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 process, 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’s hope the Cole inquiry finds out.

Peter Fray

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