Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

On behalf of the Attorney-General, I table a statement on the Report of the inquiry into certain Australian companies in relation to the United Nations Oil-For-Food Programme, together with the report.

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

by leave—I move:

That the Senate take note of the documents.

Today the parliament received the five-volume report of the royal commission into the wheat for weapons scandal. It is interesting that the government in the Senate did not even bother to make a ministerial statement in this chamber. We can only imagine how long the report might have been if Commissioner Cole had been given full and adequate terms of reference by this government to examine the whole story that underlies the wheat for weapons scandal. Instead, the government has rorted the terms of reference and from the outset used the inquiry to deflect scrutiny from its negligence and incompetence.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

We should have looked at the UN, they’re the crooks.

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I know, Senator Heffernan, that you think bribing people is appropriate behaviour but we do not. What this report will clearly show is that this scandal is among the biggest in public administration in this country. The government has ignored the national interest. It has refused to be held to account and it has proven that it governs in its own political interests—not in the interests of Australia.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

Put your heart into it.

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Go back to tracking paedophiles, you grub. Get out of here.

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Evans.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

Put your heart into it.

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

You ought to go and get treatment, Senator.

The Acting Deputy President:

Senator Heffernan, please desist.

Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. I should not be baited by Senator Heffernan but his behaviour is beyond the pale. The government only allowed Commissioner Cole to make determinations about whether three Australian companies had breached Australian law. The terms of reference prevented the commissioner from making determinations about whether ministers met their obligations. In March, the solicitor assisting, in a letter to the shadow foreign minister, confirmed that the commission did not have terms of reference enabling it ‘to determine whether Australia has breached its international obligations or a minister has breached obligations imposed upon him by Australian regulations’. There you have the solicitor assisting making it clear that Mr Cole’s terms of reference did not include the capacity to look at the actions of the ministers. The letter goes on to indicate that those matters are ‘significantly different to that in the existing terms of reference’.

So when we hear John Howard, Alexander Downer and Mark Vaile saying that the inquiry has cleared their government, we know it has done nothing of the sort. We know from the solicitor assisting that the matters investigated and reported on by the commission were significantly different to whether or not ministers had met or breached their obligations. The government has cynically claimed that its own role has been reviewed and that there has been transparency, scrutiny and accountability. What absolute nonsense. The government went into damage control when it received the request from the UN and set up the inquiry on its own terms to try to limit the damage. This has been about damage limitation, not about a full, transparent case of scrutiny and accountability.

The government rorted the terms of reference to prevent scrutiny of its role and extended its cover-up to the Senate. For three successive estimates rounds, the government has prevented public servants from answering questions from senators on the wheat for weapons scandal. The government has not allowed the Senate to play its role and inquire into what occurred inside the bureaucracy. It is one of our core functions. It is one of the reasons that the estimates process has been established and serves this country well, but the government has point-blank refused over the last year to allow the Senate to fulfil that function. It was a convenient excuse to prevent proper examination of it and its departments’ activities. This went ahead, I might add, despite Commissioner Cole’s statement that such inquiries at Senate estimates committees would not disrupt his inquiry. So in spite of the cover-up, the rorted terms of reference and the gag on estimates, these facts remain. These are facts that the government cannot walk away from.

Australia’s monopoly wheat exporter passed $300 million in bribes to the Saddam Hussein regime. AWB was the biggest single rorter of a sanctions regime designed to provide food and medical and humanitarian supplies to the people of Iraq—$300 million and the biggest rorter. The Department of Foreign Affairs and Trade, headed by Mr Downer and Mr Vaile, approved the contracts that contained the bribes. Australian regulations regarding the oil for food program only allowed Australian companies to export to Iraq under a permit issued by the Minister for Foreign Affairs where, ‘The Minister is satisfied that permitting the exportation will not infringe the international obligations of Australia.’

Under this regulation, Foreign Minister Downer approved 41 AWB contracts over a five-year period. This is not a question of the minister perhaps missing something or, in a rush, not noticing the detail; nor is it a question of it being an occurrence that was not brought properly to his attention. The minister approved $300 million in bribes and 41 contracts. This is a scandal on an enormous scale. This is bribery, fraud and breach of the UN obligations on a scale not seen in any other country. The Howard government was warned about the bribes—not once, not twice but on 35 separate occasions. On 35 separate occasions, reference was drawn to concerns. This included reports and cables from Australian officials and warnings from other countries. It was a hot issue in the US about how we were getting away with it. On 35 separate occasions, reports, cables, warnings were ignored: hear no evil, see no evil.

Despite claiming ignorance of sanctions busting by the AWB, the Prime Minister used Saddam’s corruption of the oil for food program as a pretext for committing Australian troops to the invasion of Iraq. Ironically in Iraq our troops faced an insurgency in part funded by the $300 million we paid them. They were able to arm themselves with the money we were bribing them with. How do you think the Australian Defence Force feel about that?

This has been the worst corruption scandal in Australia’s history, with hundreds of millions of dollars funnelled to the Saddam Hussein regime under contracts approved by the foreign minister of this country. It has done immeasurable damage to Australia’s international trading reputation, and that price is being paid by wheat farmers across Australia. What does this say about morality, responsibility and accountability in politics in this country? In question time, again, the government was trying to take the moral high ground about its commitment of troops to Iraq without UN approval by saying: ‘Saddam Hussein was a butcher. We’ve done the good thing by getting rid of Saddam Hussein.’ There is no question that Saddam Hussein was a butcher. There is no question that the world is better off without him being in power.

The government is trying to take the moral high ground when the whole justification for the invasion of Iraq was based on a lie—that of Saddam’s weapons of mass destruction. AWB has been exposed as having profited over many years by breaching, rorting and paying bribes while we lectured the world on best practice in governance. We committed troops, we continued to breach sanctions and we ignored 35 warnings from various departmental advices inside the government that said there was a problem. Where is Australia’s standing? Where is the morality? After what occurred under this government’s watch, how can we hold our heads up with any pride in our ability to maintain proper standards of accountability in this country?

We committed troops to a war against a force that had been sustained by our rorting and our bribes. It is a scandalous situation—as I say, one that has not been seen on this sort of scale before in Australian public life. I think the question to ask now is: will there be any ministerial accountability for this? Will any minister say: ‘I take responsibility for this. I should’ve done better. I should’ve known. I should’ve heard the warnings’? You can bet your bottom dollar, no.

John Howard threw out ministerial accountability about 8½ years ago. No-one has taken responsibility for anything in the last eight or nine years. No minister has taken responsibility for anything that has occurred in their department or on their watch. Again, we will have the same here. It will all be somebody else’s fault: ‘Nothing to do with us.’ If it is not the former Labor government’s fault it will be somebody else’s fault. The government will take no responsibility for the largest scandal in Australian public administration we have ever seen, because they refuse to own up to their responsibilities. They had the National Party mates club rorting this system, bribing Saddam Hussein’s government, and now they will not take any responsibility for their actions. (Time expired)

George Brandis (Queensland, Liberal Party) Share this | Link to this | Hansard source

Contrary to the rather ignorant remarks that have fallen from the Leader of the Opposition in the Senate just now, the government has taken responsibility in relation to this matter in the most direct, immediate and transparent way, and that is by establishing the Cole commission to thoroughly investigate the scandal. Let there be no doubt about this. This is a great scandal—one of the great scandals of Australian history. But it is not a political scandal; it is a commercial scandal. It is conduct of an egregious character engaged in by AWB Ltd, a commercial enterprise no longer, nor at the time of these events, a government owned corporation.

In the report of his inquiry, tabled in the House of Representatives within the last hour, Mr Cole, a commissioner whose independence, integrity and thoroughness are not subject to dispute, has made some key findings. I will turn to them in a moment. Let me read onto the record what Mr Cole said about the context of his inquiry. He said this:

... 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 shining the bright light of this independent public Inquiry over AWB’s conduct.

So who would you believe? Would you believe the cheap rhetoric of the Australian Labor Party, who claim that this is a cover-up? Or would you believe the observation of the independent commissioner who subjected these events to a searching inquiry lasting for 76 hearing days, who produced a five-volume report nearly a foot thick, who has no axe to grind and no end in view but to expose the truth? Of course Mr Cole is the man who speaks with authority on these matters. He speaks with more authority than anybody else in Australia, and his assessment is that the inquiry has shone a bright light on AWB’s conduct.

I, of course, have not had time to absorb the contents of these five volumes in the last hour or so—but I understand that the commissioner recommends that several individuals, most of them officers or former officers of AWB Ltd, be referred to the Director of Public Prosecutions so that the criminal law may take its ordinary course. But, the significant—because, as I said at the start of this contribution, this may be a commercial scandal but we now know as clearly as can be from Mr Cole that this is not a political scandal—finding on Mr Cole’s part in relation to the allegation of governmental and political involvement is this. Let me read from paragraphs 6.26 and 6.27 of the report:

I—

that is, Mr Cole—

closely examined the role of the Commonwealth, and particularly that of the Department of Foreign Affairs and Trade, in relation to the operation of the Oil-for-Food Programme, with particular emphasis on the Department’s role in the export of wheat to Iraq by AWB during the programme.

I found no material that is in any way suggestive of illegal activity by the Commonwealth or any of its officers. There was thus no basis for my seeking any widening of the terms of reference in that respect.

One of the red herrings that has been tossed around with carefree intellectual dishonesty by the Australian Labor Party is the suggestion that the inquiry was artificially narrowed in its scope by a limitation of the terms of reference. Not so. That is not the truth. The truth is that on five occasions Mr Cole asked for his terms of reference to be expanded so that he could pursue what he considered to be relevant lines of inquiry. And five times, without demur, the terms of reference of the Cole inquiry were expanded. So the suggestion that this commission has had too narrow a focus does not bear scrutiny and could not be maintained by any honest person who is familiar with the history of the inquiry. As Mr Cole himself said in today’s report:

I found no material that is in any way suggestive of illegal activity by the Commonwealth or any of its officers. There was thus no basis for my seeking any widening of the terms of reference in that respect.

Not my words, not Mr Downer’s or Mr Howard’s words—Mr Cole’s words.

That is the governmental or public administration aspect or focus of the inquiry, which gave DFAT and its officers a clean bill of health. But what about specifically the political implications—the suggestion that there had been some political involvement or some breach of political duty on behalf of the ministers of the government? Mr Cole addressed that matter as well. He said, and I quote from paragraph 30.241 of the report:

... there is no evidence that any of the Prime Minister, the Minister for Foreign Affairs, the Minister for Trade or the Minister for Agriculture, Fisheries and Forestry were ever informed about, or otherwise acquired knowledge of, the relevant activities of AWB.

As well, Mr Cole found there was no evidence to support any inference that anyone had turned a blind eye to the matters the subject of his inquiry.

So those are the findings. For some months now in the political debate in this country, the Australian Labor Party has thrown around in a loose, careless and intellectually dishonest way all manner of allegations, directed particularly at the Prime Minister, the Minister for Foreign Affairs, the Minister for Trade and various other members of the government. The government’s response has been consistent. The government has merely said, ‘Let us wait and see what Mr Cole finds.’ We alone, of the 66 countries that were involved in this scandal, set up an exhaustive, searching, transparent, public inquiry. We alone, having taken that course, were prepared to rest content with its findings. Nobody in the government knew what Mr Cole was going to find—of course they did not. Because Mr Downer and the Prime Minister and others knew that they had behaved honestly and diligently throughout, because they knew they had nothing to hide, they could throw that hostage to fortune, could say on the public record, both in speeches in the House of Representatives and in the media: ‘Let us rest content and allow ourselves to be judged by what Mr Cole finds.’

But if it is good enough for the government to be judged by what Mr Cole finds then it is good enough for the opposition and the political critics of the government to be held to his findings too. His findings could not be more unambiguous: that there is no evidence of any misconduct or any neglect of duty or any turning of a blind eye at the political level, by Mr Downer, by the Prime Minister, by the Minister for Trade or by any other relevant actor; nor is there any evidence of misconduct by any officers of DFAT. There is evidence of grievous misconduct on the part of a number of individual business executives, but this, as I said at the start—as Mr Cole has now told us in clear, unambiguous language—was only ever a commercial scandal. The attempt, for opportunistic reasons, to inflate it into a political scandal does not now bear scrutiny in light of what the Cole report has told the parliament today.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I want to draw the Senate’s attention to volume 4 of the Report of the inquiry into certain Australian companies in relation to the United Nations Oil-For-Food Programme. Volume 4 covers the findings. At pages 120 to 122 the question is put in this manner:

Did AWB mislead the United Nations?

In the response to that question, the commissioner says the following things:

First, AWB denied to the United Nations and the Commonwealth that it was making payments to Iraq outside the Oil-for-Food Programme.

Second, AWB knew that the fee it was paying to Alia was not for the provision of transport services. It knew the fee was a payment to Iraq.

Third, AWB knew it was not responsible for transportation within Iraq. AWB knew it had no contract with Alia to provide transport services. It was obliged to pay a fee.

Fourth, AWB went to extraordinary lengths to hide the payment of the fee to Alia.

              …              …              …

Fifth, AWB knew that its contracts submitted to the United Nations did not reflect the true agreements it had with Iraq.

              …              …              …

Sixth, the proposition in paragraph 51 amounts to a contention that, the United Nations having imposed sanctions to prevent payments to Iraq, if told that such payments in breach of sanctions were to be made to Iraq, would have approved contracts which so stated.

That section ends:

I find that AWB did mislead the United Nations.

Mr Cole has found that the AWB misled the United Nations, so the question is: how could that happen if DFAT and the ministers were doing their job? The thing we should pay attention to in reacting to the Cole commission is the abysmal immediate response of the government. They immediately said to the world at large: ‘We were not to blame. We did not know what was occurring.’ They should be saying that there are real problems in government systems and processes, in government competency and in government’s ability to do the job that it is supposed to do on behalf of the Australian people—and they should address those problems.

One question that Mr Cole was not asked was: how could DFAT and the ministers remain ignorant of wrongdoing going on under their very noses? What is wrong with our oversight and accountability systems? What is wrong with our mechanisms? We should be able say to the Australian people, when Australia commits itself to United Nations resolutions and accountability and sanctions regimes, that there will be the ability to conduct proper oversight. The Cole commission had limited power to look at the most important player in this whole sorry AWB scandal. The government itself did not, could not and would not do the job which it is required to do, and that is to run the department properly and to properly examine the 35 separate contracts it had to look at. AWB not only misled the United Nations but also, in doing so, misled the Australian people and the Australian government. And we trusted the Australian government to make sure that they did not do so.

If the government—and two ministers in particular—had an obligation to know what was happening under their very noses and they did not do that job, they were therefore delinquent and negligent. They did not have to turn away or turn a blind eye; they were not even looking. That means incompetency. That means a dereliction of duty. What the government have to say to us senators and members, representing the Australian people, is: ‘This will not happen again. We will institute systems and processes and accountability and oversight mechanisms such that this cannot happen again.’ How do we know that this sort of scandal is not going on somewhere else if we do not have the proper systems in place to oversight these matters?

The inconvenient truth is that the government should have known about the $290 million paid to the Saddam Hussein regime. The government failed to protect Australia from breaching the resolutions and the sanctions that we had agreed to stand by. We know that the Australian coalition government has a poor accountability and probity record. As with many important issues of domestic and international concern, when it has acted it seems to have been mostly reactive and a follower not a leader. It has gone backwards on electoral disclosure, freedom of information and public accountability laws. In making progress in corporate governance and standards, it has mostly just responded to international pressure, except where it has wanted to protect revenue, where it has been proactive. In my opinion, the coalition is good at money and poor on morality and accountability. It minimises ministerial responsibility and specialises in blame shifting.

We have here a failure of the government to do the job for which it is appointed, and that is to properly protect Australia’s interests. With respect to the AWB, the Howard government has failed on three major counts. Firstly, it has failed to comply with its obligations under international law to institute to the full the OECD and United Nations conventions with respect to bribery and corruption and ensure that our law made such things absolutely prohibited. In that respect, Mr Cole has been obliged to make recommendations to increase and improve our law.

Secondly, the Howard government has failed to enforce vigilance and probity in public sector oversight and management of sensitive foreign dealings. That is not just a minor issue. The oil for food regime required the Minister for Foreign Affairs to be directly responsible for 41 contracts that were approved and which passed through DFAT’s hands, and yet on not one of those occasions was a warning taken seriously and taken up to such an extent that AWB was warned off. AWB should have been warned off from practices which—it is quite clear from the evidence—it regarded as perfectly normal commercial dealings. If that was so in one company dealing in exports from this country, how likely is it to be the case in many other companies? It seems very unlikely to me that AWB stands alone in these sorts of practices, and that therefore means that our laws and our oversight need be strengthened.

Thirdly—and I am particularly offended by this—this failure to exercise proper ministerial responsibility has resulted in a diminishing of the reputation of Australia. Because of my background and my contacts, I am very well aware of people who deal with Australia on an international basis. This scandal has affected our reputation, not because people are surprised that we have some criminals in our community—because that is perfectly well understood and expected in any country—but because they are surprised that our government systems, our government mechanisms, are so poor are that this was allowed to go on under the very noses of the department that was responsible.

The Cole inquiry should have highlighted the delinquency, the negligence, of our systems, but of course it could not do so because the terms of reference were too limited and it was solely focused on whether anyone in government knew, or was known to have known, about these matters. On that count, of course, it found that they did not know. That they did not know, to me, is the greatest failure of all. They should have known.

The Democrats call on the Labor Party to commit, if it wins the next election, to guaranteeing a return to the Westminster tradition of ministerial responsibility and to implement the recommendations of the former Senate Finance and Public Administration References Committee in respect of ministerial staff. We think that we have to return accountability in this country to a far more rigorous standard than is employed under the Howard government. Under the Howard government, money reigns supreme but accountability comes a distant second. We think that right from the start the terms of reference of the Cole inquiry were too limiting. We think that it was wrong that the Senate was prevented by the government from inquiring separately into the Cole matter through the estimates process. We are concerned that some material from the relevant bureaucrats and departments arrived too late for proper analysis and that other documents might not have been supplied. (Time expired)

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for the debate at this stage has expired. I am advised that it will appear on the Notice Paper again on Thursday of this week.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I seek leave to make a five-minute statement now.

Leave granted.

I thank the Senate. The government claims that this is not a political scandal and that there was no illegal activity. Mr Cole was not asked to find illegal activity. In the report Mr Cole stated:

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 ... criminal or civil proceedings ...

It is quite clear that many of the areas that should have been looked at in this inquiry were not able to be looked at because of the limited terms of reference. I agree with Senator Murray: there are a number of concerning areas apparent just from the very quick look at the report that we have had time for. I am greatly concerned about a number of the findings.

For a start, let us look at the incompetence in the oversight of the WEA, the Wheat Export Authority. The Cole report shows that, quite clearly, the WEA was not carrying out its functions. Paragraph 29.60 of volume 4 of the report states:

In relation to exports to Iraq, the Wheat Export Authority did not display the necessary strength or vigour.

Mr Cole, in the report, goes on to recommend:

... there be a review of the powers, functions and responsibilities of the body charged with controlling and monitoring any Australian monopoly wheat explorer. A strong and vigorous monitor is required to ensure that proper standards of commercial conduct are adhered to.

The WEA very clearly reported to the Minister for Agriculture, Fisheries and Forestry. Why were these issues not picked up? Just by asking questions at estimates, it was indicated very clearly that the WEA has a very narrow interpretation of its terms of reference and of its functions and that it was not carrying out its functions of oversight of the AWB adequately.

In looking at the whole of the issue around the AusAID payment for wheat, in the report I can find reference to the contracts, but I cannot find any direct comment about AusAID and the way that that contract was established and a decision made on it. That is exactly the sort of thing that the Cole inquiry could not adequately look into, because it looked at the government’s role and at the agency’s roles in decision making and at its failure to carry out what I believe are statutory requirements and an adequate review of the $83 million that was paid out to buy wheat. Of that $83 million, $38 million went to shipping and $45 million went to trucking—54 per cent of the money went into handling and distribution costs.

When a decision is made about the allocation of money to AusAID, there is a very rigorous process that is undertaken for allocation of that money. There are very strict requirements under the financial management legislation, and delegates must take all reasonable steps to ensure expenditure of public money provides value for money, aligns with the public interest and provides an assurance of probity. I understand that the minister takes an interest in and does not use a delegate for anything over a certain amount of money spent by DFAT on AusAID—I understand it is over $1 million. So DFAT was not carrying out its job properly. It did not carry out scrutiny of the contracts, so there was a failure in process, a failure to report to the government. In one way or another, there was a failure by the government to adequately oversee the functions of its agencies, both the WEA and AusAID.

From the less than an hour that we have had to review the report, I feel sure that the report is full of similar stories of government failure to properly carry out governance of the many boards that were involved in the decision making process. There clearly needs to be a thorough review of how agencies operated through this whole sorry saga—not just from a legal perspective, as was the undertaking of Mr Cole, but from those of their governance, their decision making processes and their oversight of these programs. Quite clearly, ministers have been failing in their duties in respect of these agencies. (Time expired)

Debate adjourned.