Former DFAT chief economist Peter Urban writes in the Fin today: “If ‘should have’ were a crime, I would have been sentenced to life several times over.”

says that’s exactly what Paul Volcker’s report on the UN Food for Oil
program accused the Australian Wheat Board of. “To make matters worse,”
Urban says, “AWB will never be able to prove it didn’t know. No one can
prove such a negative.”

Urban says America’s wheat lobby and its
allies in Congress and the Iraqi government are making a song and dance
about the matter for selfish, competitive reasons of their own. Or is
there more to it?

In The Australian,
legal affairs editor Chris Merrit says AWB directors may be legally at
risk because they failed to detect that $US222 million of company money
had been diverted to Saddam Hussein. Elsewhere in the paper Mark Emons,
the former executive at the centre of the Iraqi kickbacks scandal,
claims people at all levels of AWB knew about payments to a Jordanian
trucking firm since revealed as sham transactions to funnel millions of
dollars in bribes to Saddam Hussein .

Shadow Minister for Foreign Affairs Kevin Rudd continued his calls for a Royal Commission on the matter on Lateline last night. Ray Brooks from Brooks Grain, a long-term critic of the AWB, told Radio National’s Breakfast program
this morning that the Iraqi wheat scandal is symptomatic of a rotten
trading system. He said a Royal Commission is the only type of inquiry
that will free former AWB staff of the requirements on confidentiality
agreements and let them discuss the grain marketer’s conduct freely.

Government says there is insufficient evidence to conclude that the AWB
had actual knowledge of trucking company Alia’s partial ownership by
the Government of Iraq, the fact that Alia did not actually perform
trucking services or the fact that Alia remitted payments from AWB to
the Iraqi Government.

But according to the Volcker Report,
Iraq’s former Trade Minister has recalled that AWB paid
after-sales-service fees on all contracts where such fees had been
levied, that AWB’s payments to Alia were tantamount to payments to the
Iraqi Government for nominally the provision of inland transportation
services and that AWB did not advise the UN that it was making payments
to Alia for inland transportation costs.

The first several
contracts submitted for UN review and approval advised that payments of
“discharge costs” would be paid to unnamed “maritime agents.”

The relationship between AWB and Alia bore little resemblance to an ordinary arms-length commercial relationship.

there a smoking gun? There’s enough for a 21 gun salute! Numerous
documentary and circumstantial warning signs placed AWB on notice that
payments to Alia may have been illicitly funding the Iraqi regime:

  1. Alia’s general manager thought that AWB knew that Alia did not provide actual transportation services.
  1. The Iraq Grain Board selected Alia.
  1. AWB made the requested payments to Alia according to a non-negotiated fee schedule.
  1. AWB did not initiate discussions for or negotiate a contract with Alia.
  1. AWB did not contest the sharp price increases for trucking because
    the change was “revenue neutral” for AWB – it was incorporated into the
    price charged for wheat and recovered.
  1. AWB was aware that the Iraqi Government had chosen Alia and was
    therefore alerted to the prospect that these sudden increases would
    benefit the Iraqi regime.
  1. AWB was aware that the price for Alia’s transport services was determined by the Iraqi Government, not by Alia.
  1. AWB General Manager Michael Long knew that Iraq’s Ministry of
    Transportation set the price for Alia’s inland transportation charges
    and Michael Long admitted he was informed of the transport price during
    visits to the Transport Ministry.
  1. This role should have alerted AWB to the probability that the
    Transport Ministry derived some benefit from AWB’s payments to Alia.
  1. AWB had no documentation describing logistical details of Alia’s trucking services.
  1. AWB took no steps to investigate or clarify Iraq’s documents –
    notwithstanding that the documents should have raised concerns over the
    fact that Iraq State Company for Water Transport was complaining about
    non-payment of fees by AWB to Alia, suggesting AWB’s awareness that the
    Iraqi Government was privy to its specific payments and arrangements
    with Alia and that the Iraqi Government possibly was the actual
    beneficiary of those payments; a fax stated that funds were to be
    remitted to the Iraq Grain Board and /or the Iraq State Company for
    Water Transport through Alia; Alia sent a fax marked “URGENT” to AWB
    warning that the Iraq State Company for Water Transport informed us
    that “you should credit their account” immediately today and that Alia
    specified that AWB should confirm that it would send the fee to Alia so
    “we can notify the Iraq State Company for Water Transport that we have
    received the amount.”
  1. This exchange of correspondence again suggests that AWB was placed
    on notice of the Iraq State Company for Water Transport’s interest in
    payments made by AWB.
  1. AWB was copied on numerous invoices sent by the Iraq State Company
    for Water Transport to Alia that related to the collection of
    transportation fees on AWB’s contracts.
  1. Many of the invoices received by AWB were printed on Ministry of
    Transportation letterhead and signed by a senior Iraq State Company for
    Water Transport officer.
  1. None of the invoices indicated that Alia actually was expected to provide or arrange inland transportation services.
  1. AWB’s correspondence with the Iraq Grain Board indicates that AWB
    routinely informed the Iraq Grain Board of the timing and details of
    its transportation fee payments to Alia.
  1. These documents again suggest AWB’s awareness of the Iraqi Government’s high degree of interest in AWB’s payments to Alia.
  1. The Iraq Grain Board occasionally reminded AWB of its obligation to pay transportation fees.
  1. The Iraq Grain Board noted that, once these payments had been made, AWB’s ships would be permitted to discharge.
  1. Another AWB document reflects a communication from one AWB employee
    to another AWB employee that the Iraq Grain Board was “looking for”
    inland transportation fees.
  1. In a telex, an AWB employee complained that AWB did not wish “to be
    threatened to stop vessel[s] from sailing unless trucking fees were
    received” and warned that “any discussion/message concerning
    trucking/and trucking fees should be sent only repeat only from your
    office in Jordan to myself or Mark Emons’ home fax – not by telex to
    AWB office and not from Basra.” In the same telex, the AWB employee
    also noted that he would send Alia “wording of 7 letters to cover
    trucking fees.”

AWB representatives admitted to the
Volcker Committee that these documents raised at least
“debatable”questions about whether Board employees should have known
that AWB’s payments to Alia were channelled to the Iraqi Government.

aspects of the AWB-Alia relationship, as well as the nature of the
documents received by AWB and discussed above, suggest that some
employees of AWB were placed on notice of facts strongly suggesting
that AWB’s payments were in whole or in part for the benefit of the
Iraqi Government and should have signalled AWB officials to the
probability that the Iraqi Government stood to illicitly benefit from
AWB’s payments to Alia.

Then there’s DFAT. AWB wrote to Foreign
Affairs that “Jordan based trucking companies are responsible for
arranging trucks at [the] discharge port” and that it wished to enter
into a “commercial arrangement” with “the Jordan trucking companies” to
“ensure that there are enough trucks to enable the prompt discharge of
Australian wheat cargoes.”

An official of DFAT replied that it
could see “no reason from an international legal perspective” why AWB
could not enter into an agreement with a Jordan-based company.

A Royal Commission might.