Senator McLean (New South Wales) (12.57pm). Mr Deputy President, I am sure we are very well aware of that. As honorable senators will be aware, I have in the past drawn the attention of the Senate to the activities of the ICLE Bank more correctly and f ully known as the Institutes Nazionale Di Credito Per II Lavoro Italiano All'Estore; I hope my Italian is interpretable and the commonwealth Bank of Australia in relation to the downfall of the mineral water company, Huon Valley springs Proprietary Limite d and the charges of fraud brought against the founder of Huon Valley Springs, Miss Donna Marie Batiste. Today I would like to draw the attention of honorable senators to a potentially much more serious state of affairs involving the former parent company of ICLE Bank, namely, the Banca Nazlonale del. Lavoro, The Commonwealth Bank and the Australian European Finance Corporation, now a wholly owned subsidiary of the Commonwealth Bank.

In February this year the manager of the Atlanta Georgia branch of the Banca. Nazionale del. Lavoro, or the BNL, one Mr Christopher Drogoul, and nine others were indicted by a United States federal grand jury charged with making more than $US4 billion in unauthorised loans. The recipient of those unauthorised loans was the Iraqi regime of President Saddam Hussein and the period over which they were issued was between February 1988 and July 1959. Those are significant dates because, as I will explain in more detail in a moment, for much of that period the Commonwealth Bank of Australia was in partnership with BNL through its holdings of the merchant bank, the Australian European Finance Corporation.

Newspaper reports on the scandal claim that investigators in the United States have now established that more than 25 per cent of the funds had been backed by the Commodity Credit Corporation, an arm of the Department of Agriculture which provides guar antees to help sell US farm products. But rather than helping American farms, intelligent officials now say that the money was used by Baghdad to fund its chemical, biological and nuclear missile projects. It is established that some of those funds went t owards producing the Condor II missile, which is capable of carrying a nuclear payload to Jerusalem and other Israel cities.

Other BNL funds financed the chemical weapons which killed 5,000 Kurds in northern Iraq in 1988, the invasion of Kuwait and the Scud missile attacks on Israel and Saudi Arabia during the Gulf war. During an arms embargo against Iraq. BNL Atlanta suppli ed funds which bought 40 electronic trigger devices, discovered by British Customs on route from the United States at Heathrow in March 1990, which were probably destined for the Condor II missile. It is believed the BNL funds were also used to develop Ir aq's so called 'super cannon', a device also designed to deliver chemical and nuclear warheads. The super cannon's inventor, 62 year old Canadian rocket scientist, Gerard Bull, was assassinated in Brussols shortly before British Customs discovered the tri ggers. Parts of Bull's cannon, manufactured in Sheffield and said to be destined for an Iraqi oil pipeline, were also impounded by British Customs. Twelve months before Bull's murder, his company, Space Research Corporation, had been linked to Iraq's netw ork of European companies supplying missile technology financed by funds from BNL.

Investigators in Rome have identified more than 20 American, British and European companies which ignored the Iraqi arms embargo. News reports in both Rome and London say that within hours of the BNL scandal breaking in 1989, the Chairman, Nerio Nessi, and General Manager, Glacomo Pedde, resigned claiming innocence of the Atlanta dealings. However, since June that year, they and four other senior BNL officials had been under investigation by Italian authorities for involvement in an illegal arms deal w ith Iraq's warring neighbour, Iran. Investigations on both sides of the Atlantic are continuing.

IN the United States the House Banking Committee is grilling officials from a range of government agencies to establish whether knowledge of the illegal loans extended as far as the Executive Office. The United States Attorney General. Dick Thornborgh has warned that the BNL affair raises national security concerns. But despite this warning Banking Committee Chairman, Henry Gonzales, is pressing ahead in the face of strong pressure from the Bush Administration to stop.

I have recently travelled to Washington to meet with representative Gonzales to raise with him the question of any possible Australian Involvement in the BNL Atlanta scandal questions which I am sure every responsible Australian will want answered. My major concern is to establish whether any Australian money was illegally funneled though the Atlanta branch of the BNL, money which may have gone towards the purchases of arms which were then arrayed against our own Australian servicemen during their supp ort of the allied offensive in the Gulf. My fears arise from the fact that the Commonwealth Bank of Australia that is our people's bank was in business with BNL Atlanta was illegally financing the Iraqi war machine. In fact, during my talks in Washington, I was told that some of the weaponry purchased with those Atlanta funds was deployed against allied forces during the Gulf war, including Australian sailors.

In the 1980's when the scandal really began, Western governments, led by the United States, turned a blind eye as Saddam Hussein went on a buying spree which was to make his army the third best equipped in the world. So much money flowed into the Iraqi coffers that the US congressional investigators now believe that the National Security Agency, the CIA and the Defense Intelligence agency were deliberately looking the other way. American banking regulators are now speculating that the banking scandal g oes all the way to the White House. A Cable Network News report quotes the US Justice Department as saying that much of the Atlanta money came from many of the West's leading and most trusted financial Institutions, including the Banque Nationale de Paris , Barclays, National Westminster, the Bank of Tokyo, the Fiji Bank, Mitsubishi and American Express. According to top secret records of the transactions lifted from the so-called 'grey books' of the Atlanta branch of BNL, even Israeli banks lent to Iraq's weapons fund.

What most Australians do not know is that for much of the period from February 1988 to July 1989 when the Atlanta branch of BNL was illegally and secretly financing the IRaqi war machine, BNL, the Banque Nationale de Paris and the Dresdner Bank AG wars partners with the Commonwealth Bank. All held equity in what was then Australia's only consortium merchant bank, the Australian European Finance Corporation Ltd, AEFC, established in 1970 and ranked in Australian's top four merchant banks with total asse ts of almost $A2.5 billion. The Commonwealth Bank had a majority 51 per cent shareholding.

In March 1989, five months before news of the Atlanta BNL scandal leaked, the Commonwealth Bank bought out its partners for an estimated $A48m. The takeover was instigated by the Commonwealth Bank with none of the three other partners voluntarily pulli ng out. The Commonwealth Bank was moved to defend its actions in the light of the claims by some banking analysts who expressed doubt ever the funding of the purchase at a time when the banking industry was entering a period of rationailsation and contrac tion.

During that same period, BNL was 70 percent owner of the ICLE Finance

Corporation Ltd, a merchant bank established in Australia in April 1986.

Among the directors of the ICLE bank at that time were

Franco????????????????????????????????????????? the giant construction business Transfield and co-builders of the Sydney Harbour tunnel. Belgiorno-Nettis and Salteri also held more than two million of the five million issued shared, all but two of the remaining three million being held by the BNL.

I mentioned at the start that I had in the Senate previously named the ICLE Finance corporation, BNL, The Commonwealth Bank and AEFC in relation to the collapse of the Huon Valley Springs mineral water company. Journalists Tony Dickinson and Jerry Corn ford first raised the Commonwealth Bank BNL link with me. I thought it serious enough to go to Washington to have discussions, with representative Henry Gonzales, who is the Chairman of the United States house committee on banking. During my banking talks with him, I outlined my fears that Australian money may have found its way to Saddam Hussein via the Atlanta BNL connection and may have been used to purchase weapons that were later lined up against our boys in the Gulf. Representative Gonzales told me that it was very possible that Australian money had been funneled through BNL Atlanta and he has undertaken to have his staff thoroughly search all available transaction records in the grey books in an attempt to establish whether this was, in fact, the c ase. Representative Gonzales also urged me to investigate possible Australian involvement in the current Bank of Credit and Commerce International scandal, due to that bank's high profile in the South East Asian region.

It was because of all this that yesterday I asked the MInister for Foreign Affairs and Trade, Senator Gareth Evan's, as the Minister representing the Treasurer whether the treasury is aware of the business links between the Commonwealth Bank and the BN L via the Australian European Finance Corporation during the majority of the period that BNL's Atlanta branch was issuing unauthorised credits to Iraq.

I also ask whether the treasurer will undertake to inquire whether any money from the Commonwealth Bank of Australia, BNL Australia or the Australian European Finance Corporation was illegally funded to Iraq via the BNL Atlanta Georgia Branch and wheth er it was used to purchase weapons which were later deployed against our servicemen in the Gulf? I further ask: Will the treasurer establish whether, during that period, the ICLE bank, which was at the stage 70 per cent owned by BNL, or any other

Australian financial institution may have wittingly or unwittingly provided funds which were later to be forwarded illegally to Iraq by the BNL Atlanta Georgia Branch?

The Lima Declaration

The Second General Conference of the United Nations Industrial

Development Organisation (U.N.I.D.O) met in Lima, Peru, during the period March 12/26, 1975, this resulting in a declaration which has provided the blueprint for what has subsequently happened to Australian industry. The basic reasoning behind the decl aration was that the drastic plight of the Third World was the result of the rapacious policies of the advanced industrial nations. Australia listed as one of these. The only way to rectify the situation was to transfer industrial resources from the advan ced to the Third World, and then to provide markets for Third World exports, buying products once produced locally. The Fraser Government took over where the Whitlam Government left off, with Malcolm Fraser extolling the virtues of the programme under the guise of "The North-South Dialogue." The Hawke-Keating Government has increased the tempo of the programme, Hawke, Keating,

Button and other senior ministers frankly telling Australians they are working to INTERNATIONALISE the Australian economy.

MORE THAN HALF OF AUSTRALIA'S MANUFACTURING CAPACITY HAS BEEN DESTROYED SINCE 1974. And the destruction continues, while Australian imports vast quantities of goods once produced locally. In 1970 there were approximately 300,000 farmers. THERE ARE NOW ONLY 125,000, WITH THOUSANDS MORE DOOMED TO DESTRUCTION UNDER THE HAWKE-KEATING STRATEGY.

The following are the main recommendations of The Lima Declaration:

(35) "That special attention should be given to the least developed countries, which should enjoy a net transfer of resources from the developed countries in the form of technical and financial

resources as well as capital goods, to enable the least developed countries in conformity with the policies and plans for development, to accelerate their industrialisation."

(41) "That the developed countries should adhere strictly to the principle that the Generalised System of Preferences must not be used as an instrument for economic and political pressure to hamper the activities of those developing countries which pro duce raw materials;"

(43) "That the developing countries should fully and effectively participate in the international decision making process on international monetary questions in accordance with the existing and evolving rules of the competent bodies and share equitably in the benefits resulting therefrom;"

(52)

"That developing countries should devote particular attention to the development of basic industries such as steel, chemicals, petro-chemicals and engineering, thereby consolidating their economic independence while at the same time assuring an effecti ve form of import substitution and a greater share of world trade;"

In order to achieve the above recommendations, The Lima Declaration advocated the following Plan of Action:

(59) the development countries should adopt the following measures:

(a) Progressive elimination or reduction of tariff and non tariff barriers, and other obstacles of trade, taking into account the special characteristics of the trade of the developing countries, with a view to improving the international framework of the conduct of world trade...

(b) Adoption of trade measures designed to ensure increased exports of manufactured and semi manufactured products including processed agricultural products from the developing to the developed countries:

(c) Facilitate development of new and strengthen existing policies, taking into account their economic structure and economic, social and security objectives, which would encourage their industries which are less competitive internationally to move pro gressively into more viable lines of production or into other sectors of the economy, thus leading to structural adjustments within the developed countries, and redeveloped of the productive capacities of such industries to developing countries and promot ion of a higher degree of utilisation of natural resources and people in the latter;

(d) Consideration by the developed countries of their policies with respect to processed and semi processed forms of raw materials, taking full account of the interests of the developing countries in increasing their capacities and industrial potential s for processing raw materials which they export;

(e) Increased financial contributions to international organisations and to government or credit institutions in the developing countries in order to facilitate the promotion of financing of industrial development. Such contributions must be completely free of any kind of political conditions and should involve no economic conditions other than those normally imposed on borrowers.

To Section (e) was added the following rider; "Urgent consideration of the question of re-scheduling of debt servicing of long outstanding debts, their conversion, if possible, into grants and granting favourable treatment to the industrial and financi al requirement of the developing countries most seriously affected by the present economic crisis..."