Speech on the Appropriation Bill - AWB Scandal

Mr DANBY (Melbourne Ports) (7.06 pm)—Tonight I want to return to a topic which has quite rightly dominated this parliament for the past month and that is the scandal of Australia’s complicity in the corruption of the Oil for Food program in Iraq. Day after day, last week and this week, we have seen the Deputy Prime Minister floundering around during question time. This week the Deputy Prime Minister has repeatedly refused to answer elementary questions about which documents were supplied to the Volcker inquiry. In question time he and the government object to giving yes or no answers.

This is a minister who does not know whether it is yes or no. He does not seem to know anything. He has not seen any of the 14 reports that warned Australia about these corrupt payments. Either he is lamentably ignorant about his own government’s actions or he has something to hide. He has refused to tell us why the government failed to acknowledge the numerous warnings it had about the behaviour of the AWB executives in Baghdad, most recently in the 2003 report by the US Department of Defense, hardly a secret report.

One wonders what all of the military attaches we employ both in Baghdad and Washington thought when they saw this report and reported it to the government. It was a case of blind eye to the telescope, deaf ear to their ear trumpets, Minister Vaile and his happy band of National Party ‘hear no evil, see no evil’ people paid no attention. The minister has refused to fulfil his basic duty as a minister, which is to give a proper account of his and his government’s actions to the House.

This week we have also seen yet another display of this government’s arrogance. The government told officials appearing before the Senate Finance and Public Administration Legislation Committee not to answer questions relating to the AWB scandal. How can we judge the appropriations that are made in this House if elementary things like bureaucrats appearing before the Senate estimates committee are no longer to be asked difficult questions? Senator Minchin refused to answer questions relating to the source and timing of this directive.

Labor’s Senate leader, Chris Evans, quite rightly pointed to this decision as a ‘cover-up aimed at avoiding accountability.’ In 30 years no government has dared appear before a Senate estimates committee with such a brazen refusal to account for its actions or to allow public servants to answer questions. Last year Labor warned this would happen when the government took over control of the Senate. Now we are seeing Labor’s predictions being fulfilled. This is an arrogant government out of touch and increasingly out of control. This government is doing everything in its power to avoid accountability in relation to the AWB scandal or, as the member for Griffith correctly called it this week, the ‘wheat for weapons scandal’.
It is not surprising that the AWB scandal is doing increasing damage to Australia’s reputation abroad and to our trade prospects and our wheat farmers. It is not the opposition, as the government weakly protests that are the cause of this; it is the minister. The very seasoned political correspondent Dennis Shanahan on the front page of the Australian today described the minister as ‘over-cautious’ and ‘uncertain’ with an ‘insufficient grasp of detail’ and an absolutely unacceptable person to be in this ministry. That was on the front page of today’s Australian. Dennis Shanahan is not always the strongest critic of the government and coming from Mr Shanahan, the chief political correspondent, surely it is a devastating indictment of the Deputy Prime Minister.
It now appears that we are going to lose $800 million of wheat sales to Iraq. The new democratically elected government in Iraq is understandably not amused to learn that the AWB has been bribing Saddam Hussein—the dictator who exiled, imprisoned and tortured them—to the tune of $300 million. It is all very well for the Prime Minister to write on behalf of individual wheat farmers and express their emotions on losing these big contracts, but if his ministers were doing their job at the time the wheat farmers would not be in the position that they are now. Why would any public official in Iraq, who was under threat of his very life at any time from the insurgents there, care less about people who provided $300 million to fund the very people who were trying to shoot them in the streets? There are plenty of other places where Iraq can buy its wheat.
Ultimately, the AWB and its National Party mates will have defeated their own purpose. By seeking to bribe their way into the Iraqi wheat market, they have bribed their way out of it. I certainly hope that is not the case, but we all know where the responsibility will lie. The Australian government may claim the AWB was a private company, but that is a fiction. The Iraqis know it is a monopoly acting on behalf of Australia. No wonder the Prime Minister has signalled that the AWB may lose is monopoly—and so it should, and I will return to that subject in a second.
It is astonishing to me, to many taxpayers and to many members of this parliament that a person who could orchestrate all of this—Mr Lindberg, who resigned—could be earning a salary four times that of the Prime Minister of Australia. How such people end up in charge of major corporations like this—dolts who ruin Australia’s trade with this part of the world for short-term interest—surpasses all understanding.
Frankly, I think there are more serious aspects to the damage this scandal has done to Australia—even more serious than the potential loss of a valuable wheat market—including the odium we will incur as it becomes more widely known that the money paid by AWB as kickbacks to Iraq was used to subsidise suicide bombers. It will become known all over the world: Australia rhetoric one way, give dough to the bad guys in reality.
In November 2004 Republican Congressman Henry Hyde’s House Committee on Foreign Affairs heard that Saddam used some $10 billion he raked in from corruption of the oil for food program to subsidise suicide bombers and to reward the families of so-called ‘martyrs’ after their attacks. Funds were transferred to an account in the Rafidain Bank in Jordan and then withdrawn by Iraq’s Ambassador to Jordan and handed over to the Arab Liberation Front. The ALF is an Iraqi funded group within the PLO which then made payments to ‘martyr’ families. Rahib Al-Maleh, an ALF operative, paid out $20 million in cheques from the same bank that our AWB money was paid into—that is, the Rafidain Bank. He told ABC’s Jerusalem correspondence, Mark Willacy, on 8 February that he would not rule out that some of that money came from the Australian Wheat Board.

We now know that the largest component of the corrupt kickbacks paid to Iraq came from Australia, from our monopoly AWB—and the government cannot prove that the AWB money did not finish up in the hands of these homicide bombers. The government protests that there is no evidence that AWB money was spent in this way. That is not true. We know from the excellent report compiled by the Iraq Survey Group, known as the Duelfer Report, that the great majority of money Saddam milked from the oil for food program was spent on illegal arms purchases. All of that money came from the illegal oil sales to Turkey, Jordan and Syria.

Duelfer tells us that the money gained from the kickbacks on food imports was not spent on arms purchases—so it must have been spent on something else. Once again, we know from Duelfer that it was spent on two other objectives of Saddam’s rorting of the oil for food program: bribing foreign politicians, like the execrable Galloway, and officials like Mr Sevan, who ran the program for the United Nations; and gaining favour with radical Islamists by making payments to the families of homicide bombers.
This is not a difficult thing to figure out. We know that the kickback money was paid into the Rafidain Bank in Amman. We know that the money to pay the ‘martyr’ families was withdrawn from the same branch of the same bank during the same period of time that the AWB payments were going in. It is not hard to join up this particular set of dots. Unless Mark Vaile himself marked the bills, he cannot prove that these tangible, discretionary funds that Australia effectively provided to the Baath regime in Iraq were not used for these nefarious purposes.

These revelations are particularly shocking for many people all around Australia, including people in my electorate who have been personally touched by the homicide bombing campaign against Israeli citizens which has killed more than 1,000 people since 2000. This is no joke, Mr Downer, foreign minister. This should be shocking to those Australians who have taken at face value the government’s rhetoric about the war against terrorism. The war against terrorism, if it is to succeed, requires constant vigilance against the ceaseless efforts of terrorist groups to get their hands on funds.

The companies which rorted oil for food and which paid kickbacks to the Saddam regime are all guilty of indirectly abetting terrorism. And the government is guilty of lacking the necessary vigilance to prevent this happening. The Deputy Prime Minister is particularly guilty. He has been completely negligent in his responsibility to see that any of the 14 reports that appeared before Volcker led to action by the Australian government to prevent this huge amount of money being rorted and used by homicide bombers.
How did this scandalous state of affairs come about? For years Australia has effectively had two foreign policies. One is the Howard-Downer policy, rhetorically pro-American and pro-Israeli, which now holds that Saddam Hussein’s regime was so evil that we had to intervene in Iraq and overthrow him, though it did not hold that view before the intervention in Iraq. As the parliamentary wit, Fred Daly, once said, ‘The Country Party has two policies: one for people and one for sheep.’ That is as true to this day as it was then. The National Party has its own foreign policy, particularly in the Middle East where it saw Saddam as a valued customer who needed to be flattered and pandered to so he would buy our wheat and, if necessary, with $300 million in illegal bribes.
This is the same two-track, doublespeak policy which sees the foreign minister condemning Syrian sponsorship of terrorism in Iraq and the Syrian regime’s occupation of Lebanon while, at the same time, it sees Australia welcoming 12 dubious Syrian diplomats for purposes which have still not been made clear but are probably linked to some murky trade deal cooked up by some mate in the National Party. By contrast, Ukraine, which has a population more than twice the size, has been begging for Australian diplomatic representation. But, of course, they, with 47 million people, do not deserve diplomatic representation.
These kinds of people are terrorising the Lebanese community in Australia, and these 12 Syrian diplomats are here for purposes that go completely against the rhetoric of this Howard government. Mr Howard and Mr Downer will be very embarrassed if these issues became more the focus of public attention, particularly the role of these Syrian diplomats and this double-track foreign policy where they subcontract all of the Middle East to the National Party so they can continue their rorts overseas.
Few Australians noticed this two-faced policy until Paul Volcker found that AWB was the biggest single source of kickbacks to Iraq under the corrupt oil for food program. Volcker revealed that the AWB paid trucking charges of $290 million to a company called Alia—a bogus trucking company owned by a wealthy Iraqi family with strong connections to Saddam. This trucking company had no trucks. It is a company that did not move one tonne of wheat off the docks at Umm Qasr and pocketed $300 million for its services. The AWB insist that its payments to Alia were approved by the Department of Foreign Affairs and Trade. If this is true, it seems hard to believe that ministers were not informed and equally hard to believe that they accepted without question that $300 million should be forked out for trucking fees to an extremely dubious trucking company.

We are yet to learn the full truth of this. It has not been proven at the Cole royal commission that ministers knew what the AWB was up to in Iraq. But even if they did not know, they are far from off the hook. It was the government’s job to know what its monopoly wheat seller was doing and the government was warned many times that these bribes were being paid to the Saddam regime. This week the opposition has documented no less than 15 occasions on which the government was warned what the AWB was up to. The UN first raised concerns about the irregular payments to the Iraqi regime in January 2000—six whole years ago. The Australian mission at the UN passed the warning to DFAT in Canberra. The UN asked again in March 2000, ‘What was going on with the Australian payments?’

In October 2000, AWB wrote to DFAT seeking DFAT’s approval for its arrangement with Alia. In March 2001, the New York Times carried this issue on its front page. We have diplomats in New York and Washington who presumably read the New York Times. It outlined in accurate detail Saddam’s misuse of oil for food, including the use ‘bogus additional charges linked to inland transportation’ or commodity contracts, including wheat. In August 2002, the then agriculture minister, Mr Truss, was warned by a prominent Victorian grain merchant that the AWB was paying bribes to the Saddam Hussein regime. He did not believe it and told this public-minded citizen to stop spreading such stories.

It reminds me of the great Jewish comedian in New York who says of people like this: they never met anyone; they never knew anyone; someone else was responsible, not them—it was a little fellow working in the basement. They never read these reports. They are paid to read these reports but they did not read them. It is a farce.
In 2003 an Australian representative on the Coalition Provisional Authority in Iraq, Michael Long, received a memorandum of instruction from the CPA asking him to identify which contracts under the oil for food program have a kickback or a surcharge, often of 10 per cent. The memorandum said:
We need to know what percentage kickback or “after-sales service fee” was involved in the Extra Fees category. Your Ministry is likely aware of this charge so please work with them to identify and indicate on the matrix.
I repeat those words: ‘Your ministry’—the Australian ministry—‘is likely to be aware of this charge.’ This was sent to an Australian official who would have read those words, and I am sure they were passed back to Canberra. Mr Long forwarded this memorandum of instruction to DFAT. Apparently no-one thought to tell the minister—blind eye to the telescope.

In September 2003 the US Department of Defense published a report on the misuse of the oil for food program. It found the AWB contracts were ‘potentially overpriced’ to the tune of $US14.8 million. Soon after, Treasury officials working on secondment in the Iraqi Ministry of Finance, as part of this CPA, forwarded a Canberra report that found that the Saddam regime required 10 per cent of the face value of the contracts to be paid directly to the regime.

Finally, in September 2004 the Duelfer report, compiled with all the resources of the CIA and based on the best intelligence available, found that Saddam used illicit funds and kickbacks through the oil for food program ‘to procure sanction military goods and equipment’. It is beyond belief that no-one in DFAT, Trade, Agriculture or the Prime Minister and Cabinet read or understood this report or that it never occurred to any of these officials to warn their ministers about its content.
If that is what happened, a lot of people should lose their jobs—not just the executives of the AWB. As the member for Wills quite rightly argued, if we were to apply the criteria of the legislation that we recently passed against the financing of terrorism, these people should be in jail and for a very long time for effectively being the biggest funder of terrorists in the Western world. We have been the biggest funder of terrorists in the Western world—Australia, a country which rhetorically, through all of its security agencies, has worked very effectively and openly against this—because one part of our government has not been watching what our wheat monopoly has been doing, despite 14 or 15 warnings.
It seems to me that the Deputy Prime Minister is in particularly hot water. It is the National Party which insists that the AWB retain its monopoly over Australian wheat sales, even though it is now a private company—a situation almost guaranteed to breed corruption. The AWB chairman at the time of the payments in Iraq, Trevor Flugge, is a former National Party parliamentary candidate. The shadow foreign minister, the honourable member for Griffith, has rightly described the AWB as the ‘National Party abroad’. It is often said that while the Liberals are born to rule the National Party are born to rort. This time they may have gone a rort too far. It is not for the first time that Liberal Party ministers have been put in the position of having to cover-up for the National Party’s trail of rorts.
Reports today suggest that the Minister for Foreign Affairs may have aided the AWB in watering down the Volcker inquiry’s findings into the AWB kickbacks to the Saddam Hussein regime. It seems that last October the minister met with the disgraced AWB CEO, Lindberg—who is paid four times as much as the Prime Minister in Canberra. It is claimed that the minister asked the then ambassador to the UN, John Dauth, to set up a meeting between AWB executives and Mr Volcker in New York. That meeting, we are told, led to a watering down of the allegations that the Volcker report eventually made against the AWB. That is an absolute disgrace if that is true. The Minister for Foreign Affairs must answer these allegations: did the minister, his office or his department meet with Mr Lindberg or any AWB officials to discuss the watering down of the Volcker inquiry; did the Australian officials at the UN have any role in trying to soften Volcker’s conclusions on AWB? s
Finally, I will turn to another casualty of the AWB scandal—the so-called single desk system of selling Australian wheat. This policy has been in existence for many years. I acknowledge that it has its supporters on both sides of politics. In the past it may have served Australian wheat growers well, but it appears that some of the benefits that the single desk has brought to wheat growers may have resulted in the longstanding practice of paying kickbacks, bribes and commissions to corrupt regimes so that they will take our wheat. It is not acceptable, either ethically or practically, for people to say that this is what needs to be done to operate in this part of the world.
What AWB, the National Party and this incompetent Deputy Prime Minister have done is to effectively shoot Australia in the foot. By paying these bribes we have alienated the current Iraqi regime, just like the ‘Big Australian’, BHP, has alienated Iraq forever and prevented Australia from getting any access to the Halfayah oilfields. Why would they give access to Australia when BHP on the one hand tried to give a soft loan to Saddam of $100 million in 1997 or made the so-called charitable donation through its front organisation, Tigris Petroleum, of one million tonnes of wheat—$5 million worth—in 1995? It is absolutely unacceptable.

In a free market economy, state monopolies should not be acceptable either. The days of the single desk are numbered. Australian wheat growers need to face that fact. In fact, I am sure that they will do much better with a whole series of companies representing them honestly abroad.