The Terence Cole inquiry has drawn indirect
links between the government and the Wheat Board’s kickbacks to the Saddam
Hussein regime, but nothing of real consequence so far. It’s partly because the inquiry’s terms of
reference are so tightly specified – but also because no AWB document as yet
implicates the government directly in any wrongdoing.

Still, there is another rock to be turned
over before the issue is settled. In
sales to dodgy international customers – and there would have been few more
dodgy than Iraq under Saddam – the AWB takes out insurance against the
possibility of non-payment. The
Australian Government insures these types of wheat sales, through the Export Finance
Insurance Corporation (EFIC), an agency in the Foreign Affairs and Trade
portfolio that comes under the wing of Trade Minister Mark Vaile.

EFIC does two types of insurance – normal
insurance, provided on commercial terms, and so-called “National Interest”
cover. National interest insurance is
for transactions too risky even for a state owned financial institution to take
on, and the risk is passed on to the government as a whole. These national interest transactions are
considered and approved at the highest levels of government.

There is a well rehearsed interdepartmental
stoush over such proposals: broadly speaking, the economic departments argue
that the taxpayer should not bear the risk, the agriculture and trade
departments argue that passing profits to farmers and leaving risks with
taxpayers is a time honoured Australian tradition. Ministers referee the arguments and take the
final decisions on the insurance cover.

It would be surprising if the transactions
being considered by the Cole inquiry had somehow escaped this net. If they were part of the national interest

Ministers should have had their attention
drawn to the price that the Iraqis were prepared to pay for AWB wheat. The
contract price information, available then as it is now, has certainly led
counsel for the inquiry to ask questions. It is of course possible that nobody
at the time asked why the price was so high. Even if they did, it is also possible that the AWB convinced the
government and EFIC that the inflated price was due solely to the AWB’s superior
negotiating skills. The point remains
that the government had information that, had they been so inclined, might have
raised at least a suspicion of a possibility of kickbacks being involved.

If EFIC did cover this shipment, the next
question is whether it sought assurances from the AWB that there was no
corruption involved. EFIC has a
corporate responsibility code under which it is committed to “informing
applicants [for insurance] of the legal consequences of engaging in bribery”
and “requiring applicants to provide a “no bribery” declaration in certain
instances”. EFIC does not specify what
these instances might be. Did they ask
the AWB to provide a “no bribery” declaration for its wheat sales under the oil
for food program? Let us hope the Cole
inquiry finds out.