document for the purposes of any report or decision the commission makes.

We have seen reports today concerning further developments on this issue. According to a report in the Australian today, the wheat exporter AWB was to be forced to agree to a timetable to produce potentially damning documents to the Cole inquiry. The report indicated that Commissioner Cole would hold a public hearing today to address the production of documents, some of which are likely to show that AWB knowingly breached UN sanctions and provided hundreds of millions of dollars to the regime of Saddam Hussein. As the Australian said:

AWB is known to have conducted a secret legal review of its trade with Iraq, known as Project Rose and later as Project Lilac. Mr Cole wants access to some of the 30,000 documents collated as part of Project Rose.

We can see that significant issues are at stake here. Indeed, I understand that today wheat exporter AWB said it would be asking the Federal Court to decide whether some 1,240 documents sought by the Cole inquiry are protected by legal professional privilege. Legal counsel for AWB said today, ‘The most expeditious and responsible course would be to let the Federal Court rule on whether the documents should be made available to the inquiry.’ He said, ‘We will be commencing proceedings today to have the Federal Court resolve the claims in respect of all documents.’ This sounds innocent but it is not. It is anything but. It is more of the culture of cover-up and obfuscation which has marked AWB’s conduct in this matter. Commissioner Cole said today that the extent of future hearings was dependent on the inquiry receiving all the documents to which it was entitled—that is, the inquiry will be delayed. AWB has claimed this privilege over 1,240 categories of documents and the claims could extend to some thousands of documents to come.

Mr Cole also said that it would greatly increase cost and delay if each of the claims were tested in the Federal Court as no decision could be made on what witnesses needed to be called or recalled until he had all the necessary documents before him. He said that only 45 of the 164 documents in the Tracey brief—that is the brief in dispute—had been given to the UN’s Volcker committee, which found of course that AWB had been paying $300 million in kickbacks to Saddam’s regime. This makes a joke of the claim that there has been cooperation with the Volcker committee. Only 45 of 164 documents were handed over to the Volcker committee. So we have AWB commencing proceedings to have the Federal Court rule on whether the Cole commission is entitled to view these documents. This is no doubt an attempt to seek advantage as they seek to exclude detail of their in-house legal review of the contract and the deals with Iraq and Alia, known to the Cole inquiry as Project Rose documents and Project Lilac documents. Project Rose alone is thought to contain up to 30,000 documents.

The other issue that I think is important for us to be aware of is the 1998 wheat deal involving the former Australian Wheat Board and India, which is more evidence of the need for the House to support the amendment moved by the member for Gellibrand concerning the powers of the Cole commission. Back in February 1998, India’s STC bought $310 million of wheat from AWB, which was then owned by the Australian government. Indian politicians protested that the tender was extraordinary and the Central Bureau of Investigation in India began investigating corruption allegations against three senior Indian government officials. They suspected kickbacks because there was a $7.50 per tonne increase in the price of wheat compared with the price of wheat that had been sold to Egypt. A request for help by Indian police investigating AWB’s possible involvement was never referred to the Australian Federal Police. The Times of India reported last week that the Indian investigation was stalled because the Australian government refused to hand over documents, claiming the Australian Wheat Board was an autonomous body it had no control over. India’s CBI was forced to close the investigation in January 2004, blaming noncooperation from Australian authorities.

Last week Senator Ellison told the Senate Legal and Constitutional Legislation Committee that, in 2001, after fielding a mutual assistance request from India’s Central Bureau of Investigation, the Australian government deemed there was no evidence to justify any inquiries by local authorities into possible breaches of Australian law, yet we now have exhibits before the Cole inquiry showing that in October 2001, when AWB was under pressure to cooperate with the CBI, the wheat seller had documents showing that it had paid $US2.5 million to a Cayman Islands bank account for a May 1998 wheat shipment. In May 2004, just as the Volcker inquiry began investigating AWB for breaching UN trade sanctions against Iraq, an officer in the Attorney-General’s Department knew some Federal Police officers were ‘keen to explore the possibility of an investigation by the AFP to see if AWB Ltd had broken any Australian laws in its Iraq dealings’.

Indeed, an email tendered to the Cole inquiry shows Jonathan Chew of the Attorney-General’s International Law and Transnational Crime Section told Department of Foreign Affairs and Trade officials that the AFP officers had expressed ‘some concern that, despite Australia having antibribery and corruption laws in place for a number of years, there had been few prosecutions’. So we have details emerging of something like a forerunner to the AWB kickback deals with Saddam. When the price being paid to AWB was found to be significantly over the market rate, the Indian Central Bureau of Investigation began asking questions. When these questions reached Australia, they were met by the same deaf ear that received dozens of accounts, allegations and warnings about the kickbacks being paid to Saddam. The questions here are: why was the matter not referred to the Federal Police? The AWB was still government owned at this time. What actions did the government take?

I agree with the member for Gellibrand’s amendment and its point that Commissioner Cole’s terms of reference ought to allow him to make findings concerning the conduct of ministers. During the Cole inquiry I saw at least 10 reasons why the Cole commission should be empowered to make findings concerning the Minister for Foreign Affairs. First, ministerial ignorance is not bliss. We live in a constitutional system of ministerial responsibility. The idea that nobody is responsible for such a monumental disaster so damaging to our international reputation is unacceptable. On an issue of such profound significance, ignorance is no excuse. Second, Minister Downer had a legal obligation to ensure that Australian companies complied with UN sanctions against Iraq. He failed to discharge this obligation, yet he still claims he did nothing wrong. He continues to try to buck-pass—blame the UN, blame AWB and blame Australia’s wheat competitors.

Third, he gave conflicting answers to the parliament and the Cole commission. He was asked in parliament about a January 2000 cable from his departmental staff in New York. He said, ‘Of course I would have read them,’ but when he was questioned by the Cole commission he said he had no specific recollection of the cable. Did he read it or didn’t he? Fourth, he has not been able to cope with the demands of the job. He told the Cole commission he does not have time to read diplomatic cables and only reads them when he is stuck on a plane and has nothing better to read. He told the Cole commission that was one reason he failed to pick up on a series of warnings from diplomatic and intelligence officers about problems with AWB.

Fifth, he has been too gullible. He simply accepted AWB’s denials that it was not paying bribes and made no further inquiries. He did not apply the same standard to Saddam Hussein’s denials concerning weapons of mass destruction. He got that one wrong as well. Given the stream of warning bells, he should have made further inquiries. His claim to the Cole commission that the only other option he had was to call in the Federal Police is disingenuous in the extreme. For example, he could have personally demanded to be taken through the structure of the contracts. They would have been pretty brave to have lied to his face. The former Labor government scrutinised contracts with Iraq thoroughly.

Sixth, he has been too lazy to follow up serious issues. In March 2004 he wrote ‘This worries me’ on a departmental report about the Volcker inquiry and asked about AWB’s pricing arrangements, but he failed to follow the issue through. He got an AWB letter in June 2004 which was unenlightening, but he failed to chase up this matter. Despite this, he was party to Australia’s Ambassador Thawley misleading United States senators later on in 2004, which has damaged Australia’s standing in the US congress. He presides over a department so administratively sloppy that, even when he says he is worried, nobody does anything to pursue the issues he raises, including him.

Seventh, he has not run his portfolio in a professional way. For example, he met with AWB’s former CEO Andrew Lindberg in June 2004 to discuss the UN’s Volcker inquiry, but no-one took any notes, even though he had two staff there. Perhaps they thought there was no point taking notes because he never reads them. This is disgracefully unprofessional. The Public Service used to record everything in triplicate and was a reliable historical record. Now it has become plain sneaky. And the absence of a record of this meeting is no mere academic point. A major dispute has emerged at the Cole commission between Mr Lindberg and Mr Downer as to whether Mr Lindberg informed him that Alia, which AWB was paying fees to, was half-owned by the Iraqi government. Mr Lindberg says he did; Mr Downer says he did not.

Eighth, his department has degenerated into little more than a postbox, on its own admission. His department rubber-stamped AWB’s corrupt wheat deals with the Iraqi Grains Board. What on earth was it being paid to do? Minister Downer was totally unable to explain to the Cole commission why his department did not drill down into the detail of the inflated prices in AWB wheat contracts, and his excuse that finding out corruption in contracts was the UN’s task is just not good enough. For example, he had Australian taxpayers, through AusAID, take over liability for one of the most corrupt contracts three days after war broke out—but, although taxpayers became liable for the contract, the bribes inside the contract went undetected.

Ninth, he has failed to distinguish between AWB’s interest and the public interest. In June 2005, despite the myriad warnings he had heard by then, he indicated his ‘strong support’ for the company and said he ‘saw it as his responsibility to defend AWB’. He embarked on a strategy of trying to tough it out and of cover-up, which has maximised the embarrassment for Australia, instead of trying to get to the bottom of the matter and make a clean breast of it.

Finally, he still does not get it. The Cole commission challenged him over the failure of his staff on numerous occasions, yet he expressed full confidence in his staff. He said they had ‘done a good job’ and ‘faithfully implemented government policy’ et cetera. If ministerial responsibility and public accountability are to mean anything in this country, this system must be cracked open. If the Cole commission’s terms of reference allowed it to make findings and to report on the conduct of ministers, it would assist a public which is now heartily fed up with having to tolerate such miserably low standards of ministerial performance.

Duncan Kerr (Denison, Australian Labor Party) Share this | Link to this | Hansard source

The House tonight is debating the Royal Commissions Amendment Bill 2006, which will facilitate a royal commission being able to assess for itself and to adjudicate in relation to claims for legal professional privilege. This particular mechanism is one which the opposition supports and, indeed, has called for for some time. The need for it arose because a decision of the Federal Court, whilst upholding the royal commissioner’s judgment that a particular document was not covered by legal professional privilege, did nothing to overturn earlier findings that it was not for the royal commissioner himself but for the court exclusively to adjudicate upon any claim for legal professional privilege. In practice, that meant that such claims might have been made, not only in this royal commission but in future royal commissions, designed in a way which would have resulted in protracted litigation regarding the legitimacy or otherwise of those claims, thereby slowing down or entirely thwarting the capacity of royal commissions to undertake the task that the executive commissions them to undertake to inquire into particular matters in as effective a manner as possible. It may indeed have prevented royal commissions addressing their terms of reference in the time frame required of them. Clearly, that is an impractical outcome and, with great respect to the judge who made that conclusion, I suspect it would not have been sustained on appeal.

It is the case that the higher courts have said that lower courts and tribunals are attended with all necessary powers to determine questions in relation to their own jurisdiction. It cannot be the case that parliament can endow a court or a tribunal with a set of responsibilities and then have a circumstance whereby any question as to whether or not a matter falls within those powers is incapable of determination by the tribunal or court. It has to be as a practical matter—not all such matters can be referred up to higher courts for adjudication. Of course, if somebody is disappointed with a conclusion of a court or a tribunal that the matter is within jurisdiction or is not within jurisdiction, they have the capacity of testing that in higher courts. So too I would have imagined, had this matter gone on appeal, it would have ultimately been determined that it is entirely logical and necessarily within the reach of a royal commission to make findings in relation to whether or not a particular document or thing brought before it is covered by legal professional privilege. In doing so, a royal commission would behave no differently in terms of its fact-finding responsibilities than any other court which routinely undertakes such an assessment. Where a claim is made in relation to legal professional privilege, the judge makes that determination and excludes from their mind, difficult though it may be, the material that has come to their attention which is legally inadmissible.

It seems to me implausible that our higher courts would have ultimately determined that such mental skills are within the reach of those appointed to higher judicial office, or even magistrates or justices of the peace, but not within the capacity of a commissioner appointed under the powers of the Royal Commission Act to undertake an inquiry on behalf of the executive. Be that as it may, whether or not ultimately the Federal Court decision would have been decided otherwise had the matter been subject to lengthy appeal, plainly that course would have been time consuming and its ultimate resolution would have been outside of the time frame of the reporting of the Cole Commission of Inquiry. So the matter comes to this parliament and is being resolved in a timely way which will enable the commissioner to take into account those matters where claims of legal professional privilege have been made. In particular, of course, he will be considering the document that was originally claimed to be covered by legal professional privilege, which the court has now asserted and found is not—that is, the apology. Although again it is difficult to see on what plausible basis that claim could have been advanced in the first place, how the draft terms of an apology could have been said to be material to disclosing the nature and character of legal advice sought seems somewhat beyond my simple understanding, but we now have settled those issues.

That said, the more interesting question that is before us is why this parliament is not acting with the same alacrity to tidy up the deficiencies in the terms of reference themselves in relation to the royal commission. Whilst the commission now is cloaked with the necessary capacity to examine whether or not the actions of the Australian Wheat Board were criminal and whether or not any person associated with those actions committed criminal offences, it is not cloaked with the authority to examine whether or not ministers of the government or public servants were negligent in the carriage of their responsibilities in a way which ought to carry censure.

There is a huge difference between someone being criminally liable for misconduct and being worthy of censure—being negligent or grossly negligent. We make these distinctions all the time. If it were the case, for example, that those examining the aftermath of the terrible tragedy of September 11, where planes were flown into the twin towers, had concluded that any officer of the security services in any country had been guilty of a criminal offence, that would have been a shocking state of affairs. But had anyone suggested that the inquiry be limited to the question of whether or not those officials had been guilty of a criminal action we would have said, ‘How silly—that is not the substantial question.’ The substantial question is: did the security agencies operate effectively? Did they alert government to the risk? Did they put in train proper measures to secure the interests of the community? Were there deficiencies that need to be remedied? And were it to be established that high public officials had been warned, had been given information disclosing the likelihood that planes would be crashed into the twin towers and had failed to do anything, we would not have expected an inquiry to bypass that question because it did not involve criminal complicity, did not involve those high public officials in any criminal conduct.

When we turn to this particular instance, the parallels are stunning. We have before us the greatest circumstance whereby a program—designed internationally to circumvent what were then understood to be the designs of Saddam Hussein, the then leader of Iraq, to develop weapons of mass destruction through a program of sanctions—was circumvented by one of the very countries that later took military action to invade that country and to replace the government. This is not a small matter, because one realises that the sums involved were such as to place that regime in funds to a substantial degree—$300 million.

The inquiry was established without giving it power to look beyond the simple questions of criminality. It cannot make findings in respect of negligence, incompetence or incapacity of high public officials, whether they be in the Public Service or in the ministry. My friend and colleague who has spoken previously, the shadow minister, the member for Wills, has gone through a whole list of instances where the Minister for Foreign Affairs appeared before the Cole Commission of Inquiry with no explanation—or certainly no plausible explanation—as to why various warnings that were made available to him and to his office did not trigger further action on his behalf. The point, simply made, is that any reasonably drafted terms of reference would now alert the commissioner to examine whether or not the person holding such an office is competent to continue to fill it. That is a finding that is not available to the royal commissioner. It is a finding not available to the royal commissioner because it is not within his terms of reference.

Of course, we might have thought initially that the narrowness of the terms of reference was a mistake in their drafting. But that is plainly not the case. Though for a short period of time the Prime Minister and those who are defending these particular arrangements claimed that the royal commissioner had all necessary powers to make findings in relation to the conduct of government ministers and high public officials, that claim has been effectively and totally demolished as the commissioner himself has clarified his obligations under those terms of reference and as the legal advice that the opposition has sought has been made available publicly. Both that legal advice and the commissioner’s response to that advice make it very plain that the point that I and the opposition have made in relation to these constraints is valid.

So at the end of this day we will have findings made which may or may not conclude that board members or the executive of the Australian Wheat Board and other associated persons were guilty of criminal offences—that is, they conspired in one way or the other to get around the regulations that this government put in place to prevent the evasion of the sanctions regime. Whether or not such findings are made, the commission is not empowered to make findings on the government as a whole and its management of this affair or on particular ministers—the Minister for Foreign Affairs, the Minister for Trade and other ministers who have been mentioned as this inquiry has proceeded—or on those in the ministers’ personal staff or on senior departmental advisers who perhaps could have done more and failed to do more in relation to these matters.

I might make one particular mention of how these events make prisoners of those who find themselves caught in their travails. My colleague mentioned the fact that the Minister for Foreign Affairs spoke in extremely warm and complimentary terms of both his personal office and the department, who he said fulfilled their jobs in an exemplary way—notwithstanding the fact that many warnings were given which were not heeded. In a sense a minister becomes a prisoner because, if he were to draw attention to deficiencies in relation to the conduct of such persons and those persons in turn felt the need to defend themselves, the minister then becomes subject to the possibility of being undermined. And of course the defence that is being constructed is one in which all persons who are not the subject of the direct terms of reference have to be mutually supportive. They all have to tell each other what jolly good chaps they were, that they all did the right and proper thing, that they all could not have anticipated the fact that the Australian Wheat Board behaved in the shoddy way that it did, that no reasonable person could have anticipated this, that it was all a great big surprise and that successive warnings took them all by surprise. Yes, they all feel a bit sheepish and foolish in retrospect, but no-one really could have expected any better. Of course if anyone steps out and sings from a different hymn sheet, the whole defence crumbles.

There is a game of which interrogators and prosecutors are very aware called the prisoner’s dilemma. The prisoner’s dilemma deals with the question posed by the circumstance whereby various co-accused are faced with the prospect of diminished punishment if they confess to a crime. Working through the way in which the prisoner’s dilemma actually works out in practice shows it is a very challenging piece of theory, one which any person who has been involved with the justice system will be intimately familiar. In practice, in the criminal law jurisdiction many people do in fact confess to get a lesser sentence, despite the fact that if all hung together and sang from the same hymn sheet the conviction of none would be possible.

Fortunately for the way in which the criminal justice system operates, people actually subject to the enforcement of the law do find themselves often telling the truth and dobbing in their mates. Our criminal justice system could not work without such self-interested confessions. But very clearly here we have a rather more sophisticated group of persons all working together, plainly aware for a very long time of the problems of the prisoner’s dilemma, with no-one from the high group of public officials or ministers saying anything nasty about another. There was no possibility that any of them could have had any foresight, none of them could have thought ahead—each of them supporting the other in their incompetence, making no criticism of the fact that foresight was not available to them or to another, because of course not for a moment could anyone fall away from what was obviously a phoney account. I say ‘phoney’ because from its commonsense the Australian public knows that, with so many dead fish and the smell rising so profoundly, the failure by any of those persons to take any action means someone in that system failed in their responsibility to the public and in their responsibility to their duties.

The public realises this and no doubt the royal commissioner does, but the royal commissioner cannot track down or examine those matters because they are not within his terms of reference; they have been excluded deliberately. Which of those persons were in fact responsible for a failure to inquire when they should have inquired, a failure to take action when they should have taken action, a failure to pass messages up the system—if they failed to do so—or a failure, if they were up at the highest ends of the system, to take heed of those messages and to act upon them is not within the royal commissioner’s remit. The royal commissioner cannot attend to those matters because he has no power.

The end, I suppose, is that we send a message. The real message here that I am concerned that we should send is not to those ministers who are being criticised in this debate or to the public servants who may feel that they are being chastened unfairly in relation to this debate. My real concern is the take that the kids, the young people, in our schools will have on responsibility. When things go so badly wrong and when incompetence of such a degree is demonstrated and nobody takes responsibility—when no-one accepts that such a botch has been made of such an important matter in which our national interest is concerned, our troops are engaged and people’s lives are on the line so nobody takes responsibility—then how do we say to those young people, ‘This is a society where you have to take personal responsibility. Honesty, decency and accepting responsibility for the conduct of your own actions is fundamental to our expectations and to the way in which you have self-respect in the world’? I think that somebody should take responsibility for this mess. It should not just be a question of whether some person or other in the AWB committed a crime. That will be for the criminal courts. But the real question of accountability should be for those in higher office. (Time expired)

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

The ‘wheat for weapons’ scandal is about three things: gross negligence, gross cover-up and grave damage to Australia’s national interests. Labor supports the Royal Commissions Amendment Bill 2006, but we do so with the second reading amendment proposed by the member for Gellibrand, which I also support in full. The obligations on UN members to enforce sanctions against Saddam Hussein’s regime have been clear since the inception of those sanctions in 1991. After the first Gulf War, the UN Security Council adopted resolution 661, which states:

[The Council] Decides that all States shall not make available to the Government of Iraq or to any commercial, industrial or public utility undertaking in Iraq ... any funds or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to—

The government of Iraq—

... except payments exclusively for strictly medical or humanitarian purposes and, in humanitarian circumstances, foodstuffs …

That is all in UN Security Council speak, but the intention is clear. In other words, the government of Australia was bound to prevent any payment by any Australian individual or any Australian company to the Iraq government, or to anyone acting on behalf of the government of Iraq. As Felicity Johnston, the UN customs inspector who blew the whistle on the entire oil for food program scandal globally and on AWB in particular, stated:

Mr Vaile may try to wash his hands of it but they—

the government of Australia—

do have a responsibility to ensure that their nationals abide by the rules and the regulations.

But the obligation on the government to approve AWB contracts did not stem just from its obligations under the UN charter or to uphold the specific provisions of UN Security Council resolution 661. It went much beyond that as well. The Minister for Foreign Affairs and the Minister for Trade have repeatedly said that this was all exclusively the UN’s responsibility because it was the UN that approved the contracts. What they consistently refuse to recognise is that they had an obligation under Australian domestic law to ensure that AWB’s contracts were not funnelling kickbacks to Saddam Hussein. That is the import of UN Security Council resolution 661, and the section I just read.

When the oil for food program was first established, the Australian government took steps to implement the obligations of this resolution and to incorporate them into Australian law through the Customs (Prohibited Exports) Regulations. Regulation 13CA provides that goods can only be exported to Iraq if the Minister for Foreign Affairs—nobody else—granted an export permit. And such a permit can only be issued if ‘the Minister is satisfied that permitting the exportation will not infringe the international obligations of Australia’.

There is no ambiguity whatsoever here. The buck stops with the foreign minister, and the foreign minister knows it. On 30 January this year, the Prime Minister said in relation to the AWB’s dealings with Saddam Hussein’s regime, ‘We had no suspicion, no suggestion there’d been any bribes.’ That was plainly untrue. In fact, the ‘wheat for weapons’ scandal has been a rolling story of Howard government negligence, with government ministers turning a blind eye to warning after warning on what the AWB was up to in Iraq.

To date, we have uncovered 29 separate warnings that the Howard government received on the AWB’s engagement with Saddam Hussein’s regime, an engagement which involved the payment of corrupt moneys to that regime. Let us take the intelligence warnings as examples in point. The first intelligence warning was dated in 1998 and said that Australian intelligence indicated that Alia Corporation—the front company for Saddam Hussein—based in Jordan, was part owned by the Iraqi government and that it was involved in circumventing United Nations sanctions on behalf of the Iraqi government. That was in 1998. The second intelligence warning said:

By the first quarter of 2000 the AIC held intelligence indicating that Alia received fees in Jordan for the discharge and inland transport within Iraq of goods purchased by Iraq under the Oil for Food Program. It received these fees as 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 very substantial.

That is the Australian intelligence community’s warning in the first quarter of 2000. The third intelligence warning came in November 2000, and stated:

... the IAC held intelligence indicating that Iraq’s transport charges for humanitarian goods under the OFFP had been very substantially increased. Alia was one means by which these transport fees were paid to Iraq. The AIC also held information that such fees would probably be used for procurement purposes outside Iraq.

The fourth warning from Australian intelligence, in March 2001, stated:

... the AIC 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 OFFP. It included information that Iraq violated sanctions by charging a “commission” of at least 10 per cent on imported humanitarian goods under the OFFP and that the 10 per cent commission was rigidly enforced.

The fifth intelligence community warning said:

By September 2001, the AIC held intelligence indicating that inland transport fees for humanitarian goods, including fees paid through Alia, were proposed to be increased very substantially ... 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 on all humanitarian goods delivered under the OFFP through the port of Um Qasr.

And the sixth intelligence community warning, which came in December 2002, stated:

... the AIC held intelligence that Iraq was enforcing the 10 per cent commission on imports under the OFFP and that one means by which it continued to be paid was by payment into accounts in Jordan.

These intelligence warnings were received by the Howard government prior to the decision to invade Iraq. These intelligence warnings all pointed to the corruption of the oil for food program and the use of Alia in the process of that corruption. We now know that several warnings from the United Nations to Australia were also received by the offices of the Prime Minister, the foreign minister and the trade minister and their respective departments. For example, in January 2000, the UN raised concerns with the Australian permanent mission in New York. A senior Department of Foreign Affairs and Trade official reported the meeting in which these concerns were raised 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 of a company owned by a son of Saddam Hussein. The UN asked if Australia would make some ‘discreet, high-level inquiries’ to ensure that the AWB was not in breach of the sanctions. DFAT Canberra responded and said, ‘We think it is unlikely that AWB would be involved in a breach of the sanctions regime.’ This cable was sent without first contacting AWB. This cable was sent to Minister Downer’s office, and he has admitted in parliament that he read it.

In another cable, on 10 March 2000, a senior DFAT officer reported 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 OIP’—that is, the Office of the Iraq Program—‘and the third country’—in this case, the warnings received from the government of Canada. The foreign minister has admitted in parliament that he read this cable as well. On 11 March 2000, an Austrade representative in Washington reported to DFAT in Canberra that there were 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 was copied to the managing director of Austrade and to the Secretary of DFAT. The trade minister has since told parliament that he would have been briefed on this cable. On 20 October 2000, AWB Chairman Trevor Flugge wrote to the trade minister regarding AWB’s recent visit to Baghdad. AWB then had discussions with DFAT about its proposal to engage Jordanian trucking companies and on 30 October 2000 wrote to DFAT seeking approval for this arrangement. On 2 November—a few days later—DFAT replied to AWB giving its formal green light to this process. DFAT said:

We … 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.

On 10 April 2001, a senior DFAT officer at the Australian Permanent Mission to the UN in New York sent a cable to Canberra which referred to ‘anecdotal and in some cases hard evidence of Iraqi purchasers and agents demanding fees and commissions in association with ... the import of humanitarian supplies’. The cable went on to say that the official had been approached by Iraqi officials in the UN corridors who had complained that the sanctions committee could ‘complicate the matter’. The official noted that ‘Iraq’s interest in keeping port fees outside the oil for food program appears self-evident from the Iraqi delegation’s approach to us’. The cable was sent to the offices of the Prime Minister, the foreign minister, the trade minister, the agriculture minister and a range of government departments, including ONA, DIO, A-G’s and Treasury. For 18 months after the Iraq War, the warnings on AWB’s activities in Iraq continued and the government continued to ignore them. So much for the record of negligence. There were 29 separate warnings which were systematically ignored by one government minister and official after another.

The other thing this scandal brings into focus is a systematic cover-up on the part of the government. On 15 February 2006, the Prime Minister said:

… the dam really burst on knowledge in relation to Saddam Hussein, and Volker bears this out. After the fall of Saddam Hussein authorities investigating these matters began to have full access to the documents of the former regime.

Of course, we now know that this was only half the story. After the ‘dam wall burst’, it is clear that the government engaged in a systematic attempt to cover up its complicity in the ‘wheat for weapons’ scandal. We now know: (1) that the government tried to avoid cooperation with the Volcker inquiry; (2) that the government attempted to pressure a US congressional inquiry into dropping its investigation into AWB’s activities in Iraq; (3) that the government severely limited the powers of Commissioner Cole to make findings of negligence or otherwise on the part of government ministers and officials; and (4) that government ministers have point-blank misled both the public and parliament.

The Prime Minister and the foreign minister have continually claimed that the government fully cooperated with the Volcker inquiry, which was established in April 2004 to examine allegations that UN sanctions against Saddam Hussein had been breached through the oil for food program. On 31 October 2005, the Prime Minister told parliament:

The government cooperated fully with the Volcker inquiry, providing all information requested by the committee.

Again on 31 October 2005, the Prime Minister told parliament:

… having received in the case of Australia full responses and cooperation and full documentation, if there were anything lacking in the behaviour of Australia in relation to her obligations the Volcker inquiry would have so reported.

However, the Prime Minister’s claims that his government cooperated fully with the Volcker inquiry are not underpinned by information contained in documents tabled at the Cole inquiry which reveal Mr Volcker’s frustration with the lack of cooperation he was receiving from the Howard government. On 23 March, it was revealed at the Cole inquiry that in February 2005 Australia’s ambassador to the UN met with Mr Volcker in New York at Mr Volcker’s request. A cable report back to Canberra following that meeting revealed that Mr Volcker expressed his concern that the government was not being sufficiently cooperative and described the government’s approach as ‘beyond reticent, even forbidding’. The cable also stated that Paul Volcker strongly indicated in the meeting that it would be in the government’s and AWB’s best interests to cooperate with the Volcker inquiry. You can add to that the fact that the opposition had established, before the release of the these cables from the UN, that the Volcker inquiry had not been provided with full documentation, because the Howard government had not provided Volcker with access to DFAT’s electronic files or any documents in the possession of the Wheat Export Authority.

The cover-up was not restricted to lack of government cooperation with the Volcker inquiry. It also extended to the government’s attempt to shut down the Coleman inquiry, which was being conducted by the United States Senate. During the 2004 federal election campaign, in the weeks leading up to the 9 October poll, the Howard government instructed its ambassador in Washington to exert pressure on the congressional inquiry not to investigate the actions of AWB in Iraq. This is a matter of documentary record. We now know that Australia’s ambassador met with Senator Norm Coleman, chairman of the Senate permanent subcommittee on investigations, in an attempt to dissuade him from pursuing allegations against AWB. This was despite the fact that by October 2004 the Howard government had received multiple warnings—29 warnings of a direct or indirect nature—about the AWB’s corrupt payments to Saddam Hussein’s regime.

Of course, the cover-up, and the pattern thereof, extends also to the government’s cooperation with the Cole inquiry itself. The Prime Minister and the foreign minister have repeatedly claimed that they have provided full documentation to the Cole inquiry. On 12 February this year, the Prime Minister said:

… we have unprecedented transparency here. We’ve got a full blooded Royal Commission effectively into this and Mr. Cole has access to something I don’t have access, you don’t do, Mr. Beazley and Mr. Rudd don’t, he has access to all of the documents. The bureaucracy’s documents and also the documents of AWB, so I think we should all wait until Mr. Cole has reported.

The Prime Minister went on to say:

… everybody respects Mr. Cole, he’s got all the powers of a Royal Commissioner, he’s got all of the documents, he will ask all of the questions …

We know now that Commissioner Cole did not have all the documents at all. On 3 February 2006, the Prime Minister said:

So far as the Government is concerned, it remains the case that we will continue to cooperate fully with the inquiry. Information sought will be provided, if I were asked to attend or any of my ministerial colleagues, we would do so. Any officials of the Government who are asked to attend will do so and my only request of everybody is that they tell the truth.

On 3 February 2006, the Prime Minister also said:

… I am advised that all of the documents directly relevant to the matters under investigation by the Inquiry, within the Department of Foreign Affairs and Trade, and I believe within my own Department, are in the hands of the commission. You can’t be more cooperative than that.

You can be more cooperative than that.

Debate interrupted.