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

Ever since the Volcker report blew the lid on the AWB scandal, the Howard government has been angling for the verdict ‘AWB guilty, government innocent’. The idea that wheat exports to Iraq and kickbacks to Saddam were AWB’s domain alone is just absurd. We know, for example, that the government’s trade body, Austrade, was involved. Two of its officials met with the 51 per cent owners of Alia—the truckless trucking company—the al-Khawam family. We know that the government’s aid body, AusAID, was involved. Just before the outbreak of war in Iraq, they took over an AWB wheat contract, some 50,000 tonnes of wheat, on board the Pearl of Fujairah. AusAID did not much want to take over the contract; they said it was a bit premature and costly. But the Minister for Trade, Mr Vaile, expressed his displeasure with their view and AWB got their way. AusAID took over the contract lock, stock and barrel—kickbacks included. AWB paid Alia $US2.7 million as a kickback for this contract. We also know that ministers’ offices were alerted to the Tigris deal in communications from the Iraq government.

The fact is that the Howard government was involved in these wheat deals up to its eyeballs. Of course, it had formal legal responsibility. Australian domestic law is clear-cut. The Minister for Foreign Affairs, Mr Downer, was the decision maker responsible for approving AWB contracts with Iraq. He approved 41 contracts over a five-year period. Under the Customs regulations, he was required to satisfy himself and certify that exports to Saddam Hussein’s Iraq did not breach Australia’s obligations to uphold United Nations sanctions against Iraq. He failed dismally in the performance of his ministerial duties. He failed to respond properly to any of the 35 separate warnings the government received about the nature of AWB’s involvement with Saddam Hussein’s regime.

Did the Howard government seek any answers for this monumental incompetence? No. The terms of reference the government gave Commissioner Cole prevented him from making any determinations about whether the Minister for Foreign Affairs had discharged his obligations under Australian and international law. The terms of reference were all about AWB. Let there be no doubt whatsoever about this matter. In March, my colleague the shadow minister for foreign affairs wrote to Commissioner Cole about the terms of reference and received a reply confirming that it did not have terms of reference that enabled it to determine whether ‘a minister has breached obligations imposed upon him by Australian regulation’. Furthermore, the commission said that these matters were significantly different from the commission’s terms of reference. In other words, the commission had no intention of going off on what it saw as a frolic of its own to investigate departments, agencies and ministers. If the government wanted it to do that, it had to alter the terms of reference. To give an indication of how serious and bad this was, I will quote from the Cole report:

It is immaterial that the Commonwealth may have had the means or ability to find out that the information was misleading, or that it ought reasonably to have known that the information was misleading. It is also immaterial that the Commonwealth, at the time it conferred the benefit or advantage, suspected but did not know that the information was misleading.

In other words, none of these things were material because they were outside the inquiry’s terms of reference. In one Yes, Minister episode, Jim Hacker said, ‘I thought these planning inspectors were supposed to be impartial.’ Bernard Woolley replies: ‘So they are. Railway trains are impartial too. But, if you lay down the lines for them, that is the way they go.’ Notwithstanding the severe limitations on it, the commission made two findings pointing to massive bungling in the Department of Foreign Affairs and Trade. Paragraph 30.171 in volume 4 of the report says:

The critical fact that emerges is that DFAT did very little in relation to the allegations or other information it received that either specifically related to AWB or related generally to Iraq’s manipulation of the program.

And again, at paragraph 30.179 in volume 4:

DFAT did not have in place any systems or procedures in relation to how its staff should proceed in response to allegations relating to the breach of sanctions.

So the department had no procedures in place to deal with allegations about kickbacks and did very little about them, at a massive price to Australia’s trading reputation and Australia’s wheat farmers.

Given this, you would think that ministers from the Prime Minister down would be contrite and apologetic. But no: they are cock-a-hoop. They say we should apologise for having the temerity to raise these matters. They revel in their incompetence. ‘I didn’t have a clue,’ they chorus. Last night Minister Downer said:

You don’t know what you don’t know.

He is still trying to impersonate Donald Rumsfeld. Has nobody told him that Donald Rumsfeld has gone? The world has moved on, and it is time Minister Downer moved on too. It is like Frodo Baggins marrying Anna Nicole Smith: the job is too big for him. Donald Rumsfeld is gone, but Minister Downer is still there.

One day after its release, we must ask the question: did the Cole inquiry get to the bottom of the AWB scandal? And the answer is: no, nothing like it. I mentioned earlier that two Austrade officials, Ramzi Maaytah and John Finnin, met with the al-Khawam family, the 51 per cent owners of Alia, to talk about wheat contracts. Do we know any detail about what they discussed? No. Do we know what they reported back to their minister about these discussions? No. We do not know because the Cole inquiry never called them as witnesses. They should have been called. And now, mysteriously, both these Austrade officials have resigned from Austrade. It will make it pretty much impossible to call them before a Senate committee. But the Cole inquiry says that there is no evidence that Austrade knew anything about these deals. This conclusion is plain wrong. To reach it, the Cole inquiry completely overlooked the evidence of the Austrade meeting, and it also ignored the evidence of Othman al-Absi, the Alia official, that Austrade knew all about its wheat deals. It discounted Mr al-Absi’s evidence concerning the Austrade official Mr Ayyash, but at other stages in the report it uses Mr al-Absi’s evidence, treating it as accurate.

The al-Khawam family—the 51 per cent owners of Alia; Saddam Hussein owned the other 49 per cent—have an interesting background. The chairman’s father led a rebellion against the British mandate in Iraq in 1920 and against the British-backed government in 1935. Back then, of course, we were British subjects, but these are the people of the party of Sir Robert Menzies; they are the people who this party was doing business with. Sir Robert would be turning in his grave.

The Cole report also fails to deal with other issues. It did not call the AusAID personnel who took over the AWB contract just before the outbreak of war. So we do not know just how the AusAID personnel were greeted when they contacted Alia to arrange delivery of the wheat, as documents before the Cole inquiry said they did. But we can imagine that not since Pauline Hanson’s ‘Please explain’ would there have been such galloping incomprehension as that which Alia would have shown on receiving such inquiries. Alia, after all, delivered kickbacks not wheat. But did the Cole inquiry investigate these matters? No. No AusAID personnel were summoned as witnesses, so we do not know what AusAID found out about these contracts or what the government’s own aid agency reported back to the minister about them.

I also note the inquiry’s conclusion that there was no evidence that Norman Davidson-Kelly had any influence over the Howard government. Mr Davidson-Kelly was the mastermind of the Tigris deal, an extraordinary scheme to defraud the UN oil for food program. Yet we know that Mr Davidson-Kelly is a long-term friend of the former Leader of the Government in the Senate Robert Hill, and dined with him regularly over a 10-year period. There certainly is evidence that he could have influenced the Howard government.

The Howard government frequently claims that it is the only government around the world taking action in response to the Volcker report. Not true. The Australian’s New York correspondent, David Nason, today reports that people who rorted the oil for food program have been prosecuted or are being prosecuted in a range of countries around the world. In the United States, a New York court found a South Korean businessman guilty of accepting bribes from Saddam Hussein’s regime. He is awaiting sentence and could reportedly serve five to 12 years. A co-conspirator, an Iraqi-American businessman, has also pleaded guilty to offences. Two Texas oilmen have been charged by a federal grand jury in New York with manipulation of the UN program. In Paris, the No. 2 at oil company Total was charged last month with paying illegal commissions to obtain favours for the oil group in Iraq. A former senior Total executive has been charged with similar offences. Both are expected to go on trial next year. In India, the national Enforcement Directorate has asked six people, including India’s former foreign minister, to show cause why they should not be charged over the scandal.

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

He lost his job over it.

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

Indeed. Investigations by police and prosecutors are also underway in New Zealand and Switzerland. But here in Australia things are moving at a snail’s pace.

The Attorney-General, in releasing the Cole report yesterday, was in the business of softening us up and lowering expectations. He said:

I would like to add a word of caution. ... it may take time for the independent agencies involved in the task force to thoroughly consider all of the relevant material before commencing any prosecution.

This is appropriate. Government agencies should only take actions to investigate and prosecute citizens or companies when they have a proper basis for doing so. Thanks to Commissioner Cole’s inquiry, we now have a basis for making proper, informed decisions about whether persons or companies can and should be prosecuted for possible breaches of Australian law.

Reading this, I am concerned that it is the government’s intention and desire to hold back and delay any charges and cases going to court arising from this scandal. Why might the government want such a delay? What motivation could it have? The answer might be found in a report in today’s Age by Richard Baker and Dan Silkstone, which goes as follows:

AWB figures implicated in the Iraq wheat scandal have threatened to call Foreign Affairs Minister Alexander Downer as a witness if they face trial, with one vowing “my QC will rip him to shreds”.

With the Cole report yesterday recommending 11 former AWB executives be investigated for possible criminal offences but clearing Howard Government ministers and officials, several wheat board figures embroiled in the scandal hit out at the Coalition.

“The Government knew ... They knew everything,” said one AWB figure. “It’s like Breaker Morant all over again. If I go to trial, then Downer will be the first witness called, that’s a promise. My QC will rip him to shreds.”

The report also says:

The threats from the former AWB executives came as the lawyers representing them at the Cole inquiry criticised the conduct of the inquiry, with many claiming it was set up to protect the Government.

They certainly got that right. It was set up—and it was a set-up—to protect the government. If the government wants to emerge from this scandal with any shred of integrity, it will not try to hide these cases until after the election. It will deal with them expeditiously. The AWB executives who say that they will call Minister Downer as a witness may be bluffing but, for the sake of this country’s reputation, this matter must be dealt with, and dealt with not by an inquiry with rigged terms of reference but in a court where everyone has the opportunity to put their case.

The immediate need is for the Howard government to send a clear signal that public accountability has not gone through some Stargate-like portal and disappeared into outer space. The Prime Minister should accept the resignation of the Minister for Foreign Affairs. That would be the signal.

But we need to take action on a number of fronts to improve public accountability and rescue it from the abyss into which it has fallen. We believe that ministers should be required to adhere to a formal code of conduct. We think that question time should be rejuvenated with measures to enhance the independence of the Speaker. We think that ministerial advisers should be accountable to the parliament. We think that freedom of information legislation should be strengthened by abolishing conclusive certificates. We think that corporatisation, outsourcing and commercial confidentiality should not be used as excuses to evade open government and accountability. We think we need more legislation to provide effective protection for public interest disclosures or whistleblowing in the public sector. Finally, we think that job insecurity forced on departmental secretaries and agency heads can lead to politicisation of the Public Service and that we need fixed contracts for a period of five years for these people.

We are blessed with a healthy democracy, but it has become flabby and blotchy in recent years. It might not yet need an extreme makeover, but it needs work. If the AWB scandal does not act as a real wake-up call, then our present smugness and complacency about the health of our democracy will cause us to drift even further down the path of those countries where corruption is a way of life and it is not what you know but who. (Time expired)

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I am pleased to contribute to the debate on the report by Commissioner Terence Cole QC into the inquiry into certain Australian companies in relation to the UN oil for food program. I make some brief comments on these matters because of my longstanding interest in statutory marketing, which the honourable members would be aware of. We have had a number of debates about these matters. Commissioner Cole’s report is a very comprehensive analysis of the concerns regarding the conduct of AWB and AWB staff in wheat shipments to Iraq under the UN oil for food program and payments to Iraq contravening the UN sanctions.

The Leader of the Opposition and the member leaving the chamber have been left red-faced by the release of the report because they have been arguing for a whole year about the possible contents. There has been much bluff and bluster over the past year by the Leader of the Opposition and the shadow minister for foreign affairs, but the Cole inquiry has found that there was no wrongdoing on the part of the government or any of the ministers. For all the talk of smoking guns, the Labor Party has suffered a misfire in this debate. Instead of spending the past 12 months developing policies and undertaking the real work of opposition, the Leader of the Opposition and the shadow minister have been clutching at straws, chasing the Cole commission, waiting for Cole to deliver the bullets that Labor was waiting to fire at the government. Instead, the Cole report clearly shows there was no wrongdoing on behalf of the government. The only political bullets resulting from this report are the ones fired into the election hopes of the Labor Party, because Labor’s allegations against the government have been demonstrated to be without foundation.

I call on the Labor Party to read the Cole inquiry report and to recognise the reality that the government and the ministers have been completely exonerated by the commissioner in the 2,000-page report. In case the Labor Party choose not to read the report, I quote an important element in the report which puts the lie to the Labor Party’s attacks over the past 12 months. In his report, Commissioner Cole stated:

There was a lack of openness and frankness in the AWB’s dealings with the Australian government and the United Nations. At no time did the AWB tell the Australian government or United Nations of its true arrangements with Iraq. When inquiries were mounted into its activities, it took all available measures to restrict and minimise disclosure of what occurred.

That is in volume 1. Then Commissioner Cole found that the government and the United Nations were deliberately deceived by the AWB over the full nature of its dealings with Iraq. The AWB intentionally and dishonestly concealed information from the Australian Department of Foreign Affairs and Trade and from the United Nations.

A commission of inquiry was undertaken by the government and, as many members present would know, the outcomes of commissions of inquiry are never predictable. The outcome of the Costigan royal commission in, I think, about 1982 was unpredictable and the Fraser government—my own side of politics—had a number of problems when the unravelling of that royal commission took place. However, in this case we found that the government was open. They appointed a very respectable commissioner in the Hon. Terence Cole. They have 2,000 pages of documents, letters, emails and detailed information that the commission has put on the public record.

Obviously, in the last 24 hours I have not read the report, but I have perused the documents and I am most impressed with the detail, with the forensic evidence that is available and the amount of background information that the commissioner has extracted from witnesses, from those people who were associated with AWB, the departments and other parties. Today in the parliament the Prime Minister made these points very clearly in the debate—that the commission was open and transparent and that the commission was formed with a view to finding the truth and tabling all documents.

Like the Prime Minister, I do not accept that the terms of reference were too narrow. Here we have a commission of inquiry and we have the experience of the Costigan commission, the Petrov commission and other commissions. The duty of the commissioner or those running the commission is to find the truth through any avenue they think fit. In my assessment, this is a first-class report. It is tabled in the parliament for everyone to read.

I make the observation that fundamental to this whole debate is the fact that the AWB enjoyed a good reputation amongst farmers, amongst those who support the single-desk proposition, amongst people who have argued the case for statutory marketing for the last 30 years. So, whilst there were some allegations in the wheat fields around the farms that maybe the AWB was not doing the right thing, that was not validated, as we know. The AWB did their best to conceal this information. It was the good reputation of those personnel, farmer members and others, that I think did not help anyone who had even the slightest concern that the AWB was not doing the right thing.

Commissioner Cole in his report asked why the AWB sought to deceive the Australian government and the United Nations to do whatever was necessary to retain the trade with Iraq. I make the observation that this wheat trade to Iraq was critical to the AWB’s operations. It had been going on for a number of years, it formed a major part of the marketing arm of AWB, it was lucrative and it was longstanding, and I think there was a culture in the AWB to maintain this market at any cost. In answering this question, Commissioner Cole made the following statement—and this is really the key of why I put these remarks on the public record:

The answer is a closed culture of superiority and impregnability, of dominance and self-importance. Legislation cannot destroy such a culture or create a satisfactory one. That is the task of the boards and the management of the companies. The starting point is the ethical base. At AWB the Board and management failed to create, instil or maintain a culture of ethical dealing.

A government grant, by legislation, of a monopoly power confers on the recipient a great privilege. It carries with it a commensurate obligation. That obligation is to conduct itself in accordance with high ethical standards. The reason such an obligation is imposed is because, by law, persons are denied choice with whom they may deal.

That comes from volume 1. It is on this question of monopoly power that I want to make some comments. The AWB has enjoyed these statutory monopoly privileges guaranteed by the Australian parliament so that it is a single-desk exporter. That has been a matter of some debate over previous years and is obviously currently a debate amongst Australian wheat farmers and members of this House. We have a position where the monopoly powers—and I emphasise the point—have been conferred by this parliament by way of statute, and the AWB that was created was a statutory authority of monopoly powers which was privatised in July 1999.

As members would know, the Australian Wheat Board and its former entities were created in the 1930s to sell wheat by way of export and by way of monopoly so that, in their view, wheat growers would obtain a better price in the difficult international markets. As members would know, the AWB, when it was privatised in 1999, created two classes of shareholders: class A, who were fundamentally wheat growers, and class B, who were on the stock market. This from the very beginning created an element of conflict between those class B shareholders and those normal wheat-growing members. That debate was pretty fierce at the time and, I think, did create a problem within the Wheat Board management position. So you had a monopoly and you had an attitude that was generated within the management and within the board that the Wheat Board could do no wrong, that they were representing the wheat growers at any cost and that they should maintain their markets at any cost.

I would like to draw a parallel with the Australian wool stockpile. This was the subject of a major debate in this parliament. As would be recalled, the Australian wool stockpile peaked at 4.7 million bales in the early 1990s and had a debt of $2.7 billion. They were very huge figures at the time and there was huge debate about the situation. I had some sympathy for Minister Kerin and those in the government at that time because of the pressures that were exerted by woolgrowers. I notice that the shadow minister, the former minister in the former government, is nodding in agreement that there was enormous pressure on government members to maintain the price of 870c.

This, again, was a monopoly position. Australian woolgrowers felt that they could dominate the world market—they could seek a price. So we have a similarity between the two situations. In my view, the woolgrowers unfairly influenced the government of the day and forced the minister at that time to raise the price to 870c. As a consequence, the wool reserve price scheme collapsed, there was $2.7 billion worth of debt, and nearly five million bales were locked up in stores all around the country. Some people even advocated burning the wool. That is how bad it got. It took about eight years of quite delicate and difficult sales of that stockpile of wool for the stockpile to be removed. So we have two similar situations. As people would know, I have always been concerned about statutory marketing—and I see you smile, Mr Deputy Speaker Haase. The debate is ongoing because of these conferred privileges both in the case of the Australian wool stockpile and the case of the Australian Wheat Board.

I would like to finish my brief remarks by quoting from the prologue of the Cole commission report, which I think summarises this debate. We have had hundreds of hours of discussion and debate about this over the past 12 months, but I think Commissioner Cole summarised it very well in his prologue, and I would just like to quote it for the record. It reads:

The consequences of AWB’s actions, however, have been immense. AWB has lost its reputation. The Federal Court has found that a ‘transaction was deliberately and dishonestly structured by AWB so as to misrepresent the true nature and purpose of the trucking fees and to work a trickery on the United Nations’. Shareholders have lost half the value of their investment. Trade with Iraq worth more than $A500 million per annum has been forfeited. Many senior executives have resigned, their positions being untenable. Some entities will not deal with the company. Some wheat farmers do so unwillingly but are, at present, compelled by law to do so. AWB is threatened by law suits both in Australia and overseas. There are potential further restrictions on AWB’s trade overseas. And AWB has cast a shadow over Australia’s reputation in international trade. That shadow has been removed by Australia’s intolerance of inappropriate conduct in trade, demonstrated by the shining bright light of this independent public Inquiry on AWB’s conduct.

I think the moral of the story is that any monopoly position—be it in the private market or in statutory marketing set up by this parliament—always has the possibility that arrogant and non-market behaviour will emerge.

We have seen it in other areas—for example, in silver mining, where the Hunt brothers thought they could corner the market. We have seen it in the wool industry. We have now seen it in the wheat industry, where there is an attitude of mind that the Australian Wheat Board can dominate the world market by their capacity to sell wheat in a monopoly position and ask all Australian growers to put their wheat through the Wheat Board. This is a great example of the problem of monopoly power, be it by a statute or be it by a group. I hope that, in the long run, these matters will be resolved.

I reject the allegations of those opposite that the government—the Prime Minister and ministers—were involved. In the final analysis, the Australian Wheat Board is an independent entity run by independent management, carrying out its duties on behalf of Australian wheat growers as it sees fit. The AWB was not an arm of government. It is very clear that both the former government and this government made it a separate entity with a separate set of arrangements, be it a corporation or a statutory company. I hope the debate will reach some good sense and that governments, farmers and everyone in Australia will learn from this very unsatisfactory and unhelpful set of events.

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

I rise more in sorrow than in anger to speak in this debate. As a former minister for the Department of Foreign Affairs and Trade, I have very high regard for many of the officials in that department. They were put in a terrible position as a result of the circumstances that developed. In my role as the Minister for Trade I dealt with the Australian Wheat Board—it was differently constituted then but nevertheless I dealt with the Australian Wheat Board as it then was—and I was aware of the great significance it placed on the wheat trade to Iraq.

I want to add to some extent my agreement with some of the remarks made by the member for Corangamite—I have to say not much of them but one part—insofar as I am particularly concerned when the law gives a monopoly in any event but particularly to a privatised monopoly. Any monopoly has serious risks because of the capacity to generate anti-competitive conduct and to distort proper market operations. But when you privatise a monopoly, you create really perverse incentives. It is equally true when you privatise a dominant player in an important market. I would be straying too far to say more than that is one of the reasons why I think the government’s decision to privatise Telstra is such a mistake. But I do want to put on the record my reservations about the continuation of AWB’s monopoly powers. That is a matter for consideration on another occasion and there are many factors to be considered and those reservations may be outweighed by other factors—but I certainly do have some concern.

But when I became aware, as I said in opening, of the AWB and the significance it gave to its wheat trade to Iraq in the nineties, I also became aware of the rigour with which the then foreign minister, Gareth Evans, applied the United Nations sanctions, enforced them and imposed them on AWB and on BHP—in BHP’s case, through Tigris, who were endeavouring to get around the sanctions in one way or another. There could have been no doubt in both AWB and BHP that the foreign minister was actively, in detail and in a very forthright manner, requiring them to comply with the UN sanctions. They were not exactly the oil for food sanctions, because it was at a slightly earlier stage in the United Nations relationship with Iraq, but there were UN imposed sanctions with which Australia was required to comply. There were export control regulations which it was the responsibility of the foreign minister to ensure that Australian companies complied with—and Gareth Evans made sure they did. I have seen the files; I have seen the notes. I am aware of the instructions that he gave to both BHP and AWB to make sure that they complied. That is why I think it is such a travesty that people can say the foreign minister has been exonerated.

What has been found is that he did not break the law and he was ignorant of what was going on around him. That is no real excuse for a minister. First and foremost, he did not make sure that the responsibilities imposed upon him by the export control regulations were properly carried out. If the government did not have any concern about that, if the government had nothing to hide, why would they not give the commission the power to judge the merits, the competence and the appropriateness of the performance of ministers? But that was explicitly excluded. That was not a matter upon which the commissioner could rule. Why? Because the government knew the answer before they started. At least one minister was lacking—on the basis of his performance before the commission—and I would say two, because the then Minister for Trade’s performance was an embarrassment to all of us as public representatives and, for anyone who had previously been the Minister for Trade, we were almost humiliated to see how incompetent he claimed to be in his defence.

But the primary responsibility lies with the Minister for Foreign Affairs. Forty-one contracts were approved despite 35 warnings. Of course, a warning is not a conviction. It does not say to you, ‘This company has done the wrong thing.’ It says, ‘This is a matter you should look at.’ I recall the foreign minister coming into the House of Representatives and saying, ‘I could not investigate this matter without the assistance of the AFP with a warrant because I had no right to seek the documents.’ That is just untrue. Under the export control regulations, when the minister has to give approval he can say, ‘I will not give approval until you show me the documents that prove you are complying with the sanctions.’ That is what the minister is given the power for. It is not because it is a bit of fun to sign documents and we all feel better if we do it. The minister delegated that responsibility anyway, which he was entitled to do. The power exists so that the minister has the capacity to enforce the sanctions. He explicitly had those powers; he totally failed to take action.

We have a circumstance where there were allegations, but beyond that there was a cable that came to the minister’s office which raised this allegation. Once again, it was not proof. I would not expect him to take action against the AWB on that allegation, but I expect him to investigate. As far as I can tell, the minister still holds that he did not read that cable. I ask anybody to contemplate whether a cable of that character coming into Gareth Evans’s office would not have been read by him, would not have been subject to a minute from him and would not have had a response from him.

Let us assume that it is reasonable for a minister not to be aware of a profoundly important cable from the Australian mission at the UN alleging breach of sanctions by a major Australian company. For some reason, people seem to think it is all right for the minister not to have read that. I think it is an absurd proposition and a failure of great magnitude on his part. But let us assume that it is okay. As I understand it, the report was read by others in his office. Here we face a serious problem of a black hole of accountability in the Australian accountability regime.

There is a longstanding principle which I have articulated—in fact, to my embarrassment, I saw it reported in one place as the ‘McMullan principle’—which says: ‘Staff are responsible to ministers. Ministers are responsible to the parliament.’ In the normal course, that is correct, but that means you have to accept responsibility for what your staff do. You cannot say: ‘They’re responsible to me but I do not care what they do; I am not going to tell you what they do. If they make a mistake, it is nobody’s business.’ Then there is a black hole of accountability because they deal with the departments. They give instructions; they receive directions. It was of course classically illustrated in ‘children overboard’, but it is illustrated here as well. There is a big black hole in Australian accountability, and either ministers have to accept responsibility for what their staff do or staff have to be accountable. It cannot be that nobody is accountable.

That is what we have at the moment, and therefore the foreign minister had the capacity to investigate and refused to do so. In fact, he got up in the parliament and said he did not have the capacity, when that is just untrue. Secondly, we had the cable to his office and nobody accountable for the failure to act upon it. Then we had a sin of commission. There were two major sins of omission, but the sin of commission was that he nobbled the proposal for a United States investigation because it might have been politically embarrassing, particularly as it was likely to arise just before the Australian election. He nobbled it on the basis of a guarantee that he gave, which he knew at the very least flew in the face of serious allegations and he knew that he had not investigated those allegations.

Without investigating these allegations, he gave a guarantee to the United States congress that there was nothing in them—a profound breach of his obligations. I have been in negotiations with the United States government. I have given them guarantees on behalf of Australia that certain things were true, but I made very sure that I had done everything to satisfy myself that the assurance I was giving was accurate. In most cases I sought cabinet approval to give it; sometimes I sought it on the basis of my own investigations.

There are two other things I want to refer to. One was covered by the shadow minister, the member for Wills. That is the very interesting reports about the next round of information about this, which is what will emerge from the dock when people are charged with offences arising from this, because people are saying—perhaps incorrectly; we do not know—that they will implicate the foreign minister in their evidence. But one thing we can be sure of is that this government will move heaven and earth to ensure that those cases do not come before the court until after the next election. I will guarantee that now. This government will do everything to prevent those matters coming to court until after the next election. If the government changes, there will be significant capacity to investigate these matters, and I look forward to that being done.

But the questions that go unanswered are these: what are ministers responsible for in this government? Of course they are responsible for what they do themselves, and of course they cannot be responsible for everything that every officer of their department does. But who is responsible for the fact, established by the Cole royal commission, that there was a lack of procedures to ensure that the UN sanctions were complied with? The minister cannot be responsible for what every officer writes on every file or every letter that goes out of the department, but you can be responsible for making sure that your legal responsibilities are properly carried out and that there are procedures in place to ensure that it happens. It is the minister’s job to make sure. They cannot do everything themselves, but they must establish a culture of compliance and a proper set of procedures.

Who is responsible? Who is going to be accountable for the failure to follow up 35 warnings? Is nobody in this government accountable for that? Is it the fact that people can come to a minister directly, as some did and as others sought to do, and say, ‘I believe this Australian company is in breach of the sanctions’? It was not just airy-fairy comment: the Canadian government raised it with the United States, who raised it with us. The Canadian government raised it in January 2000—and on what bit of information did they do it? Their wheat board had been approached for kickbacks. Their wheat board said no and told their government that the Iraqi government had said to the Canadians, ‘Well, you should do it; the Australians are.’ Did we hold an inquiry then? Not on your nelly!

We asked the AWB if it was true and they said no. It is like the congress asking the Watergate burglars whether they had broken into Democrat headquarters. It is as credible an investigation as ringing up Gordon Liddy and saying, ‘Gordon, did you break into Watergate?’ and, on being told no, saying: ‘Well, that’s it; I’ve inquired. No need for any more inquiry’—and Richard Nixon might still be the president.

The Australian government did nothing. So in June 2003 what was that other minor agency that raised an allegation? The Coalition Provisional Authority said: ‘All these contracts have a 10 per cent commission. We’re inquiring.’ Did we inquire? No; we asked AWB if they were paying a commission and—shock, horror—they said no. The Cole commission said, ‘Yes, they were.’ It is a terrible thing that AWB were doing it and it is a terrible thing that they lied, and it is proper that they be pursued on that basis. But, in this parliament, the obligation is on the ministers to make sure that proper procedures are in place, that the Australian law is complied with and that ministers act responsibly to discharge their obligation. The Cole royal commission did not find on that because the government would not let it, but this parliament should not rest until it makes sure somebody is accountable for those failures.

Arch Bevis (Brisbane, Australian Labor Party, Shadow Minister for Aviation and Transport Security) Share this | Link to this | Hansard source

I am delighted to follow the member for Canberra. He made an excellent contribution that set out the key issues in this debate. It is a very thoughtful contribution that members of the government would do well to read. He referred to the black hole in accountability that this government hide behind in relation to this matter and indeed a number of others over the course of the last 10 years. I do not regard that as an accident. I think that is a carefully planned construct this government have fostered and have produced as an art form.

The report we are discussing is titled Report of the Inquiry into certain Australian companies in relation to the UN Oil-for-Food programme. That title is not by accident. It is an inquiry into, as it says, certain Australian companies. It is not an inquiry into the role and activities of this government, its ministers and their operatives; it is an inquiry into the activities of certain companies. Indeed, from the day it was set up, the Labor Party, amongst many in the community, has raised concerns about the way in which the government put blinkers on this inquiry to prevent it fully examining those involved in authorising and knowingly going along with the most corrupt activity, the most shameful activity, that I think Australia has been involved in.

To see $300 million provided as kickbacks to a repressive regime at a time when Australian troops were deployed to enforce those very sanctions and at a time when other Australian troops were being deployed and made ready to invade that country, ultimately to overthrow the regime, and to have operatives of the government involved in that subterfuge is, I think, one of the highest order acts of treachery that can be imagined.

It is not an accident that the government have hidden from their responsibility in these things. It has been a well-developed plan of this government to rely upon a doctrine of plausible deniability in which those who have responsibility for actions are able to stand and deny any knowledge of those actions in a plausible manner, notwithstanding the fact that by any fair interpretation of events it is their job to know. Plausible deniability is the sort of thing—and the reference by the member for Canberra reminds me of it—that Richard Nixon sought to hide behind. Not that you could prove a person was necessarily innocent; you just could not prove that they were guilty. There was not sufficient information to join the dots together.

We saw that perpetrated by this government in the ‘children overboard’ affair. A similar mechanism was used. You have political appointees of ministers, sitting in ministerial offices, who are not required to appear before Senate committees or other parliamentary processes, but for whom ministers claim to have no responsibility or, indeed, no knowledge of the actions they take or even knowledge of the important critical portfolio matters they are dealing with. That is what we have in this case.

I do not believe the defences of this government; I simply do not. I do believe the parliament and the people of Australia have been told the truth. But if you were to believe everything the relevant ministers have had to say about this, then you have to believe that, whilst senior people in their department knew about these problems and raised concerns and discussed it with one another and while senior people in their own personal offices knew about it, they had no knowledge. That is a completely unbelievable set of circumstances to attribute to any competent minister, junior or senior. To attribute it to two of the most senior ministers, the Minister for Foreign Affairs and the Deputy Prime Minister, who also was Minister for Trade, is mind-boggling. That people in those offices could pretend to have such scant knowledge of so vital a piece of information affecting their portfolio beggars belief.

But if that is true then they should resign out of sheer embarrassment because of their publicly acknowledged incompetence. Their confession of ignorance and maladministration should, by itself, cause them to leave office. But that was the important ingredient in affording those senior ministers plausible deniability: ‘We can deny it because there is no proof that we knew.’ Plausible deniability has undermined the entire process of parliamentary accountability. Forget the Westminster model of accountability. Under this government, that was lost years ago. There is now, under the standards set during the course of this Wheat Board scandal, no process of accountability that the Howard government accepts as bearing upon them and their actions.

Have a look at the way in which these senior ministers dealt with warning after warning—about 35 separate warnings—that there was a problem. In answer to a series of questions that Labor have been pursuing for months on these matters, the closest we got to an answer—as opposed to a piece of political spin—was that inquiries were made of the AWB officers. The AWB officers denied any wrongdoing and the government accepted the denial.

You might be forgiven for accepting that as a process if there were a sole, solitary complaint or if you thought the complaints were vexatious. But when they come from all manner of agencies—from the UN, from the governments of the United States and Canada, and from our own Department of Foreign Affairs and Department of Defence—it is simply not believable that a process like that could be seen as adequate. Of course, the reason that happened was also quite deliberate. The people who were being asked these questions are close confidants of this government. We are talking about people whose political connections are closely intertwined with the National Party in particular—not just the National Party but primarily the National Party. The people who were running this scam in the AWB were the mates of the senior political operatives of this government, including the ministers in this government.

I am reminded of a Yes Minister skit where they are talking about a financial scandal in the banking industry. Sir Humphrey said, ‘You simply don’t ask one of the chaps a question like that. If one of the chaps says he’s not doing things, of course you take the chap’s word for it.’ That is what happened here. One of the chaps who was one of the good old National Party cronies asked one of the other chaps, who was also a National Party crony, ‘Have you been breaking the law and sending a few hundred million dollars off to Saddam Hussein?’ And the chap said, ‘No.’ So they said, ‘Fine. We won’t ask any more questions.’ Then when the next complaint came along, they asked the chap again, and he said the same thing. After you have asked this chap 35 times and he has said ‘No, you don’t have to worry’ 35 times, you want to maintain plausible deniability. You do not want a paper trail. You do not want an investigation. You do not want to know what really happened, because by that stage you know it is your head that is in the noose. That was the thought process going on amongst those senior ministers involved in this. They knew their heads were in the noose, and the only way they had of saving their sorry hide was to pretend they knew nothing about it. As long as the chaps could keep the conversation going and the chaps would keep saying, ‘No, we weren’t involved in this sordid corrupt affair,’ then we could all maintain this veneer of plausible deniability.

Contrast the abysmal and disgraceful activity of the Minister for Foreign Affairs and the Minister for Trade, in particular, with what the Australian public servants who were actually in the Middle East and charged with enforcing these sanctions were doing. While the government was happily enabling $300 million to be siphoned off to Saddam Hussein in breach of United Nations sanctions, we had hundreds of soldiers on ships enforcing the blockade. As the Leader of the Opposition, Kim Beazley, reminded the parliament today: what did we expect of our naval officers when they confronted a vessel on the high seas en route to Iraq at that time? We expected them to ensure that those ships were interdicted and inspected, which they did with great care and professionalism, as our defence forces have a wonderful record of doing. When they went to the commander of the vessel, they did not say, ‘Well, chum, what’s going on? Have you got any contraband’ and then let them through when they said ‘No.’ They stopped the vessels and they searched them, and they made sure that there was no breach of United Nations sanctions.

The standard we expect of our military personnel, which they uphold, is to do the job properly, and they did it. They actually enforced the sanctions. What an outrageous breach of faith and decency at every level that, at the same time as our sailors and people in the Navy particularly were doing that work in the Middle East, people at the highest level in government were turning a blind eye and allowing hundreds of millions of dollars of breaches of those very same sanctions.

These were mates’ arrangements. They did not need to have documents. In fact, they needed to make sure there were no documents. They did not need to have formal meetings. It was a bit like another comedy skit I am reminded of, a Monty Python skit: ‘Wink wink, nudge nudge, say no more.’ It was Eric Idle out there, running the Department of Foreign Affairs and Trade: ‘Wink wink, nudge nudge. Don’t tell me. We all know what the game is here. We have been mates for a long time. Wink wink, nudge nudge.’ Nothing needed to be said. Everybody involved knew exactly what the game was. You do not get 35 warnings, you do not get cables from Washington, from Canada, from the United Nations in New York and from your own Defence personnel saying: ‘There is something rotten here. We think you should look at it’, you do not get that sort of information streaming in over the course of about three years and leave it at ‘Wink wink, nudge nudge, say no more.’ But that is precisely what this government did at its highest level.

Now we are confronted with a report that has done what everybody who followed this in Australia knew would be the case from day one: it has not implicated ministers in criminal activity—because its terms of reference did not allow it. When the shadow minister for foreign affairs, the member for Griffith, Kevin Rudd, wrote to the Cole commission to seek the views of the commissioner on extending the terms of reference, Commissioner Cole made it clear that the terms of reference could not be extended in such a broad way, that that was not his job, that that was a major change in the scope of the inquiry, that his job was to inquire into the matters that had been put before him by the government. That is what he has done, and that is why the report we are talking about is an inquiry into certain Australian companies.

Do you know what this nation needs, what the soldiers and the sailors in the Australian Defence Force deserve? What they deserve, what this country needs and what democracy would demand is a full and thorough investigation not of the companies involved in this but of the whole sorry, sordid affair.

It is a disgrace to the process of parliament and what we call the Westminster system that this government has been able to construct this veil of secrecy, these misguided terms of reference for a committee of inquiry, this plausible deniability sham that they sit behind. It is a disgrace that they have been able to do that and it is a terrible reflection on this entire parliament and institution. This could not actually happen in the United States, because the executive is divorced from the legislature. It would be hard, even if you had the same party in both places, to get away with this sort of scam in the United States. You could not do it. You certainly could not do it in the United States today when you have a Democrat-controlled Congress and Senate and a Republican presidency, because the parliament would conduct thorough inquiries or would appoint a judicial officer to do the job and make sure that those responsible were held accountable.

But this government, after 10 years, has so debased the parliamentary process that everything has become a rubber stamp for the cabinet, for the executive—so much so that people of integrity in the government now find themselves tied into that obnoxious process and, in this case, find themselves having to silently stand by, if not defend, what is one of the most outrageous acts of treachery that this country has seen perpetrated by a government. I look forward to the weeks and months after the next election, when we are in government, and I look forward to a proper inquiry into this.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Getting to the bottom of the biggest Commonwealth scandal in Australia’s history is no easy task. Getting to the bottom of a government so accustomed to hiding itself from any form of public accountability I have to say, again, is no easy task. Getting to the bottom of a $300 million payment to the corrupt dictatorial regime of Saddam Hussein is no easy task. But getting to the bottom of all these things with terms of reference with little or no flexibility is virtually impossible. However, that is precisely the task that this government set Commissioner Terence Cole when they asked him to investigate the involvement of the AWB in the UN oil for food program. It stands to reason that, when your investigation is so restricted as it was, when the playing field is so skewed as it was, when the finding of wrongdoing is all but impossible to achieve, it is hardly surprising that Commissioner Cole could only find the government to be incompetent rather than criminal.

Yesterday we heard from the Attorney-General, who said that no other country has undertaken such an open and far-reaching inquiry. Today in a censure motion, the Prime Minister claimed that it was an inquiry that was truly remarkable. It was an inquiry remarkable in its transparency. The only thing that was transparent about this inquiry was the government’s perspective—it was lopsided; it was skewed. It was a one-sided set of terms of reference. Everyone knew that to be the case and that is probably why the Prime Minister has indicated that it was transparent.

If it was not an open and far-reaching inquiry, why was it that Commissioner Cole himself, in correspondence to the opposition, indicated there was no capacity for him to find as to the stewardship of these ministers for the responsibilities they had? That was at the outset of this inquiry. Therefore, I think the Prime Minister is probably right to say it was transparent. It was transparent; it was open. Even Commissioner Terence Cole himself acknowledged that he had no capacity to find as to the stewardship of those ministers involved.

Why did the government allow this to go through without any examination? I think that is pretty obvious. If there were such certainty in the ranks of the members opposite, particularly amongst those of the frontbench, that they were all innocent, why would they have restricted these terms of reference in the manner that they did? There is one thing that the Australian public does understand when it comes to ministers who set the scope of an inquiry so narrowly as to make it all but impossible to find fault—that is, that there is fault to be found. That is why the terms of reference were so skewed from the outset.

The Prime Minister, the Deputy Prime Minister and the Minister for Foreign Affairs might think that they have pulled the wool over the eyes of the Australian public on this one by making sure that they could not be found to have been doing anything wrong. But the Australian public can see through those tricks. While members of the government are happy with the result and are happy to be found incompetent rather than criminally negligent, the Australian public realises there is more to this. We know that the Australian public knows that the departments of the Minister for Foreign Affairs and the Minister for Trade actually approved all those contracts for sale. All the very contracts which were being investigated by the Cole commission were approved by those ministers’ departments.

We and the Australian public know that this government received on no less than 35 occasions warnings indicating wrongdoings, suspicions of bribes and the involvement of these ministers. Quite frankly, it is appalling that these ministers have not taken some responsibility for running their own departments. The allegations were being made not only by other countries but also by UN personnel and other organisations—yet everyone has ducked for cover and said, ‘We didn’t know.’ That was the defence from the three wise monkeys. We know, and the Australian public know, that this was wrong. It is inexcusable that $300 million went to Saddam Hussein to fund a conflict that would ultimately wind up as a campaign against Australian troops.

The Prime Minister has tried to write down the conclusion of the Cole report in language more satisfactory for his own purposes. He is trying to push the line that Commissioner Cole has completely exonerated the government. If you listen to the Prime Minister, it would appear that there was no wrongdoing by him or his government. Much like the Prime Minister’s claims that he has not broken promises on or given commitments to such things as keeping interest rates low, this characterisation of the Cole findings, quite frankly, bends him so far out of shape that the truth becomes almost impossible or at least unrecognisable. If we accept the Prime Minister’s assertion that none of his ministers were responsible for any wrongdoing then, as a matter of course, we must start to ask some serious questions about their competence.

As the Leader of the Opposition said today, this is a shameless government. Its members are here saying with pride and boasting to us, ‘We are not criminally culpable; we are merely incompetent and negligent.’ I think that is a fair summary of what has come out of the Cole report—and also, quite frankly, for the celebrations that took place last night by a number of members on the opposite side. In public life and in public administration, to be found to be incompetent and to be found to be responsible for gross maladministration is nothing to be proud of. Just because you avoid the hangman’s noose by being found to be incompetent should not let you off scot-free.

The Prime Minister should be asking some pretty serious questions about the competency of his ministers. I can only hope that he is asking those questions of his ministers and that he is dusting off that little used document that he once had that outlined ministerial responsibility—and that he recognises that those ministers investigated by Cole have been found to be well and truly out of their depth and should be dismissed. That is what ministerial responsibility is all about. As if the finding of incompetence is not enough, unlike in other circumstances this is a time when the price for ministerial incompetence is known. The price on this occasion for ministerial incompetence was $300 million—paid to someone who turned out to be ultimately an enemy of this country. That is right: $300 million was paid in bribes to a country, to a dictator, we were about to go to war with.

I know that many members opposite go to great lengths to emulate their great hero, that Liberal Party former great, Prime Minister Menzies, but I doubt whether Pig Iron Bob, even in his heyday, would have kept delivering pig iron to the Japanese for five years after he knew that at some stage he was going to invade them. He never really got around to that, but the point is that not even Pig Iron Bob would have pulled the trick that has been perpetrated on the Australian public in this case. This government is not off the hook. Looking at the editorial headlines of a number of newspapers today, when it comes to the AWB scandal it certainly is not off the hook, and nor should it be. This government has sent public accountability to new depths.

This government seems to be proud of the fact that it can get away with simply being criticised as being incompetent rather than being held criminally responsible for the activities associated with these contracts with Saddam Hussein. But, while the government gloats, our reputation as an ethical and responsible trading nation is being eroded. I cannot help but think that those who are witnessing this government’s joy in the findings of the Cole commission are questioning this country’s ongoing commitment to fair international trade. We have already seen—and we should not forget this—that the newly elected Iraqi government actually postponed and cancelled contracts with this country because of the activities of AWB. That was the newly installed government of Iraq. AWB has tarnished Australia’s exports and this government has overseen the process.

One of the many things that Australia could pride itself on internationally was the fact that it was always considered to be a responsible trading nation. It did not involve itself in some of the less than savoury activities of other nations simply to procure contracts. However, AWB has ruined that notion for everybody and it has ruined our reputation. One bad organisation has ruined our good reputation—one bad organisation that this government was warned about on 35 occasions and did nothing about.

It is difficult to see where the findings contained in the five volumes—the more than 2,000 pages—of the Cole inquiry are likely to take us. It is clear that the government has accepted that the findings are findings of innocence and that there should be no further action taken in this place. As a matter of fact, Mr Deputy Speaker, you will recall that only yesterday you heard the Prime Minister say:

I don’t expect it will happen, but Mr Downer and Mr Vaile are owed an apology by Mr Beazley and Mr Rudd.

Have you ever heard anything more ridiculous? As the editorial in the Sydney Morning Herald answered today:

On the contrary, Prime Minister, it is the Australian people who are owed the apology. Your ministers, who have so signally failed to manage their portfolios, should make it.

I think that is a pretty good summary of how the Australian population sees where this government sits at the moment. Members opposite should be hanging their heads. If they are out there celebrating and drinking up about being excused by being exonerated from criminal activity and simply being seen as incompetent, I say that, if that is all they have to celebrate, that is a pretty poor form of government for this country. At the very least, those ministers should be held to account for their incompetence and they should be dismissed.

The timing of the Cole commission report has resulted in a collective sigh of relief from these ministers who have been under question. But to simply go into renewed vigour—as the Prime Minister tried to do in the last two days about his government being exonerated—will not wash with the Australian public. The Australian public is already distrustful of this government, no matter what the spin, and that is the way it should be.

The Australian public are already distrustful of governments generally. You have to understand why that would be the case. If this is the reaction they see from an elected government—if this is the form of responsibility they take, if this is the form of ministerial accountability that is imposed by a Prime Minister over his ministers—no wonder they become cynical of governments. Quite frankly, there are one or two people in this place who are clearly in the wrong place; they should not be here.

The Australian public believes that government should be doing everything they can to ensure that there is proper scrutiny of something as important as the oil for food program, particularly as it has been raised with us by a number of international organisations, particularly as it does amount to bribery—something which we would say is foreign to the way we would normally expect Australian companies to act internationally—and particularly when these contracts were supervised and approved by two ministers of this government. At best, this Prime Minister owes the Australian population the heads of those two ministers for incompetence. If he does not deliver, he taints his whole government.

It is a sad fact, when you hear the comments that have been made and see the celebrations that are taking place, that there is only one member on that side of the House who has spoken out about this—just one. That just shows the level of discredit that— (Time expired)

Gavan O'Connor (Corio, Australian Labor Party, Shadow Minister for Agriculture and Fisheries) Share this | Link to this | Hansard source

Tonight there are wheat-farming families sitting around the kitchen table looking at the scarcity of food. They look out on the devastated, drought ravaged landscape of their farms and they shudder in despair about their future. Last night in the bowels of this parliament, a collective sigh of relief came over the coalition as they popped the champagne corks and celebrated the fact that the rorted terms of reference and the subsequent report had exonerated ministers in the government.

Let us call this for what it is worth; let us call it for what it is. This is the greatest corporate scandal in Australia’s postwar history and it occurred on the watch of the Howard Liberal and National Party government. This is a Liberal-National Party scandal—no more and no less. And every member of the coalition tonight should put the champagne glasses away and reflect on the enormous damage that they have done to this great industry of this country and what damage they have done to the democratic processes of this parliament and this nation.

We are talking about a five-volume report of over 2,600 pages which documents the deepest corruption of the international wheat market we have seen in our lifetimes, under the auspices of the Liberal and National Party government of Australia. There is no escaping this fact, members opposite. It is on your watch that the greatest scandal in Australia’s corporate history has occurred. Every one of you ought to hang your head in shame. Because, as you popped the champagne corks last night in glee that your ministers had got off the hook in your eyes, many wheat-farming families around Australia are starving because of this drought—while members opposite have presided in their incompetence and in their negligence over the worst scandal in Australia’s corporate history.

Let us call this report for what it says. This is what Commissioner Cole had to say:

It is not my function to make findings of breach of the law.

Well, why were they celebrating last night? The government rorted the terms of reference to insulate itself against scrutiny and then, when the commissioner delivered a report within those terms of reference, its members breathed a collective sigh of relief. The commissioner said:

It is not my function to make findings of breach of the law; my function is to indicate circumstances where it might be appropriate for authorities to consider whether criminal or civil proceedings should be commenced. I found such circumstances to exist.

Five volumes of it he found—five volumes of evidence that shines a light on the worst corporate scandal in Australia’s postwar history, courtesy of the Howard government and of Liberal and National Party members.

The commissioner, in the prologue—and if you only read two pages, read those two; it is enough—asks the question: ‘Why did it happen? How is it so?’ His words are a description of this government and the culture that is spawned not only in the political system but throughout corporate Australia, including rural corporate Australia. He has this to say:

The answer is a closed culture of superiority and impregnability, of dominance and self-importance.

There are no two lines, or one and a quarter lines, that sum up the culture of the Howard government better than the words of Commissioner Cole: ‘The answer is a closed culture of superiority and impregnability’. The Prime Minister and his ministers for years had a firewall set up—as only they know how to do and as only a corrupt government knows how to do—to make sure that there were no paper trails that led to the desk of any minister in the Howard government, including the Prime Minister. There is this terrible sense of impregnability, of dominance and self-importance: ‘We can swan around the rural sector and betray them on Telstra, like we betrayed them on the US FTA on sugar.’ And now there is the ultimate betrayal, in five volumes, of corrupt practice courtesy of the Howard government and its ministers.

What has it cost the great wheat industry of Australia, the communities that depend on it and the farm families that make their living proudly in this great industry? The ultimate hypocrisy and the ultimate insult was made on the floor of the House of Representatives when the Prime Minister said about the ethics of this government, in that glib one-liner that says it all, that the wheat growers of Australia have no better friends than the Liberal and National parties. Who needs enemies when you have friends like the coalition?

This scandal has cost wheat growers $290 million of their hard-earned income, paid in bribes courtesy of the Howard government and its negligence and incompetence to a dictator in Iraq at a time when the government was spinning out a line to commit Australia in a grave conflict that has now claimed the lives of over 650,000 Iraqi civilians and thousands of American lives—untold suffering spun out by a deceptive Prime Minister who has the ethics of a snake. The ethics of this Prime Minister and his moral depth are about the distance between the rattlesnake’s belly and the ground.

Harry Quick (Franklin, Independent) Share this | Link to this | Hansard source

Order! I remind the honourable member for Corio to temper his language a little bit. I think he is getting very close to being unparliamentary.

Gavan O'Connor (Corio, Australian Labor Party, Shadow Minister for Agriculture and Fisheries) Share this | Link to this | Hansard source

Thank you. The anger that I express on this floor tonight is an anger that is out there in regional Australia. If I apologise, I apologise to you, Mr Deputy Speaker, and I apologise to the parliament. But I will never apologise to this government, which has betrayed the wheat growers of Australia. I express this anger on their behalf, because they have placed their trust in the government and it has been broken. But I take your admonition, Mr Deputy Speaker.

Let me go through what it has cost AWB wheat grower shareholders of this nation. As we know, when this structure was set up by the coalition—this fatally flawed structure in the wheat industry that has led to this mess—many of those shareholders were the wheat growers of Australia. They have seen their shareholding halved in value. In addition to the $290 million of their income paid directly in bribes, they have now seen the value of their shares in AWB halved. Not only that, but in the most lucrative of markets in the Middle East—and, for this industry, in the world—they have lost $500 million. We are so far over the $1 billion mark it is not funny—lost to the wheat industry of Australia courtesy of the Howard government.

AWB is threatened with four lawsuits that I know of, and the conservative estimates say it will be hundreds of millions of dollars and the outside estimates say that, if they are successful, it will be in the region of $1 billion. If that were to occur, the cost of this fiasco at this point in time is some $2 billion. There is potential for further restrictions on AWB’s trade. This scandal has cast a shadow across the great trading reputation of this country.

I say this about some members opposite: they have finally stood on their two feet and told it like it is. Members opposite and members on this side know that the member for O’Connor and I have been bitter enemies in the past—him as a minister and me as a shadow minister in another portfolio. You could say from those exchanges that we have not been political friends, but I will say this for the honourable member for O’Connor: he tells it like it is and he is a fierce defender of the wheat growers in his electorate—not like the National Party political Judases who go around the countryside promising to the wheat growers and others that they are going to do this and they are going to do that, and then they lie like a pig in straw to the constituents.

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

I remind the honourable member to withdraw that comment.

Gavan O'Connor (Corio, Australian Labor Party, Shadow Minister for Agriculture and Fisheries) Share this | Link to this | Hansard source

I withdraw that comment. Once again my anger is rising. What a contrast between the attitudes of the member for O’Connor and Senator Bill Heffernan! I have on occasions agreed with Senator Heffernan and I have worked with him to get agendas up in the Senate and to get some scrutiny on ministerial decisions. But what did Senator Heffernan say tonight? He said, ‘Let us all just move on.’ Let us all just forget about the damage to Australia’s trading reputation, the damage to farm families and the damage to Australia’s great wheat industry. Let us all move on from a catastrophe courtesy of the Liberal and National parties. The honourable member for Hume was here. He did not participate in this debate, but I know he is a straight shooter and I know what he thinks of the National Party, and it is not too far removed from the views that have been expressed by the member for O’Connor.

In conclusion, what is at stake here? It is the future of democratic practice in this country and the great doctrine of ministerial responsibility under the Westminster system that lies at the core of our parliamentary system. What breathtaking hypocrisy that we should commit Australian blood and Australian lives to a conflict on the basis that we need to engender democratic practice and systems in those countries, and yet we have to suffer what we have seen in the last 24 hours, supposedly in a jewel in democracy’s crown, this great Australian nation. All of us have been betrayed by this government—all of us on all sides of the political fence who believe passionately in the democracy that has made Australia great. The betrayal is felt not just by farm families, and I say to them tonight: we feel your pain and we feel your sense of betrayal, because this Prime Minister and his government have betrayed us as well. They have trashed our trading reputation. Australia’s international political reputation is now at stake. Australia’s wheat industry’s reputation has been compromised, and down on the farm all they can do is look in dismay at the betrayal of the Howard government.

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Regional Development) Share this | Link to this | Hansard source

This government stands charged with incompetence. The Cole commission has not cleared it of that charge, because the government would not allow that commission to hear that charge. This is a government, I remind the House, that has a history of lacking in probity. Remember the ministers who had to resign, and the many others that should have resigned, because they did not comply with the Prime Minister’s code of conduct—a code of conduct that was ultimately trashed because the Prime Minister could not stand any more resignations. That is the government’s commitment to probity. This is a government that will go on the international circuit and lecture other countries about the need to get their systems of probity in order, but it does not practise that itself.

But this is no ordinary incompetence; this is an incompetence that has cost the nation dearly. It has cost the taxpayer almost $300 million. It has cost the wheat growers $500 million in lost contracts so far. And AWB shareholders have lost half the value of their investments. This is a government that has the gall to lecture people about good economic management. What sort of economic management can achieve that outcome? A management asleep at the wheel, one that thought it did not have to attend to these issues but is costing the nation dearly.

The $300 million figure was paid in bribes by the Australian Wheat Board—but, worse, it was paid to a regime the government had committed to toppling. Wheat for weapons—that is what this scandal represents. The Australian government became Saddam Hussein’s best friend. We became the biggest single source of illegal money flowing to that regime—significantly, money paid for weapons used against our troops. This is a government that should hang its head in shame. There can be no greater incompetence than achieving that outcome—incompetence that jeopardised the lives of our brave fighting troops, incompetence that cost the nation in economic terms, incompetence that cost us in credibility terms. How can this government hold its head high? Join the coalition of the willing but fund the enemy. You cannot have a greater incompetence than that. This sits, as the member for Corio has indicated, as one of the greatest scandals ever by a government in the history of this country.

Yet what is the government’s position on this? It is little wonder there have been few government members speaking in this debate. Last night they could not appear in any sort of debate or discussion about this because they were popping champagne corks, celebrating the fact that they got off. They believe and they claim that they have been cleared. And, in outrageous further audacity, they then seek an apology from those who have been raising the issues against them. The government claim that they have done no wrong. The fact is that the government on this issue have done nothing right. They are the ones who must apologise to the Australian people and to the Australian farming sector that is suffering huge economic loss against the background of already massive deprivation because of the drought and a failure by the government, through incompetence and negligence, to address one of the most significant causes of that drought: climate change. They must apologise essentially to all of those people who have been impacted, not least our fighting forces in Iraq.

The truth is that the government has not been cleared; it has been shielded by the limited terms of reference given by the government to Commissioner Cole. Those terms of reference were limited simply to criminal activity, breaches of the law—primarily by the AWB. The truth is that the AWB scandal is not just about criminal activity—important as that is to establish and to prosecute—but is also about competence, negligence and the role of ministers being held responsible for the actions or inactions of their departments, and the Department of Foreign Affairs and Trade has failed big-time.

Just look at the report in relation to that department, headed by two ministers that had to appear before the Cole commission. The report had this to say about DFAT:

... DFAT did very little in relation to the allegations or other information it received ...

Further on:

DFAT did not have in place any systems or procedures in relation to how its staff should proceed in response to allegations relating to the breach of sanctions.

That is absolutely damning. This is what the Cole commission found. But where does the buck stop? We are here in a parliament modelled on the Westminster system. The requirement in the Westminster system is that the buck stops with the minister. But these two ministers—God, you would not want any buck stopping with them! I have never seen two more embarrassing performances before any tribunal, let alone this commission. It was only a question of which one of them was worse.

For example, the performance of Mark Vaile, then the Minister for Trade and now the Minister for Transport and Regional Services, was the most embarrassing ever seen. I remember it being reported on The 7.30 Report that night. The reporter noted that Mark Vaile said he was not aware that wheat was being sold at inflated prices or that the AWB had agreed to payments whereby money went to the Iraqi regime. ‘I don’t recall,’ he said time and time again. The words also appeared 45 times in his written statement—the written record of it. How could anyone who saw that interview, and the bumbling, embarrassing performance of the minister, have faith that this was a government in charge of its responsibilities and in charge of its department?

Minister Downer, the Minister for Foreign Affairs, said he did not read his memos. What are these ministers paid for? He is the person who will always have that little snippet to use against someone else. He reads those memos, but the memos and warnings that advise him that there is something rotten going on in the AWB, he simply says he did not read. Then there was Minister Truss. This was the minister that actually, as Minister for Agriculture, Fisheries and Forestry, had responsibility for ensuring that the Wheat Export Authority enforced its obligations to protect the interests of wheat growers in relation to this fiasco. He failed completely.

Then there was the Prime Minister, who sat there and, in that knowing, controlled tone, denied that he ever was told about anything. We have seen this before. We saw it in relation to the ‘kids overboard’. We have seen the classic defence of this Prime Minister so many times: he does not want to know what he should not know. He has conditioned the circumstances in which the information that could prove embarrassing to him is not passed on. There you have it: they all do not know.

Carmen Lawrence (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

Dr Lawrence interjecting

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Regional Development) Share this | Link to this | Hansard source

As the member for Fremantle says, we do not have just one Sergeant Schultz in this place; we have a clutch of them—the four Sergeant Schultzes of Australian politics in charge not only of the prime ministership but also of trade, foreign affairs and agriculture—damned for their incompetence. That is what this report has found. But here they are, they pursue a war and they condemn Saddam Hussein but they pay him money to arm his troops.

I want to go on the record here to contrast how our government operated in relation to these UN sanctions when we were in charge from 1991 through to 1996 after the first Gulf War, through which the sanctions were imposed. I was a member of that government and I had responsibility as minister for primary industries in relation to the very industries that are suffering at the moment—the growers of this country, particularly in relation to wheat. We allowed no such rorting. I say that categorically. Gareth Evans, the then foreign minister, insisted on his department satisfying itself that the sanctions were not breached by Australian companies. In other words, we insisted as responsible ministers and a responsible cabinet that there would be no bribes paid. But not only that: we knew there was going to be a hit to the wheat growers. We saw that it was our responsibility not just to ensure that the sanctions were imposed but that the interests of the wheat growers were protected as well. As minister for primary industries, I announced ex gratia payments to grain growers so that they would not suffer.

So we protected the integrity of the UN sanctions but we also ensured that grower interests were protected as well. That is what is called taking responsibility. That is what a minister should do. But not this crowd. This clutch of ministers was warned many times—Cole has established 35 times they were told that they should investigate this matter. So not only were they not proactive in ensuring the sanctions regime was not breached; they failed to act when they were warned.

A division having been called in the House of Representatives—

It is true that the government has been found to have done nothing criminal. But the commission was not allowed to test whether they have been negligent. Any more open an inquiry would have found on the evidence that the charges of negligence and maladministration were found. The terms of reference were restricted to criminal activity. Our shadow minister wrote to the Cole commission of inquiry in March asking it to ‘determine whether Australia has breached its international obligations or whether a minister has breached obligations imposed upon him by Australian regulation’. Commissioner Cole replied that these matters were ‘significantly different’ to its terms of reference; he essentially could only seek an extension to the substantive issues which had been referred to him, not to those which were significantly different, as the issues raised by us were.

The government’s shield is paper thin. I do not believe the government did not know about the kickbacks. When I was Leader of the Opposition in August 2002—before the war but when the government was in full macho mode about invasion—I said that the reckless talk that the government engaged in would jeopardise our wheat sales. In fact, they were suspended. I was accused by Minister Downer of being an appeaser of Saddam Hussein. The AWB met with me and the government on 22 August. They said that the government should tone down its language. They then made an urgent visit to Iraq. They came back with a deal to resume the sales. We now know how. The question is: did the government know? I believe it is going to be very interesting to observe these prosecutions against the people charged. Already some of them have indicated that they will name names when they are pursued for their criminal activity. I look forward with great interest to seeing how those events unfold. In the meantime, let there be no mistake: this government has not been cleared. It stands condemned of gross negligence and gross maladministration. The country has paid for it in terms of its standing. It has paid for it economically. The wheat growers of this country have paid for it. It is a scandal of mammoth proportions and the government should be condemned for overseeing it.

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

Like Diogenes with his lamp, looking for the honest man, we look for a member of the government who accepts responsibility, whose eyes are open and who is willing to see. As in a bordello where somebody says ‘No sex going on here’, nobody knows. All is silence, all is ignorance, all is unpreparedness to accept the reality of what is happening under the government’s nose.

Joanna Gash (Gilmore, Liberal Party) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Speaker –

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

I expect the member for Denison to be moving that we now adjourn.

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

I move:

That the debate be now adjourned.

Question agreed to.