UPDATE - OCTOBER PART ONE 2006

The Australian Wheat Board (AWB) Commission of inquiry by Terence Cole Q.C. into kickback payments IRAQI wheat contract. 

We have major fears that the anorexic terms of reference for the Cole inquiry set down by the John Howard - Mark Vaile - Liberal-National Coalition Government is to protect their relevant ministers and bureaucrats from prosecution for being involved in serious criminal cover ups.  We hope the long term friendship between Mr. Cole  and Mr. Howard does not lead to the Commissioner perverting the course of justice.

Why has Commissioner Cole refused to demand the widest terms of reference for his inquiry?

It is important to note that the following evidence into the AWB at the major concerns in the Cole inquiry should be highlighted.

EMAIL TO RICK WILLIS - COMMISSIONER COLE'S SECRETARY

The following email was sent to Rick willis - Commissioner Cole's Secretary.  This evidence has not been released to the public.  We find it rather questionable that the majority of evidence released by Commissioner Cole appears to deflect blame away from the Howard Government and lumping it all in the direction of the AWB.

AUSTRALIAN WHEAT BOARD

Are you aware that the Australian Government headed by prime Minister John Howard, and his Trade Minister & Deputy Mark Vaile, have placed restrictions on who can be called to give evidence to the Terence Cole (Q.C.) Commission of Inquiry into the "Oil for Food Program" of which some executives of the AWB (Australian Wheat Board) have admitted they paid $300 million in kickbacks to Saddam Hussein?

It has been reported that Saddam utilized the kickbacks to buy weapons to use against the American, British and Australian troops, not to mention the $25,000 rewards given to suicide bombers.  This is a bigger cover-up than "watergate."

The Australian Government's cover-up involves their failure to give Commissioner Cole the widest terms of reference for his Inquiry.  In other words, Mr. Cole is powerless to call Government Ministers or their bureaucrats to give evidence, if any, regarding their knowledge of the AWB kickback scams.

We cannot believe the United States and British Governments continue to turn a blind eye to the cover ups by the Australian Government, especially when you consider more than 100 British troops and 2,000 plus American troops have lost their lives fighting in Iraq.  One must remember the AWB paid kickbacks to Saddam while Iraq had sanctions placed on them by the United Nations.

The Howard Government appointed Tim Besley as the CEO of their Wheat Board Regulator, knowing full well that Tim was sacked in the 1970's as the CEO of Customs for lying to a Federal Senate Committee for attempting to pervert the course of justice by protecting the then colleagues of our present Prime Minister John Howard.  Placing Tim Besley in charge of any Government Agency is akin to leaving a vampire in charge of the blood bank.

In closing, on Tuesday February 26, 2006 (Sydney - Australia time), one of our leading newspapers, the "Sydney Morning Herald" report said, "I thank him, and I congratulate him on a very successful mission" - the Prime Minister on his Deputy Mark Vaile's dash to Baghdad to save Australian Wheat contracts.  This type of statement by John Howard could well be construed by our allies to mean that the Australian Government is more concerned with retaining Wheat contracts than the lives of our troops.

On Saturday, March 4, 2006 Australian time, Prime Minister John Howard granted Commissioner Cole a two month extension in the AWB "Oil for Food Program" kickback scam, but refuses to broaden the Inquiry to enable Cole to call on Government Ministers or their bureaucrats to give evidence.

It should be noted that any confessions made by John Howard or his Ministers in the House of Parliament regarding the AWB kickbacks to Saddam Hussein are protected under Parliamentary Privilege, and under Australian Law cannot be indicted, even if they admit their guilty.

UPDATE - AUSTRALIAN WHEAT BOARD

                                                                                                                                                    9/3/06

Executives from AWB briefed Senior Government (Govt.) Ministers and officials, including Australia's Ambassador to Washington, Dennis Richardson, on investigations into the AWB scandal eight months ago in an effort to "counter and neutralize" its critics, documents released by the Cole Inquiry reveal.

Briefing Govt. officials became the "highest priority" for the former chief executive, Andrew Lindberg, after AWB was told by the U.N. investigators that they believed it had paid kickbacks.  The Board records, along with those released on Tuesday (Australian Daylight Saving Time), show AWB's strenuous efforts to work closely with the Howard Govt. on fall -out from the scandal.  To this end, they also briefed Australia's then Ambassador to the U.N., John Dauth, senior officials from John Howard's office, the Foreign Affairs Minister, Alexander Downer, and the staff of the Deputy Prime Minister, Mark Vaile, who were described as "Sympathetic."  The briefings took place months before Ministers publicly acknowledged the seriousness of the crisis.

The Inquiry Chief, Terence Cole Q.C., will ask the Attorney General, Philip Ruddock, to clarify his powers after a threat by AWB to challenge the reach of his investigation in the Federal Court.  This threat by the AWB confirms our fears that the Howard Govt. not only failed to give Commissioner Cole an Inquiry with powers regarding the widest terms of reference but, to protect their Ministers and Bureaucrats, they've left a legal loop-hole for the AWB which could lead to an Inquiry that becomes totally anorexic.

UPDATE - AUSTRALIAN WHEAT BOARD

                                                                                                                                                   15/3/06

Prime Minister John Howard continues to defend six of his senior Government Ministers, including the Foreign Minister Alexander Downer, who are accused of failing to properly declare their shares in embattled wheat exporter AWB.

It has been detected that the six Government Ministers had failed their declaration duties in regard to their AWB shares and as elected Members of Parliament.  a Person could forgive one and maybe two Government Ministers for inadvertently overlooking to declare ownership of an A-class share in AWB, but when six Ministers write to Prime Minister Howard on Sunday, March 12, 2006  to correct their errors, it appears to be all too convenient in finding an 'out' from their precarious positions.

Commissioner Cole yesterday ruled that ASIO, the Australian version of the United States Intelligence Service, the CIA, has been granted permission to withhold evidence regarding the Australian Wheat Board (AWB) under the guise of protecting Australia's National Security.

One could be forgiven for being cynical, but it appears that this Commission of Inquiry has the fingerprints of Government interference, and we will give an early prediction that Prime Minister Howard and his Ministers and Bureaucrats will incur a minor admonishment from commissioner Cole, while a select few of the AWB's executives will have to face criminal charges.  As mentioned to you and your colleagues previously, this Inquiry is foul with the smell of a major cover-up, more so that the Australian Government refuses to broaden the Inquiry's terms of reference from "anorexic" to the widest terms of reference.

Kind regards,

phil Tzavellas - for and on behalf of the "voice of the People" Lobby Group

P.S. It must be noted that the only time our intelligence services have gained criminal convictions has been from tip-offs, never form the result of their investigations.

WHEAT - FOR - WEAPONS: SEARCH

Minister didn't trust Americans

This report by Byron Kaye appeared on Tuesday April 11, 2006 edition of the Sydney Telegraph

Trade Minister Mark Vaile's dismissive view of criticisms of AWB was "flavoured"  by months of self-serving criticism of the Australian wheat exporter by the Americans, he said yesterday.

Mr Vaile told the Cole inquiry the US Administration was a constant detractor of AWB, but only because it wanted to deflect criticism of the subsidies it paid its own whet industry.

In a written statement to the inquiry, Mr Vaile said he first became aware of the American allegations against the AWB in about June 2003.

"It was my view that the particularly aggressive competitors and detractors of the AWB and Australia's single desk wheat marketing system," Mr. Vaile wrote in his 16 page formal response released by the inquiry.

"The US Wheat Associates had been constant critics of the single desk system, accusing it of being a trade distorting mechanism and accusing AWB of unfairly using the system to their commercial advantage."

"It was my view that our wheat marketing system was not trade distorting and that aggressive complaints by the US were simply a means of deflecting criticism of the huge subsidies the US wheat industry received."

When asked during the inquiry about the statement, Mr. Vaile said the US administration had wanted to break down Australia's single desk consortium system and were running a constant negative campaign.

"That certainly flavoured my view in terms of the allegations," Mr. Vaile said.

He said when concerns were raised about AWB and its contracts with Iraq he relied on information provided by AWB and his own department when he made various public statements defending the monopoly wheat exporter.

He said it was not until last October, when the UN handed down its final report into corruption of its oil-for-food program in Iraq which found AWB had paid nearly $300 million in kickbacks, that he no longer believed what AWB said.

Outside the inquiry, Mr. Vaile said he was happy to answer any questions put to him by the inquiry.

He said he and the Government wanted to get to the truth as much as anyone else.

"This is clearly an inquiry that has the ability to ask ministers questions to get all the information together," he said.

"We should now leave it up to Commissioner Cole to complete his work and pull together his conclusions, which I understand will be reported back before the end of June."

PM’s MAN ‘COACHED’ AWB REPLY

JOHN Howard’s office coached AWB to keep your response narrow to a U.N/ investigation into Saddam Hussein bribery claims.

The evidence to the Cole inquiry yesterday is the second time the Prime Minister’s claims he fully cooperated with the U.N. investigation into the scandal last year have been undermined.

Mr. Howard’s senior international affairs adviser, Paul O’Sullivan allegedly gave the advice at a meeting with AWB chief Andrew Lindberg and chairman Brendan Stewart on June 1, 2005.

Mr. Lindberg reported back to the former Wheat Boad’s executives the next day.  Notes of his account, by AWB’s chief in-house lawyer Jim Cooper, were shown to the inquiry yesterday.

Labor last night named another two MP’s as having past and present AWB shareholdings – industry Minister Ian Macfarlane and Liberal back bencher Barry Wakelin.

Wednesday March 29, 2006 Telegraph.

Former Australian ambassador Michael Thawley has an appropriate workplace for someone enrolled in a high level scandal:  His second floor office is on Washington’s K Street, just down the road from the Watergate Hotel and office complex.

A break in at the Watergate complex led to the resignation of President Richard Nixon in 1974, and K St houses most of Washington’s lobbying industry, including Jack Abramoff – the man at the centre of a new U.S. corruption investigation.

Mr. Thawley has become a key figure in the wheat scandal after it was revealed he had successfully lobbied to stop a U.S. Senate investigation into the affair.  Senator Norm Coleman has demanded Mr. Thawley front a senate inquiry to explain his action.

Mr. Thawley was reluctant yesterday to shed any light on the controversy when he left for work.

“I’m not going to say anything to anyone, especially while the inquiry is going on in Australia,” he said.

“That may change at some point, but certainly for the time being I’m not going to say anything.  I hope you can understand the reasons why.”

Mr. Thawley now works as an analysis for an investment firm called the Capital Group.

From: Peter Bennett [mailto:bennetpp@pcug.org:au]

Sent: Monday, 10 April 2006 5:22 PM

To: 'rick.willis@ag.gov.au'

Subject: Besley and the history of government cover ups.

Dear Mr. Willis

I am the President of the Customs Officers Association.

However this is a personal communication and is not on behalf of the COA.

Item 1.

As discussed. Tim Besley was the Secretary (CEO) of the Australian Customs Service in 1981 at the time of the `Colour TV Affair.

Michael McKellar (Minister for Health) imported a Colour TV and smuggled/avoided paying duty on the goods.

Michael Moore (Minister for Customs) assisted with the cover up of the efforts by senior Customs Officials to hide the smuggling event.

Junior Customs officials were lent on by Besley and his henchmen to cover up the smuggling event. Some cracked and never recovered.

Because junior officers were lent on and harmed, the matter of the smuggling and cover up was brought before Parliament (by my confederate Mr. Spanswick (02) 9547-2650 and myself) and within 7 days PM Fraser sacked McKellar and Moore from their ministerial posts.

The Mahony Review was then instituted by Government (Review of Customs Administration and Procedures) 1982 - and subsequently Besley was replaced.

Besley has a proven track record of managing an agency which was primed to cover up misconduct by senior bureaucrats and politicians.

Besley had all relevant knowledge and contacts in Customs and in foreign trade/Customs organisations to ensure that all requirements were being met.  In particular there should have been particular instructions to Australian Customs staff on the correct procedures to `test' export permits that were subject to UN embargos. The Government would have briefed Besley (Wheat Export Authority) about the Canadian complaints in 1999 and therefore should have and would have required specific scrutiny by Customs of any export arrangements. That he seems to have accepted the AWB documentation without testing it is a blatant abrogation of public duties (though perhaps his duties to the Government may have placed different emphasis on less stringent processes).

The Export Authority could have easily directed Customs to test all documentation to a standard set by the authority before issuing export permits.

If there was a known risk (e.g. Canadian complaints) then Customs should have been required (by specific instructions) to test any documentation before export.

Also -Customs has overseas liaison officers attached to and in various embassies who are required to examine trade and industry claims both for imports and exports.

(For example Hazardous Waste can only be exported to particular places and that is supposed to be checked both by Customs and Trade.)

Without specific instructions -export of UN embargoed wheat would not have received any particular attention in respect of their export permits.

Item 2.

I raised this with the Enquiry in an earlier email.

If possible - phone traces of who is calling who and the timing of those calls in respect of this enquiry would most likely be a useful exercise.

Please feel free to call me or Bob Spanswick for further advice on this matter.

Peter Bennett

AUSTRALIAN WHEAT BOARD (AWB)

Former Australian Secret Intelligence Service (ASIS) Officer, Warren Reid, said it would be impossible for the Federal Government not to know kickbacks were being paid by the AWB to Saddam Hussein's regime. "In fact, if you look at the core part of the Governmental System in Canberra - that's geared to knowing these things," he said.

The AWB Inquiry opened on Monday, January 16, 2006. The wheat deal, Oil-for-food programme, was set up in 1995. In 1999 Saddam Hussein orders "transportation fees" be imposed. Iraqi Government front company called Alia is set up to collect fees. AWB sells Iraq 6.8 million tonnes of wheat and receives $2.3 billion in payments. AWB makes $221 million in transport "side payments." These kickbacks were paid between 1999 and 2003. AWB Managing Director, Andrew Lindberg, admitted AWB might have made a profit as the fee was expected to be paid in German marks, which was an opportunity to make a margin on the foreign exchange hedge.

Commissioner Cole suggested a multi-million dollar deal between a BHP-related company, Tigris Petroleum, and wheat exporter AWB was designed to bribe Iraqi officials. In his third day on the witness stand, AWB CEO Andrew Lindberg admitted the U.N. was deceived by his company's actions, which artificially inflated wheat prices to recover an almost US$8 million debt AWB was collecting for resources giant BHP.

Commissioner Senior Counsel (SC) John Agius told Mr. Lindberg that AWB contracts submitted to the U.N. hid the true arrangement. "It follows, doesn't it, as night follows day, that the U.N. would have been deceived?" Mr. Agius asked. "I don't know" was Mr. Lindberg's initial reply. After further questioning, he conceded that, "if that is all of the information and knowledge and understanding, then perhaps the U.N, was deceived." "Is the answer yes?" Mr. Agius asked. Mr. Lindberg replied "Yes."

AWB Trade Chief, Peter Geary, admitted knowing that two big wheat sales to Iraq ripped off the U.N. and contravened trade sanctions against the country, but insisted the contracts never went ahead because war broke out in March 2003. That evidence was ridiculed by Commissioner Cole as "nonsense." Mr. Geary's assertion that he did not know his company was illegally making direct payments to Saddam's regime prompted Senior Counsel John Agius to accuse him of lying. Mr. Agius produced a memo, approved by Mr. Geary, mentioning an agreed deal in which Iraq was to be paid US$2 million for a dubious wheat contamination claim through "inland transport" fees funneled to the Iraqi Government. Mr. Geary repeatedly said he did not understand what that meant. Mr. Agius accused him of not telling the truth.

On January 27, 2006, Foreign Minister Downer said his department had co-operated fully with the Cole Inquiry into AWB kickbacks to Saddam Hussein`s regime. Mr. Downer said the Inquiry's terms of reference were broad, and did not need to be widened. ""My department has not only provided all the documents that the Cole Inquiry wanted, officials have also been interviewed" Mr. Downer said.  

Howard letter draws P.M. into wheat scandal. Ambassador tried to kill bribes inquiry.

 Confession or cover-up. Copies of these articles are being mailed to you.

January 31, 2006. Foreign Minister Downer was again drawn into the "oil-for-food" scandal when it emerged his department saw details of dealings between the AWB and Iraqi officials. AWB Head of International Sales and Marketing, Michael Long, said the exporter regularly sent "long form" contracts to Mr. Downer's department for authorisation.

Insider's bombshell on AWB. Silence on a notorious street. Bribe warning went to the top - P.M.`s office was told years ago.

Cole Inquiry, Tuesday February 7, 2006. Deputy Prime Minister, Mark Vaile, became the first Government (Govt.) Minister to be implicated in the Iraqi kickbacks scandal - on the same day Saddam Hussein's personal involvement was also at last made clear. Mr. Vaile was named as having met with executives linked to BHP and the AWB at the time the bribes to Saddam's regime were allegedly taking place.

An email was presented to the Cole Inquiry into Iraqi kickbacks by former BHP executive Norman Davidson, whose company Tigris Petroleum inherited recovery of a BHP debt from Saddam's regime. The inquiry has recently been expanded to probe the role of BHP as well as AWB. In a message sent on September 15, 2000, Mr. Davidson told AWB rural services manager, Charles Stott, that he had "friends" in the Department of Foreign Affairs (DFAT). "It was good to see you, Mark Vaile and Bob Bowker in Melbourne yesterday" he wrote.

Mr. Vaile strongly denied any knowledge of the scandal. "I have never met anyone from BHP, Tigris Petroleum or AWB to discuss the Tigris issue," he said. He said he was in Sydney, not Melbourne, on September 14, 2000.

We find it strange that the Deputy Prime Minister, Mark Vaile, had memory loss on at least 29 occasions when he appeared at the Cole Inquiry on Monday, April 10, 2006, and yet on Tuesday, February 7, 2006, Mr. Vaile could remember where he was on September 14, 2000. Curious, to say the least.

Thursday, February 9, 2006 - Managing Director and CEO of AWB, Andrew Lindberg resigned. The Iraq wheat scandal on Friday, February 10, 2006, caused further problems for former Agriculture Minister, Warren Truss, with a firm claim he knew of kickbacks to Iraq as early as 2002. Leading Victorian grain merchant, Ray Brooks, said Mr. Truss ignored his warning in 2002 that AWB was paying bribes to Saddam Hussein's regime.    

"He didn't want to know," Mr. Brooks said. He added that he heard of AWB's behaviour from Canadian and  American wheat traders, furious they had been shut out of the Iraqi market by what they claimed were AWB slings to Iraqi officials. Mr. Brooks said he passed on the information to Mr. Truss during a meeting at the Mallee Machinery Field Days in northwestern Victoria in August 2002, but was told by Mr. Truss to stop "peddling stories like that around." According to Mr. Brooks, Mr. Truss told him, "Ray, don't give me that bull: The Wheat Board is run by farmers of great integrity and honesty; they wouldn't do that sort of thing." Therefore we could match up this evidence given on February 10, 2006, with that of the AWB's former Wheat Board's Public Affairs Manager's testimony on Monday, April 3, 2006. 

Darryl Hockey told the Cole Inquiry he was at an August 2002 meeting where his bosses told Prime Minister Howard the Iraqis objected to Australia's foreign policy. Mr. Hockey said the meeting took place in Foreign Affairs Minister Alexander Downer's Parliament House office. AWB Chief, Andrew Lindberg, Chairman Brendan Stewart and Mr. Hockey were present, along with other AWB and Government staff. Mr. Lindberg, who had just returned from a trip to Baghdad to save the contract, told Mr. Howard and Mr. Downer the Iraqi Trade Minister had restored it because he had been convinced by AWB it was harming Australian farmers who had no say in Australia's foreign policies," Mr. Hockey said. 

Mr. Lindberg advised Messrs. Howard and Downer that an agreed condition of the Iraqi Trade Minister's decision to restore the contract was that Mr. Lindberg personally pass on the message to the Australian Prime Minister that Iraq was upset with Australia's International Foreign Policy stance over Iraq. Mr. Hockey, now AWB's Head of International Market Development, gave his account in a statement shown by the Inquiry. He did not reveal Messrs. Howard and Downer's responses. At the time Australia had not publicly committed to the Iraqi invasion which began in March 2003.

Mr. Hockey also said he was warned 3 years ago the U.S. would target AWB with an investigation into kickbacks paid to Saddam Hussein's regime. Mr. Hockey said he got the tip-off from an American colleague while working on secondment to the Government's overseas aid arm, AusAid, in the Coalition Provisional Authority's Baghdad office in late 2003.

On Sunday, March 12, 2006, Prime Minister Howard defended six of his Senior Government M.P.s, including the Foreign Minister, Alexander Downer, who are accused of failing to properly declare their shares in embattled wheat exporter AWB. "There's nothing wrong with having shares in AWB, and the rule is that, if you are a wheat grower, you have to have a voting share in AWB, otherwise you effectively can't participate," said John Howard. "My understanding, as far as the Ministers are concerned, is that everything is in order. The six Coalition members were identified on this morning's Sunday programme as having failed their declaration duties in regard to AWB shares."

The Community Services Minister, John Cobb, said he had "inadvertently omitted to declare ownership of an A-class share in AWB, but had written to Mr. Howard and Parliament yesterday to correct the error.

Senator Bill Heffernan, known as the Liberal head-kicker in N.S.W. and a former Cabinet Secretary, admitted to the programme that he owned $4,000 in AWB shares, but had not declared them on his Parliamentary pecuniary interests register. Conflict of interest issues have been raised. Last October (2005) the former Deputy Prime Minister, John Anderson, sold AWB shares - 2 months prior to the United Nations" report by Paul Volcker made damning accusations of $300 million in AWB kick-backs to Saddam Hussein in exchange for lucrative wheat sales. Terence Cole Q.C. is investigating these apparent breaches of the U.N.'s oil-for-food programme in Iraq.   

Mr. Anderson previously acknowledged not notifying Parliament of the share sale for 4 months, but insists he was never tipped off on the controversy about to hit the AWB. `Sunday' said Mr. Anderson had not continued ownership of an A-class share in AWB. These voting right shares were issued to wheat farmers when the AWB was privatised in 1999. They cannot be sold or transferred, and are redeemed automatically when the shareholder ceases as a wheat grower. The former Veterans Affairs Minister, Bruce Scott, the Queensland President of the National Party, said his failure to list AWB shares was not a breach of disclosure rules because he ceased to be a Director of the holding company in 1990, and any income from it went to his wife and children.

Mr. Downer and another Liberal M.P., Christopher Pyne, had money in the investment company Argo, which held AWB shares for a short time in 2002. Mr. Downer said, "I've never owned AWB shares - I don't know what Argo invests in. To suggest that they may have had shares in AWB Limited for 2 weeks or something - that raises questions of my interests in AWB, that's pretty much the longest bow I've ever seen drawn in my years in politics." Is Mr. Downer aware that investment shares are taxable income and you must declare and name your investment company? I hope Mr. Downer, by admitting you never knew you had an investment in the AWB, that you have not inadvertently confessed to being a tax evader! 

The following list of concerns by our members regarding the Terence Cole Q.C. Inquiry into the AWB's "oil-for-food programme" and the $300 million kick-back scam to Saddam Hussein are listed below:­

(1) That the Cole Inquiry appears to have been professionally orchestrated, in that corroborating evidence was stretched to both ends of the Inquiry, maybe in the hope that the truth would be lost in the mire.

(2) A possible conflict by Commissioner Cole, who had already been criticised for being a long-time friend of Prime Minister Howard, by barring the AWB's lawyers from questioning Mr. Howard on Thursday, April 13, 2006. Cole refused to allow Terry Forrest Q.C. to ask Mr. Howard about a bundle of top-secret intelligence reports sent to his office. Lachlan Carter, also representing the AWB, was also refused leave to cross ­examine Mr. Howard. Mr. Cole's behaviour is not only undemocratic, but very suspicious to say the least.

(3) Former Australian Secret Intelligence Service (ASIS) Officer, Warren Reid, said it would be impossible for the Federal Government not to know kick-backs were being paid by the AWB to Saddam Hussein's regime. "In fact, if you look at the core part of the Governmental system in Canberra - that's geared to knowing these things," he said.

(4) Deputy-Prime Minister and Trade Minister Mark Vaile had a memory loss on at least 29 occasions when he appeared at the Cole Inquiry on Monday, April 10, 2006. And yet on February 7, 2006, Mr. Vaile was named in an Email as being present at a meeting in Melbourne on September 14, 2000 with AWB Rural Services Manager Charles Stott, and Foreign Affairs Middle East Chief Bob Bowker. In response to this accusation, without missing a beat, Mr. Vaile said, "I have never met anyone from BHP, Tigris Petroleum or AWB to discuss the Tigris issue." He added that he "was in Sydney, not Melbourne, on September 14, 2000." One must not forget part of Mr. Vaile's evidence included, "You can't trust Americans."

(5) January 27, 2006, Foreign Minister Downer said his Department had co-operated fully with the Cole Inquiry into AWB kick-backs to Saddam Hussein's regime. Mr. Downer said that the Inquiry's terms of reference were broad, and did not need to be widened. "My Department has not only provided all the documents that the Cole Inquiry wanted, officials have also been interviewed," Mr. Downer said.

Thursday, February 9, 2006, Managing Director and CEO of AWB, Andrew Lindberg, resigned. The Iraq wheat scandal on Friday, February 10, 2006, caused further problems for former Agriculture Minister, Warren Truss, with a firm claim he knew of kick-backs to Iraq as early as 2002. Leading Victorian grain merchant, Ray Brooks, said that Mr. Truss ignored his warning in 2002 that AWB was paying bribes to Saddam Hussein's regime. "He didn't want to know," Mr. Brooks said. He added that he heard of AWB's behaviour from Canadian and American wheat traders, furious they had been shut out of the Iraq market by what they claimed were AWB slings to Iraqi officials. Mr. Brooks said he passed on the information to Mr. Truss during a meeting at the Mallee Machinery Field Days in Northwestern Victoria in August 2002, but was told by Mr. Truss to stop "peddling stories like that around." According to Mr. Brooks, Mr. Truss told him, "Ray, don't give me that bull. The Wheat Board is run by farmers of great integrity and honesty; they wouldn't do that sort of thing."

Therefore we could match up this evidence given on February 10, 2006, with that of the AWB's former Wheat Board's Public Affairs Manager's testimony on Monday, April 3, 2006.

Confirmation of Darryl Hockey's evidence can be found in the Email we sent on Saturday, April 15, 2006.   

(6) Tuesday, February 21, 2006, Mr. Howard confessed that U.N. investigator, Paul Volcker, a former U.S. Federal Reserve Chief, raised concerns about AWB more than a year ago during his investigation into kick-backs paid under the U.N.'s "oil-for-food programme." Mr. Cole's investigators had received a previously secret Department of Foreign Affairs and Trade (DFAT) report from 2001 which details efforts by Saddam's regime to corrupt the U.N. "oil-for-food programme" by collecting kick-backs. The report declassified by DFAT a month ago contains an impressive distribution list that includes the offices of Mr. Howard, Foreign Minister Alexander Downer, Trade Minister Mark Vaile and the then Agriculture Minister Warren Truss.

It was also copied to two intelligence Agencies - the Office of National Assessments and the Defence Intelligence Organisation - and the Departments of Prime Minister and Cabinet, Defence, Industry, Treasury and the Attorney-General's Department.

Following are our gravest concerns that we would like to especially highlight regarding the Cole Inquiry:

(a) We have to correct an early mistake made  by us, regarding the period in which the Howard Government appointed Wheat Board regulator Tim Besley, who was sacked in early 1982, and not the 1970's. He was dismissed as the CEO of Customs for lying to a Federal Senate Committee for perverting the course of justice by protecting the then colleagues of our present Prime Minister John Howard, who was then Treasurer in the Fraser Government. This incident became known as the "colour television affair", in which two of Mr. Howard's colleagues were sacked as Ministers in March 1982, followed by Tim Besley's dismissal in April 1982. Although both the Howard Government and the Opposition parties were aware of Tim Besley's abominable record, their silence was deafening when he was appointed CEO to oversee and regulate the AWB as part of his responsibility.

We have no doubt the friendship of Commissioner Cole and Prime Minister Howard will survive this Inquiry, in that we believe Mr. Cole will at worst give the Australian Government a little slap on the wrist, while at best he will use one of the AWB's executives as a scapegoat, who will cop the full brunt of the blame. We have no doubt that the result of the Cole Inquiry will make the Watergate scandal look like a kindergarten picnic.

(b) We find it both suspicious and coincidental that eight elected members of the Howard Government had past or present A-shares in the AWB, and not one of these members declared their pecuniary interest to the Parliamentary Registrar, as is required by Parliamentary rule.

(c) We also find it most coincidental that President Bush sent his U.S. Secretary of State, Condoleezza Rice, to Australia to meet with Prime Minister Howard and his Senior Ministers, and was followed shortly afterwards by a visit to our country by British Prime Minister Tony Blair. Was this for the purpose of displaying support for John Howard and his Government during difficult times with the ongoing Cole Inquiry?

(d) How big is the cover-up regarding the "oil-for-food programme" kick-back scam to Saddam Hussein?

(e) Did the Bush and the Blair Governments turn a blind eye to the kick-back scams?

(f) Surely they had to know that part of the $300 million kick-backs to Saddam Hussein's regime went towards buying weapons to fight the American, British and Australian defence forces, as well as paying suicide bomber's families $25,000 rewards for murderous services rendered.

(g) Why have the Bush and Blair Governments remained silent on the kick-back scams?

(h) Does George W. Bush and his Government care that 2,000 plus Americans have lost their lives fighting in Iraq? If they did, surely they would hold an American Congress Inquiry into how high up the AWB kick-back scam goes. And how high the cover-ups went. This applies to the Blair British Government as well.

(i)  Failing to do otherwise could amount to an act of Sedition.

(j) The Sixtyfour Dollar question: Have the Bush and Blair Governments deliberately turned their backs on their people so as to protect and defend the Howard Australian Government?

(k) It must be remembered that Commissioner Terence Cole Q.C. refused the AWB's legal team the right to question Prime Minister Howard. Why?

 DECEIT BY THE TRUCKLOAD THEY BACKED THE SCAM TO THE BITTER END

One of the greatest piece of investigative journalism in Australia’s history by David Marr and Marian Wilkinson appeared in the Sydney Morning Herald on April 15 and 17, 2006.

BETWEEN them, a pitiless dictator and UN sanctions had reduced Iraq to ruin. The currency was destroyed. Millions were starving. Hospitals had no medicines, no bandages and no anaesthetics. Faced with a death toll of half a million children since sanctions began, the US secretary of state, Madeleine Albright, remarked: "We think the price is worth it."

But the world grew so restive at the sight of this man-made catastrophe unfolding in Iraq that a compromise was forced on the US. The oil-for-food program was designed to feed Iraq while starving Saddam Hussein of hard currency until he gave up his weapons of mass destruction.

Within hours of the resolution passing the UN Security Council, the salesmen of the Australian Wheat Board were back on the road to Baghdad. These were crazy, dangerous journeys that ended in brief meetings, long lunches and huge wheat deals. As American bombs and missiles rained down on Baghdad in December 1998, the board clinched deals to sell more than 2 million tonnes of grain.

Australia has been selling wheat and mutton to tyrants for a long time. That's business and we're good at it. We're good at doing the deals, good at trading with the enemy while keeping our allies onside. This country traditionally runs two foreign policies: one for the nation and another for the bush. We refused to recognise Mao's China, but Mao was one of the wheat farmers' most valued customers.

Saddam was a familiar kind of client and the Australian Wheat Board - an arm of government about to morph into the private corporation AWB Limited - became the single biggest seller of wheat to Iraq in the last years of Saddam's regime. Our farmers had Iraq cornered. "It was huge," recalled an AWB executive with awe. "It was profits and money all round."

But it was not business as usual. Up in the Persian Gulf, hundreds of Australian servicemen were working in a multinational force supervising shipping in and out of Iraq's only port, Umm Qasr. Oil and weapons were the main game, but their mission was to prevent all breaches of UN sanctions. In the last stages of this story, an Australian would command that force from the decks of the USS Cushing.

Under UN Security Council Resolution 661, Australia was responsible for seeing that no cargo left its shores in breach of sanctions. Regulations introduced in Australia during the first Gulf war banned all shipments to Iraq unless the foreign minister was "satisfied that permitting the exportation will not infringe the international obligations of Australia". Under the oil-for-food program, no wheat could leave without a tick from Alexander Downer. He and his officers would sign off on 292 ships carrying 12 million tonnes of wheat to Iraq worth more than $2 billion. And almost every cargo breached sanctions.

The wheat was clean. The problem was the cash ferried in on the cargo. Iraq's oil revenues were held in a mighty escrow account in a New York bank with the UN as cashier. From these oil billions, Saddam was allowed to buy "humanitarian" supplies - mostly wheat - but he was not supposed to get his hands on the cash. Starving him of hard currency was seen by the international community - not least Australia - as the most effective way of forcing Iraq to disarm.

Yet Saddam got hold of billions. The UN was to prove too driven by political division over Iraq to police its own system. Australians were too willing to break the rules. And the Iraqis proved magnificent shakedown artists.

THE FIRST BITE: JUNE TO NOVEMBER 1999

ZUHAIR DAOUD, head of the Iraqi Grain Board for more than 30 years, was soon to die in an ambush on the road to Amman, but in his last weeks in office he had a strange task to perform: to tell an AWB team visiting Baghdad that they must now load into their contracts the cost of trucking wheat all over Iraq. The prospect was a nightmare for the company. Where would it find the trucks? Who would insure the loads? But Zuhair cleared the air by telling the team AWB wouldn't be responsible for trucking anything anywhere. Iraq just wanted the money.

Amnesia and confusion would later seize senior AWB executives when quizzed about the arrangements Iraq imposed in 1999. But the two AWB salesmen lunching that day with Zuhair - Dominic Hogan from AWB's Cairo office, and Mark Emons, the manager of the company's Middle East section - recognised this for what it was: a scheme for siphoning cash out of the UN's escrow account. Emons later told Terence Cole's inquiry into the AWB scandal: "We knew it was outside the sanctions."

Emons returned from Baghdad to drive a five-month search for ways of hiding the payments from the UN. Aware that Iraq's transport infrastructure was in ruins, the international body had approved the principle of contracts covering the cost of "inland transport" - but the fees had to be customary, reasonable and not a source of hard currency for the regime. All three provisos were breached by the 700,000-tonne contract AWB signed in July loaded with "trucking fees" of $US12 per metric tonne. It was a hard-currency bonanza.

Strictly speaking this was not a bribe because the rate was set by the Iraqi Grain Board and would be paid - somehow or other - into the coffers of the government of Iraq. But it was a classic kickback: a side payment made from falsely inflated contracts. The beauty of the rort from AWB's point of view was that Australia's wheat farmers didn't pay a cent. The money was all coming out of the UN's escrow account.

At Ceres House, the wheat trader's headquarters in Melbourne, the mantra was: "It's no skin off our nose."

By October AWB still hadn't found a way to get the cash into Iraq undetected. Dominic Hogan was running out of ideas. A notorious email he sent at this time ended with the flourish: "Other option is to use maritime agents/vessel owners' account/or buy a very large suitcase."

Salvation - if that's the word - came out of the blue nine days later in a mangled fax from Alia for Transportation and General Trade, a company based in the Jordanian capital of Amman: "We would like to introduce to you our company being one of the Jordanian Establishments specialized on the fields of over land and ocean freight transportation." Zuhair confirmed Alia would take the "trucking fees", which had to be paid in advance.

Just days before the MV Pretty Ruby arrived at Umm Qasr in late November with its cargo of Australian Hard, AWB deposited $US504,000 in Alia's account in the Jordanian capital. Over the next three years, AWB would pay this -obscure company hundreds of millions of dollars without ever conducting due diligence, without a contract and without ever checking if it had any trucks in Iraq. It didn't.

This is a story defined at every stage by what was not done. When obvious checks aren't made and obvious questions aren't asked, someone doesn't want to know the answer. A grey area is being left grey. No evidence has emerged at the Cole inquiry that AWB ever sought advice on paying "transport fees" from the bodies supposed to be vetting the contracts: the Foreign Affairs Department and the UN. And no one at AWB checked up on Alia.

Othman al-Absi, the company's general manager, would tell the Cole inquiry: "I do not recollect ever being asked by anyone from AWB about who owned or controlled Alia, or whether it had connections with the Ministry of Transport. However, Alia's ownership was public knowledge and was not hidden." The records show the Baghdad ministry holding 49 per cent of the shares.

According to a "distillation" of secret evidence to the Cole inquiry, this fact had been known for at least a year in Canberra. A 1998 report by a foreign intelligence agency had been circulated to the departments of Foreign Affairs, Defence and Prime Minister and Cabinet indicating "that Alia Corporation based in Jordan was part-owned by the Iraqi government and that it was involved in circumventing UN sanctions on behalf of the Iraqi government".

THE CANADIAN COMPLAINT: JANUARY TO JUNE 2000

IRAQ was putting the hard word on everyone, but the Canadians did what AWB would never do in the years ahead: they sought the UN's advice and were told emphatically not to pay.

The Canadians were Australia's only real rivals in the market because Saddam had black-banned American grain. Now the UN's verdict put them in a bind and they turned on the Australians. In mid-January 2000, a Canadian diplomat told UN inspectors that according to the Iraqi Grain Board, AWB was already paying the trucking fees.

A UN official, Felicity Johnston, immediately contacted the Australian mission at the UN to ask for "discreet, high­level inquiries" to be made into AWB. At this point, the whole trucking fee scam could have been stopped in its tracks. But it never happened. The to and fro of cables and meetings and phone calls that followed raise for the first time the big question in this story: was the Australian Government complicit or staggeringly incompetent?

On the ABC's Four Corners, Johnston insisted she spoke to the diplomat Bronte Moules at the Australian mission specifically about "trucking fees". Moules denies this but she kept no notes of their conversations; says she never asked what the suspect payments were for and never examined any of the many AWB contracts in her UN office. She confessed she couldn't have understood their terms even if she had.

Canberra's inquiries amounted to one phone call to AWB's government liaison man, Andrew McConville, who said the accusations were "bullshit". As far as the Australians were concerned, that settled the matter. But the Canadians were still unhappy and threatening to go public, so in March Johnston alerted the Australian trade commissioner in Washington. Alistair Nicholas was galvanised into action and within days had a high-powered AWB team sitting in his office.

According to the notes of the team, they talked trucking fees that day. Nicholas denies this. But everyone agrees they spoke about sending the UN the full text of the standard terms and conditions in AWB's contracts. If that's all the UN wants, one of the team emailed home, "we have nothing to worry about".

The terms and conditions say nothing about trucking. But every contract AWB was now writing with Iraq contained the commercial formula for inland transport: "The cargo will be discharged Free into Truck to all silos within all Governments of Iraq." Australian officials would claim they never noticed these words in mo than 40 AWB contracts. And by sheer bad luck, Felicity Johnston had picked from the pile the one last contract with Iraq that didn't have a trucking clause.

It was an extremely close shave. AWB got through without being quizzed about trucking fees by anyone. Unable to find anything in the paperwork about them, Johnston let the matter drop. She reproaches herself now but it seemed so unlikely to her back then. "That what I perceive to be an agency of [the Australian) Government would be deceptive and would be deliberately flouting the sanctions, and then avoiding telling the truth about the matter, was really incomprehensible."

 The crisis had only the vaguest impact on Canberra. Alexander Downer remembers being told about the complaint but can't recall reading any of the cables generated by the crisis, though they were distributed to his office.

In these same weeks, more foreign intelligence about Alia reached both Downer's department and the Department of Prime Minister and Cabinet: "Alia received fees in Jordan for the discharge and inland transport within Iraq of goods purchased under the oil-for-food program ... the fees, less a small commission, were paid into accounts accessible by Iraq in violation of sanctions. The amounts involved were very substantial."

GIVING COMFORT: OCTOBER- NOVEMBER 2000

CHARLES STOTT was an old Iraq hand, wheeling and dealing in oil and wheat for decades in the Middle East. In June 2000 he returned to AWB after a few years with BHP Petroleum. Stott was the key figure in the single shabbiest episode in this saga.

Stott would always claim the UN approved the trucking fees, but evidence to the Cole inquiry suggests that on his return to AWB he set out to simplify and shore up the covert system for paying them. His strategy included extracting a vague letter from the Foreign Affairs Department that AWB would later produce as proof of a kind that the "trucking fees" had official blessing.

In late October Stott faxed the section that handled AWB's contracts and asked if it would be "comfortable" with the company "entering into discussions with ... Jordan trucking companies with a view to agreeing a commercial arrangement in order to ensure that there are enough trucks to enable the prompt discharge of Australian wheat cargoes".

The fax bristled with problems, not least that by this time AWB had been locked into its deal with Alia - at the direction of the Iraq government - for nearly a year. Neither the deal nor Alia were mentioned in the fax. Stott would later claim that before sending the letter he spoke informally to officers of the branch "to make sure that DFAT was comfortable with the terms of the letter". They deny this.

Jane Drake-Brockman's reply came astonishingly swiftly. The assistant secretary of the Middle East and Africa branch wrote: "We ... can see no reason from an international legal perspective why you should not proceed. That is, this would not contravene the current sanctions regime in Iraq."

Success has many authors. No one claims to have written the Drake-Brockman letter. One officer concedes she may have had a bit of a hand. All the others swear ignorance. Drake-Brockman says she signed the draft relying on the line that reads: "International Legal Division has been consulted in the preparation of this response." But, told AWB needed the letter in a hurry, she sent it away without checking with the lawyers.

The letter was prized at AWB and used to reassure restive employees and unhappy lawyers - especially when things got sticky after the fall of Baghdad. But at the Department of Foreign Affairs and Trade, the copy went missing from the files.

AT FULL THROTTLE: NOVEMBER 2000 TO JUNE 2002  

AUSTRALIA was now supplying 2 million tonnes of wheat a year to Iraq. We had virtually the entire market to ourselves. But shakedowns were constant. Ships might be delayed for weeks at Umm Qasr or cargoes knocked back on spurious quality grounds. AWB fought back as best it could but in the end loaded up the contracts even more. The mantra at Ceres House was still: "It's no skin off our nose."   

In November 2000, an AWB expedition to Baghdad led by Dominic Hogan was told by the new supremo of the grain board Yousif Abdul Rahman, that a 10 per cent surcharge was now to be paid on all contracts under the oil-for-food program. Hogan had no doubt what this was about. Back in Melbourne he emailed his worries to everyone in the international sales and marketing division: "We believe the increase in trucking fee a addition of the service charge is a mechanism of extracting more dollars from the escrow account."

Hogan was carpeted by Stott. Now under growing pressure within the company, Hogan felt he could do no more. He told Cole: "To pursue my concerns any further would have resulted in career suicide."

The new scam was hardly secret. Foreign intelligence reports about it were circulating in Canberra by March 2001. That same month, the US and Britain tried and failed to persuade the UN to curtail the kickbacks. Riven by division, the enforcing 661 Committee never, in the words of Paul Volcker, "seriously considered the merits of these or any other proposals to redress the payment of kickbacks".

Bronte Moules reported these failed attempts in a cable distributed to the offices of the Prime Minister, the Minister for Trade and the Minister for Foreign Affairs. By October, P&O stevedores in the Persian Gulf was warning its customers of Iraq's compulsory 10 per cent "after sales service" fee. P&O tipped off the US and British navies and posted the news on its website. If you were in the business of shipping to Iraq, you knew what was going on.

But the Foreign Affairs Department kept on rubber-stamping AWB's contracts on their way to the UN. Once approved over there, the department rubber-stamped export permits for every shipload of wheat leaving Australia for Umm Qasr. Department officials have told the Cole inquiry they regarded themselves as no more than a postbox in this process. They never checked the contracts, didn't read them, would not have understood their terms and were unaware they even contained trucking clauses.

"I took the view that AWB probably knew more about the way the oil-for-food program operated than I did," testified Don Cuddihy of the Middle East branch. "They were very experienced users."

Downer faced a key question when he appeared before the Cole inquiry: who told the bureaucrats they were only a postbox? Evidence before the inquiry showed that a much tougher system of scrutiny had operated under Labor. And no one from Drake-Brockman down could explain when and why it was decided that scrutiny of Australian contracts under oil-for-food would be left entirely to the UN.

Downer explained that the change came about after a fresh UN resolution in 1996. "Under Security Council Resolution 986 the United Nations established an Office for the Iraq Program, and this office had the task, amongst other things, of vetting particular contracts." In time, this would become the Government's core defence.

That the UN did a spectacularly poor job of checking contracts emerged early on and would later be one of the principal findings of Paul Volcker's investigation of the whole oil-for-food program.

THE SHADOW OF WAR: JUNE 2002 TO APRIL 2003

ON A cold night in Canberra, Senator Robert Hill pledged Australia's support for the US doctrine of pre-emptive warfare to enforce UN sanctions designed to strip Saddam of weapons of mass destruction. "We are not waiting for attacks any longer," the Defence Minister told the press. "That is the lesson of September the 11th."   

In Baghdad a few days later, Hogan and his tall, bald AWB colleague Michael Long found themselves face to face with an angry minister for trade, Mohammed Mehdi Saleh. Long testified: "The minister was dressed in full military regalia, he was armed ... I counted some 17 posters of Saddam Hussein staring down at me, and it was a particularly stressful environment, particularly when we were being hauled over the coals for the position of the Australian Government."

Saleh told them he was slashing purchases from AWB by half. Wheat farmers turned on the Government. John Howard promised diplomatic assistance. And the company responded to the threat in August by sending a high powered delegation on what's known in the folklore of the wheat trade as the "mad dash to Baghdad".

How they saved the day was a mystery. AWB would put it down to the deep bonds of trust between Iraq and Australian wheat farmers. John Howard would talk of the importance of keeping politics and commerce separate, and commend "the capacity of the wheat board to handle these things with sensitivity". But the truth is that AWB sold 1.5 million tonnes of wheat to Iraq as we slid towards war by dramatically increasing kickbacks.

The last two contracts signed with Saddam's ministers - known as 1670 and 1680 - were the dirtiest of them all. They were loaded with "trucking fees" of more than $US50 million; a scam known as the "iron filings rebate" of more than $US2 million; and the repayment of the 1996 debt to Tigris Petroleum of a further $US8.4 million. Total payments in breach of sanctions on that million-tonne sale alone came to roughly $US60 million.

Where the sums were finally done by Volcker, it was revealed that AWB had funneled into Iraq $US220 million in breach of UN Security Council Resolution 661. That made the Australian wheat trader the biggest single sanctions-buster among suppliers of humanitarian goods under the oil-for-food program. And AWB was the winner by a big margin: second on the list was a Thai rice trader called Chayaporn that paid a mere $US40 million.

While AWB was doing its last shabby deals in Baghdad, the Australian Government was at work in Washington pledging military support and securing Australia's hold on the wheat market in post-Saddam Iraq. It would be a cheap crack to say we went to war for wheat, but Australia was not going to join the Coalition of the willing only to see its market taken by the ruthless and highly subsidised wheat traders of the US. Australia sold an audacious plan to the US: after the fall of Saddam, AWB's former chairman, Trevor Flugge, a man who knew Iraq and its old regime well, would run the Ministry of Agriculture. His formal role would be to assist the "revitalisation of Iraq's agricultural sector". But as Howard would later tell Parliament: "The Government has sought the involvement of Mr. Flugge in post-Saddam Iraq ... because our principal concern at that time was to stop American wheat growers from getting our markets."

War when it came was accompanied by rhetoric that looks, in retrospect, deeply embarrassing. A few days before the formal declaration of hostilities, the Prime Minister told the Canberra press club that among the many urgent reasons for ousting the tyrant of Iraq was this: "He has cruelly and cynically manipulated the United Nations oil­-for-food program. He's rorted it to buy weapons to support his designs at the expense of the well being of his people.

A NEW REGIME: APRIL TO SEPTEMBER 2003

THE streets of Baghdad were still teeming with looters ransacking almost every government building, except the heavily guarded oil ministry. Cheerful Iraqis interrupted their scavenging to smile at heavily armed US soldiers and chant praise for George Bush, before stuffing ceiling fans, curtains, computers and chairs into cars and trucks.

In the once manicured Firdos Square, a small band of marines joined angry locals to pull down a giant statute of the Iraqi dictator. After a drawn-out battle with chains and pulleys, its legs finally snapped at the knees: the old leader hung briefly in suspended animation then crashed to the ground.

With the fall of Saddam, AWB lost one of its best customers ever. The Trade Minister, Mehdi Saleh, so assiduously wooed by AWB, was on the Pentagon's most-wanted list, the six of hearts in the pack of cards. Within weeks, he would be in US military custody and talking under interrogation.

AWB and the Australian Government had always worked hand in glove but in the new Iraq, the intimacy between the diplomats and the grain trader intensified. Their long-term aim was the same: to secure the Iraq market for Australia. Inside AWB the strategy was dubbed Operation Hunta and its chief strategist was Michael Long, whom the Australians had placed in a critical position in the new Iraqi Ministry of Trade. Long gave himself the codename Proton.

The Government and the grain trader also shared an identical short-term objective: persuading the UN to "reprioritise" or honour those filthy last contracts, 1670 and 1680. What followed was a breathtaking fraud on the newly liberated Iraq that was only achieved with unquestioning support at the highest levels for AWB sales to Iraq: the Trade Minister, Mark Vaile, Foreign Minister, Alexander Downer, and their senior officials working in Baghdad, Washington, New York and Canberra.

There was no time to lose. The oil-for-food program was to be wound up within six months and already hostile forces - the US wheat lobby and Iraqi exiles led by Ahmed Chalabi - were sniffing around, convinced quite rightly that the program was riddled with kickbacks that had kept Saddam afloat. "Reprioritising" was jargon for weeding out inflated or corrupt deals.

AWB was in deep trouble. Iraqis are fine bureaucrats. Buried in the files of the old regime was the evidence of the company's kickbacks paid over years, laundered through Alia, washed through Jordanian bank accounts and ultimately channeled to the Ministry of Finance, where it was used for whatever purpose the dictator chose. Numerous Iraqi officials knew about AWB's kickbacks. It was only a matter of time before their discovery. The question was: how much time?

An ABC journalist-turned-diplomat, Zena Armstrong, of the Iraq Task Force, was given the job in Canberra of working with AWB to save the contracts. With no background in the wheat trade or Iraq, Armstrong was heavily dependent on Long and his AWB colleagues to get the job done. She seems never to have seriously doubted their bona fides: "I believe we dealt with each other very professionally, but also co-operatively."

Though rumours of kickbacks were rife by the time Long and Flugge arrived in Baghdad to take up their posts in May, AWB was not going to take a backward step. Despite the obvious conflict of interest, Long's duties at the Ministry of Trade included the reprioritisation of oil-for-food contracts. While he was there he helped secure a top job in the ministry for AWB's old friend from the Grain Board, Yousif Abdul Rahman. Long was to boast in emails back to Ceres House that he'd saved Yousif from the "de-Baathification" purge carried out by the Coalition Provisional Authority.

The storm over AWB broke in June. The powerful American lobby US Wheat Associates had somehow got its hands on two of AWB's Iraq contracts. One, already heavily loaded with kickbacks, was from mid-2002. The other was 1680, signed six months later. At a time when the world price of wheat had barely shifted, the price increase between the two was $US50 a tonne. AWB's fierce opponents had the evidence they needed.

They didn't muck around. In a letter to the US Secretary of State, Colin Powell, the lobby accused Australia of writing "undoubtedly inflated" contracts with Iraq - adding that "earlier oil-for-food wheat contracts with prices inflated by millions of dollars per shipload have provided foundation to the rumours that some of the excess may have gone into accounts of Saddam Hussein's family".

Howard's senior ministers leapt to AWB's defence when the letter was published around the world. Vaile called the allegations absurd and insulting. Where was their gratitude? "I was very, very annoyed, given the close co­operation that Australia and the US have played together as both members of the Coalition of the Willing and as two countries who participated together as close allies in the first Gulf War."

Was he not "vouching the word and the good name of Australia", asked John Agius, SC, counsel assisting the Cole inquiry. Vaile agreed. But he was not vouching he had conducted any kind of independent inquiry? The minister agreed again: "I was working on the basis of advice that had been given to me from the department." But that, in turn, had come from AWB? "I now understand that to be correct."

Australia called in its markers with the US. Zena Armstrong's office asked ambassador Michael Thawley to push AWB's denials in Washington. "We are very concerned at egregious allegations made by US Wheat Associates against AWB Ltd ... Grateful ambassador raise the matter at a senior level with the US Administration, noting our concern that AWB Ltd's international reputation would be damaged by the unfounded claims ..."

Thawley was hard at work conveying "our outrage" in US capital at the "smears and innuendo" of the US wheat lobby. After making an official complaint to then deputy secretary of state Richard Armitage, the ambassador reassured Canberra that the Washington end of the fracas was under control: the State Department "understands the issue, is concerned to contain it" and would look at ways of reining in the lobby and its powerful boss, Alan Tracy.

For the next 2 years, the mantra of the Government was that these "unsubstantiated rumours" of kickbacks were to be discounted entirely as the work of AWB's enemies, who wanted to wrest the Iraq market from Australian hands. John Howard would tell the Cole inquiry that was his general understanding: "Attacking the behaviour of one's trade competitors in the international wheat trade is fairly common."

But that didn't explain Captain Blake Puckett of the US Army's civil affairs command in Baghdad, who had swiftly drawn the conclusion that "every contract" for humanitarian supplies under the oil-for-food program since 1999 "included a kickback to the regime from between 10 and 19 per cent". Within days of the US Wheat Associates writing to Colin Powell, Puckett was circulating a memorandum about the kickbacks to all the ministries in Baghdad.

Again AWB made ritual denials and, again, no one in Canberra questioned them. Now was the time for someone in government to ask AWB to provide a forensic analysis of the pricing in its contracts. It was never done. Zena Armstrong had a stab at it and thought the contracts looked OK after what she confessed was "a very inexpert lay person's analysis".

A sobering cable setting out Puckett's findings reached every senior minister's office in Canberra - including Howard's - and was also distributed to every senior public servant, including Australia's intelligence chiefs. Puckett's findings mirrored reports from Australian Treasury officials in Baghdad assigned to work on the new Iraqi budget. But nothing was done. Alexander Downer told the Cole inquiry he dismissed Puckett's conclusions as the work of someone too far down the pecking order: "This was information provided by a captain in the US Army, a junior officer in the US Army."

By contrast, the response inside AWB to the developing crisis was frenetic. Its head, Andrew Lindberg, set up an internal investigation as soon as the first allegations surfaced. Later dubbed Project Rose, this mammoth exercise was outsourced from the start to squads of private lawyers, beginning with Chris Quennell, a partner of Blake Dawson Waldron in Melbourne. In this way, all the findings of Project Rose were shielded by legal professional privilege from external investigation. It's a cast iron box the Cole inquiry has not been able to break into.

Project Rose became the source of all the briefings and talking points senior AWB executives used to maintain their blanket denials of wrong-doing. In turn they supplied this material to the Howard Government. The lawyers of Project Rose were not only fashioning the tactics of AWB but directing Downer's and Vaile's response to the looming scandal.   

Iraq, meanwhile, was lurching towards a new crisis which riveted the media's attention. A massive truck bomb exploded outside the UN headquarters in Baghdad, killing its chief envoy, Sergio Vieira de Mello. In an atmosphere of deep apprehension about the future of Iraq, Michael Long flew to Canberra to brief Downer on AWB's bid to finalise the wheat contracts. The paperwork was sitting at the UN's headquarters in New York awaiting final approval.

The UN was demanding the "after sales service" kickback be cut out of all contracts. AWB was very reluctant to make the 10 per cent cut because it amounted to an acknowledgement of wrongdoing. It had no choice. But in a face-saving move it persuaded the UN that so high was the cost of trucking in postwar Iraq - and by now the company actually was delivering wheat all round the country - that the final price paid per tonne should be shaved by only a few dollars.

What AWB had failed to tell the UN was that this price included $US10 million in kickbacks. These were the so called "iron filings rebate" and the final payment of the old and dodgy Tigris debt. The contracts were still filthy.

On September 7, a triumphant Mark Vaile announced that the 800,000- tonne deal worth more than $US200 million had at last been approved by the UN: "This tremendous result is the culmination of many months of close co-operation between the Federal Government and AWB Ltd to secure these contracts for Australia."

THE HAWKS CIRCLE: JANUARY TO MARCH 2004

ON A freezing Washington winter's day, the US chief weapons hunter, Dr David Kay, appeared before Congress to deliver his report on Iraq's weapons of mass destruction. In a stunning blow to the Coalition of the Willing, Kay candidly told Congress: "We were all wrong."

The blow was felt acutely by Bush's war supporters on Capitol Hill. These included the Chalabi's champions, who had pushed the cause of war with reports from defectors of WMD caches. But the hunt for hidden weapons had unearthed thousands of documents detailing massive corruption in the oil-for-food program.

Stung by Kay's revelation, the Bush Administration, the Republican Congress and the Iraqi opposition switched their focus to corruption. Washington instructed a Stanford-educated aid official, Jim Warlick, to secure all documents from the old ministries in Baghdad for an audit of the program. Warlick was put into the Iraqi Ministry of Trade and, as he put it, "worked to ensure that pertinent documents were not destroyed and were available to investigators".

By now, Long had left the ministry to return to Melbourne but he was replaced in Iraq by AWB's corporate affairs manager, Darryl Hockey, once again paid for by AusAid. In Baghdad, Hockey was tipped off by an American colleague in the ministry. "We're going to do a search and you guys, you Hussies, better watch out."

Hockey dashed off an email to Armstrong: "There is a high-level push to investigate corruption in the OFF  program ... There is no doubt a protracted and intense investigation will be initiated at some point in the future - sooner rather than later."

Among the documents being uncovered were handwritten records from the Iraqi Ministry of Transport showing payments from AWB to Alia being funnelled to the Ministry of Finance, Saddam's funding source for everything from the Iraqi intelligence services to the postwar insurgency.

By March 2004 it was clear the UN would be forced to set up an independent investigation. The news rattled Ceres House. When Armstrong spoke about the new investigation with Chris Whitwell, her point man at AWB, he told her for the first time that AWB had paid for inland transport through a Jordanian trucking company before the war. To her amazement he went on to say the company "might have made payments to the Iraqis of their own volition". Whitwell also claimed AWB had told Armstrong's department about the trucking company back in 2000.

Armstrong was stunned by the admission of possible payments to Saddam's regime. On March 30, she prepared a ministerial submission for Downer and Vaile on the looming UN investigation. AWB had "strenuously denied" kickback allegations, but she warned that, as the largest single supplier under the oil-for-food program, AWB "was unlikely to escape scrutiny". She then added: "The company concedes, however, that the Jordanian company handling local transport might of its own volition have provided kickbacks to the regime."

Despite this crucial break in the facade of AWB's denials, Armstrong was not calling for any kind of investigation. Instead, she suggested the company put a bit more work into its defence. "Given the gravity of the allegations we have suggested to AWB Ltd that they may wish to provide more formal advice of their position to the Government."

Downer jotted on the submission: "This worries me." It was the first distinct note of alarm expressed by the Government. He also scrawled: "How were AWB's prices set and who set them? I want to know about this." He now says no one in his department ever told him. The answer would come 15 months later - in the most publicly humiliating way - from the former governor of the US Federal Reserve, Paul Volcker. 

  They backed the scam to the bitter end

April 17, 2006

DECEIT BY THE TRUCKLOAD: PART TWO The story so far: despite emerging evidence f AWB's kickbacks, the Howard Government continued giving the wheat trader its unconditional support. By Marian Wilkinson and David Marr.

UNDER FIRE: APRIL 2004 - OCTOBER 2004 

PAUL VOLCKER is one of those rare figures who survived public life in Washington with a reputation as an honorable man. Admired for his towering intellect as well as his personal integrity, the former chairman of the US Federal Reserve Bank was not one to shirk onerous tasks. He had mediated the fraught, emotional battles between Holocaust survivors and the Swiss banks and taken on the failings of global accountancy firms in the aftermath of the Enron scandal.

In April 2004, the UN Secretary-General, Kofi Annan, asked Volcker to investigate the greatest scandal ever face^, by the world body: the corruption of its $US100 billion oil-for-food program. The program had rescued Iraq from the brink of starvation and economic collapse after the UN-imposed sanctions on Saddam Hussein. But since the US-led invasion toppled the dictator, a chorus of critics from Iraqi exiles to the US Congress were on the attack, even accusing Annan's son of corruptly benefiting from the program.

News of Volcker's investigation was met with anxiety in Canberra, where the Government had mounted a vigorous defence of allegations coming out of Baghdad and Washington that Australia's monopoly wheat trader, AWB, had paid kickbacks to Saddam's regime. AWB had shipped $2.2 billion worth of wheat under the oil-for-­food program, by far the largest supplier of goods, and would inevitably come under intense scrutiny by Volcker.

A month earlier, the Foreign Minister, Alexander Downer, and the Trade Minister, Mark Vaile, were warned that despite AWB's previous blanket denials it had paid kickbacks in exchange for these contracts, the company was now admitting it could be vulnerable. Downer's senior adviser, Zena Armstrong, reported an AWB executive telling her that the Jordanian trucking company used by the company "might of its own volition have provided kickbacks to the regime".

Despite this, Downer never asked his department to independently inquire into the kickbacks. The elite Iraq Task. Force that pulled together the expertise of Australia's intelligence agencies, diplomats: and public servants never had such an instruction. Instead, for the next 18 months, as the evidence mounted against AWB, Downer would put his head in the sand. No one wanted to believe the great Australian wheat exporter had been funding Saddam's regime. John Howard told the Cole inquiry last week: "It hadn't crossed my mind that it would have behaved corruptly."

Yet a simple check of the internet, or indeed Australia's intelligence holdings, would have revealed that Alia, the Jordanian trucking company paid by AWB, was half-owned by the old Iraqi regime and deeply involved in sanctions busting for years. It would have exposed AWB's denials as disingenuous. From the company's own records it was clear that its oil-for-food contracts had been inflated with kickbacks to the regime funnelled through Alia.

On April 21, Australia's delegate at the United Nations in New York voted to support the independent investigation  of  the  oil-for-food program. The resolution called on all member states to "co-operate fully by all appropriate means with the inquiry". From the outset, this was not Canberra's intention.

Both the Howard Government and AWB knew Volcker depended on their co-operation. Volcker had no power to subpoena documents and no legal authority to compel anyone to be interviewed. In the end, these constraints would not save AWB - partly because of documents being unearthed in Baghdad but also because the politics of the oil-for-food scandal were ultimately beyond the control of either the company or Canberra.

In Washington, the war in Iraq was rapidly turning against President George Bush. The brutal, ugly images of Abu Ghraib were dominating the media. Baghdad was convulsed by violence as the US-led occupation government, the Coalition Provisional Authority, handed over to a fractious interim Iraqi administration.

On Capitol Hill, Bush's allies were nervous. In this election year they were desperate to shore up their defence of the war. One of the most strident voices was that of Senator Norm Coleman, a Republican former Minnesota prosecutor who now sat on the powerful Senate permanent sub-committee on investigations. Coleman had made his name in Washington attacking the UN and had announced a sweeping investigation of corruption in the oil-­for-food program, rivalling Volcker's inquiry.

On June 23, one of Coleman's staff made a surprising call to AWB's American office in Portland, Oregon, to warn that the Australian wheat trader was a target of the senator's probe. Stunned by the news, the company directed its high-powered American law firm, Piper Rudnick, to assess the potential threat. It was bleak. Coleman's investigation was to be the committee's biggest in a decade; it had bipartisan support, was planning to hold hearings for up to two years and any false statements to the committee could land witnesses in jail.

At AWB's Melbourne headquarters, fresh lawyers were summoned. The company's own secret investigation into the kickback scandal, Project Rose, had been under way for a year since the allegations first surfaced after the fall of Saddam. Now Project Rose was expanded to manage both the Volcker and US Senate investigations. AWB's chief legal counsel, Jim Cooper, was already working with an outside legal firm, Blake Dawson Waldron, but a second firm, Minter Ellison, was now brought on board along with the US lawyers. A third firm, Arnold Block Liebler, would soon join them.

The team had examined some 30,000 internal documents including scores of incriminating emails from AWB's international sales and marketing team. It was clear from these that hundreds of millions of dollars in "trucking fees" had been paid to Saddam's regime through Alia. It was also clear the trucking firm was 49 per cent owned by the Iraqi government.

Yet the Project Rose team confidently reported to AWB's board- that it had a credible defence. Put simply: there was no "identifiable evidence" that AWB knew the money it paid to Alia was paid to the Iraqi regime; that all AWB contracts had been vetted and approved by the UN Office of the Iraq Program; and that there was no evidence AWB had paid any individual Iraqi any kickbacks.

The first proposition was simply untrue, as the Cole inquiry would later discover. But just how Project Rose justified this defence has never been revealed because the material prepared by the legal teams remains protected by legal professional privilege.

The strategy AWB's senior executive chose for handling the Coleman and Volcker inquiries was this: the company would provide only "limited co-operation" and would "seek the support of the Australian Government" in taking this stand. Coleman would be offered no witnesses and few documents.

AWB turned to Canberra to try to persuade the American senator to get off its back altogether. In September, the company's managing director, Andrew Lindberg, begged Downer and Vaile to send Australia's ambassador in Washington to plead their case with Coleman. They agreed.   

This was a turning point for the Howard Government. By now it had to be clear that AWB was in deep trouble. The company had admitted its money might have been funnelled to the Iraqi regime, albeit without its knowledge. The Coalition Provisional Authority had explicitly told Canberra "all contracts" under the oil-for-food program contained kickbacks. And in July, Colonel Mike Kelly, an Australian officer who had been working with the CPA, briefed the Iraq Task Force that AWB was most likely heavily implicated in the scandal.

Despite all these warning signals, Canberra instructed Michael Thawley to argue AWB's case on Capitol Hill. In early October 2004, armed with talking points drawn up by the Project Rose team, Thawley met the senator and his staff. By Coleman's account, Thawley "unequivocally dismissed the allegations that AWB paid illegal kickbacks to the Hussein regime" and argued that "reports of AWB's illegal payments were simply the smear tactics of a rogue journalist and perhaps an insidious trick by a US wheat marketing association".

By this time, Thawley had been arguing AWB's case in Washington for a year. Once again he was persuasive. AWB's tough legal stance in refusing to hand over documents and witnesses to the committee stymied the probe. Coleman dropped off.

A few days later, in a spectacular election victory, Howard crushed Labor's Mark Latham, who had become a trenchant critic of the Iraq war. Throughout the campaign, the scandal engulfing AWB barely surfaced.

COVER UP: OCTOBER 2004-MARCH 2O05

PAUL VOLCKER'S investigators shocked Canberra with their demands. They wanted full access to people, to documents and even to records of financial transactions held by AUSTRAC, the agency responsible for tracking suspicious currency movements in and out of Australia.

Downer and his department baulked. After considering the request for a little more than a week, the minister decided he would severely limit Volcker investigators. They would not be allowed to interview his officers, they could only put questions in writing and they would get no access to any classified cables or to AUSTRAC.

In early January last year, members of AWB's Project Rose team came to Canberra for a meeting with the new head of the Iraq Task Force, Bassim Blazey. Told of the Government's strategy of limited co-operation, AWB immediately decided to follow suit. The company told Volcker's people it was refusing to make AWB employees available to be interviewed by the UN investigators to ensure "an approach consistent with that adopted by DFAT [the Foreign Affairs Department]". Volcker's investigators cancelled their trip to Australia.

Back in New York, the old banker was deeply unimpressed. In a stern face-to-face meeting with Australia's ambassador to the UN, John Dauth, he chided the Australian Government for displaying an attitude that was "beyond reticent, even forbidding". He bluntly informed Dauth that he had "strong evidence" that "AWB had knowingly paid inflated transportation costs which were kicked back to the Iraqi regime".

Volcker delivered a veiled warning that put Howard on the spot: it would be in the best interests of both Canberra and AWB to assist his investigations. The diplomatic consequences for Australia were all too clear if it was lumped in with dubious oil brokers and middlemen refusing to co-operate with his inquiry.

Howard switched tack. Within days, he and Downer advised Volcker the Government would be "an open book" and would take "strenuous measures" to impress on AWB the need to also fully co-operate. In a scrawled directive to Downer, Howard instructed, "there must be maximum co-operation and transparency". He directed the Trade Minister, Vaile, to pass the same message to Lindberg at AWB. The result would still fall far short of full of f co-operation. 

Downer's officials now began serious work on their own defence. Central to it were two bald arguments. First, the department would continue to accept at face value AWB's denials that it paid any kickbacks. Second, and most importantly, they argued that the failure to monitor AWB's dealings with Iraq was entirely the fault of the UN.

Under UN Security Council Resolution 661 imposing sanctions on Saddam Hussein, all member nations had an obligation to ensure that their nationals did not transfer foreign currency to the Iraqi regime. But Downer now argued that once the oil-for-food program set up its own supervisory committee in 1996, Australian officials actec simply as a "post box" to the UN. The Department of Foreign Affairs and Trade checked AWB's contracts to see al the boxes were ticked, but left the UN to vet them for sanctions violations.

International lawyers and even key UN officers would argue this misrepresented Australia's obligations but Downer clung to the line.

The ducking and weaving by Foreign Affairs was just beginning. When Volcker's investigators appeared in Canberra in February last year, they found witnesses afflicted with memory loss brought on, in part, by a decision of the department not to have them refresh their memories of key events from documents. Critical documents detailing the department's knowledge of the kickback scandal going back to January 2000 were simply not shown to the officers who handled the issue back then. They went into the interviews almost entirely unprepared and could offer Volcker's people little information of value.

Most telling was the case of Bronte Moules, a senior diplomat at Australia's UN mission who handled inquiries into the first kickback allegations against AWB in 2000. Despite cables from that time being downloaded in the department before the investigators arrived in Canberra, she was not shown them. Moules told the investigators she "didn't recall" any discussion of kickbacks in 2000 and "did not recall any allegations of impropriety in relation to AWB contracts during the time that-she worked with the Australian mission in New York". Incredible.

The investigators had even less help at AWB's headquarters in Melbourne. Those executives had also not prepared themselves for the interviews. Their memories were shot. Project Rose had gathered 29,000 pages of documents in the company's "data room" but among them were none of the emails, trip reports and briefing notes that have emerged during the Cole inquiry to show AWB knowingly pursued sanctions-busting arrangements with Iraq from 1999.

EXPOSED: MARCH 2O05

DESPITE their best efforts to spin the Volcker investigators, AWB's executives were rattled. Clearly Volcker knew all about Alia and the fact that AWB had channelled vast sums to the trucking company for so-called "inland trucking fees".

TO JUNE 2005

Deeply worried, Lindberg and his managers briefed the company boards on the serious consequences should Volcker find AWB had paid kickbacks. Its billion-dollar foreign markets would be put at risk. Its global rivals, especially the US wheat lobby, would use the finding to attack the company's most valuable asset - the sacred "single desk" system that gave it a monopoly of bulk wheat exports. The share price would be battered. The Government might recommend a federal police investigation or a royal commission.

The company realised its most important ally in the difficult months ahead would be the Howard Government. At the urging of the board, Lindberg and the company's chairman, Brendan Stewart, briefed Canberra on the rapidly developing crisis. Among others they saw Downer, the head of his department, Michael L’Estrange, and John Howard’s senior foreign policy adviser, Paul O’Sullivan. 

Lindberg would keep the company's innermost secrets from the ministers and officials, but he bluntly warned them that Volcker's findings could be dire. In a stark memo of his meeting with executives, L'Estrange recorded that it was known Alia was part-owned by the Iraq government and that it had been a conduit of funds to Saddam's regime. Lindberg told L'Estrange that AWB wanted to work out "a contingency plan" with the Government, "in the event an adverse finding is handed down".

Even when he read this memo, the Foreign Minister was unfazed. He jotted: "Spoke to them myself: have to take it as it comes but I'm more relaxed than they are."

His mood would change three months later, last September, when Volcker handed down an interim report that found the UN's oil-for-food program was, indeed, riddled with corruption. Kofi Annan was humiliated by the "deeply embarrassing" role of his son and the program's head, Benon Sevan, was exposed as being "ethically improper" in his dealings. But Volcker was leaving until his final report in October naming the names of all the companies caught paying kickbacks.

Downer decided on a fare-to-face meeting with Volcker. The old banker was unswayed when they met in New York in the middle of September. Downer had come to the meeting armed with arguments mustered by AWB's lawyers but Volcker swept them aside. He told the Australian minister his investigators had "excruciating detail" on the kickback from former officials in Saddam Hussein's regime and from documents found in their files.

Of all the suppliers under the UN oil-for-food program, AWB was the largest and the largest payer of kickbacks. The only outstanding question really was whether AWB had participated wittingly or unwittingly.

When Downer insisted AWB needed to be "afforded fair and due process", one of Volcker's team interrupted, saying that rather than co-operating with the investigation, AWB had been "very difficult to deal with". However, Volcker was open to AWB executives talking to him one more time. But he warned Downer the company would soon have his draft findings and they should examine them carefully.

The findings arrived a few days later at AWB's headquarters in Melbourne. Volcker's verdict was devastating: he had evidence of AWB paying hundreds of millions in kickbacks through a trucking company that provided no transport services. "AWB's payments to Alia were in actuality kickback payments for the benefit of the government of Iraq and did not correspond to actual transportation costs."

Though AWB had told him it did not know Alia was a front for the government of Iraq, Volcker concluded the company "knew or should have known that its payments were channelled to the government of Iraq ... in contravention of UN sanctions imposed on Iraq".

The draft findings blasted a giant hole in AWB's defence, carefully crafted over 18 months by three of Australia's top law firms, several QCs and the company's in-house legal team. Rather than distance itself from the company, the Government had chosen to work hand in glove with AWB to try to keep a lid on the scandal. Now both were about to be exposed on a global scale.

Clearly shocked, Downer met Lindberg and Stewart in Canberra a few days later. Notes of the meeting record Downer telling the AWB men things "did not look good" and that a report from Volcker in these terms would be "a smoking gun". He feared the press reaction: there would be headlines that AWB had paid $300 million in kickbacks to Saddam.

For the first time, Downer began to ask the AWB men some hard questions. Who knew about Alia? Had the UN been told about AWB using the trucking company? It was too little much too late. Downer urged Lindberg and Stewart to fly to New York, take a lawyer with them and talk to Volcker. He would help set it up.   

NOWHERE TO HIDE: OCTOBER 2005

DOWNER got them through Volcker's door. Using all the carefully crafted words of the Project Rose team, Lindberg and Stewart pressed their case - a case we now know is at odds with the evidence in AWB's own documents. They were duped, they told Volcker. "Self-evidently, AWB was part of an elaborate deception by the regime."

The force of their denials, implicitly endorsed by the Howard Government, swayed the old chairman a little. When his final report was published a few days later, he gave AWB the benefit of the doubt: it paid the kickbacks but might have done so unwittingly.

But Volcker did not let AWB off the hook entirely. Not everyone at AWB could claim to have been duped: "Numerous documentary and circumstantial warning signs placed at least some employees of AWB on notice that payments to Alia may have been illicitly funding the Iraqi regime."

Volcker's verdict was a huge public surprise. To this point, the scandal had had little play in the press. The news that an icon Australian company had been exposed as a major bankroller of Saddam's dictatorship seemed to come out of the blue. Howard had taken Australia to war to enforce UN resolutions against Iraq, yet his Government had overseen some of the most serious breaches of UN sanctions documented in Volcker's report.

For the first 48 hours the Government and AWB kept to the old script. The Prime Minister leapt once again to the company's defence. He had always found their managers to be a "very straight up and down group of people," he said. "And I can't, on my knowledge and understanding of the people involved, imagine for a moment that they would have knowingly been involved in anything improper."

But the enormity and credibility of the findings were too serious to be ignored. Under intense pressure from Volcker and Kofi Annan, Howard had little option but to agree to set up his own inquiry into the AWB scandal - almost six years after the kickback allegations were first brought to his Government's attention.

"I make no judgements to the contrary," he told Parliament. "But, given the seriousness of the issue, I believe that there should be an independent inquiry into whether there was any breach of Australian law by those Australian companies referred to in the Volcker report."

After four months of sittings involving squads of lawyers in front and behind the scenes; after hearing evidence from more than 40 witnesses including two ministers and the Prime Minister; after the unearthing of tens of thousands of documents from AWB, the UN, Alia and half a dozen government departments the Cole inquiry has established beyond doubt that AWB knew what it was doing when it paid those millions to that obscure trucking company: they were kickbacks to Saddam.

Ministers may be humiliated and wheat traders may go to prison. But the Cole inquiry has revealed more than a great corporate scandal; this is one of the most extraordinary failures of government in the nation's history. 

THE AUSTRALIAN WHEAT BOARD (AWB)

By Phil Tzavellas of Australia

On January 13, 2006, I spoke on Sydney Breakfast Radio 2SM (1269 am) with Voice of the Sydney Olympics and Para-Olympics, Grant Goldman. This was three days prior to the opening of the Cole Inquiry when I warned him and his listeners that this Inquiry represented an in-house rigged inquiry, for the following reasons:

That Prime Minister John Howard appointed long-time friend Terence Cole Q.C. as the Commissioner to investigate the AWBs involvement regarding the kick-backs paid to Saddam Hussein.

The failure of John Howard to broaden the Inquiry's terms of reference to the widest possible so that every shred of evidence could be realized.

We had no doubt that Mr. Howard was protecting himself and his members of Government when he extended the Cole Inquiry until June. You see, the attention of the majority of Australians will be riveted on the World Cup (Soccer) as this is only the second time our country has qualified for the ^world's greatest sporting event, the previous time being 1974.

In a report from the "Sydney Daily Telegraph ; Friday April 28, 2006, the heading was "Cole lashes out at `influence` suggestion." Wheat-for-weapons Commissioner Cole sprang to the defence of his old friend, John Howard yesterday after the Prime Minister was accused of "destroying" the Inquiry's independence. The former judge launched a blistering attack on AWB's lawyers, politicians, the media and even the public for suggesting the Howard Government might influence his findings. At issue were Mr. Howard's remarks at a press conference two weeks ago after he appeared as a witness, when he accused AWB of "corruption" and "deception" - even though the Inquiry was still under way.

Yesterday Terry Forrest Q.C., for several AWB executives, said Mr. Howard had been "prejudging" Mr. Cole's findings. Mr. Cole said he had been given advice "from many fronts" on the inquiry's shortcomings, and what the conclusions should be, but his findings would be based on evidence only. He had even refused to speak to Government figures. "This Inquiry is divorced from politics," he said. It appears Commissioner Cole has accepted his old friend, John Howard's, decision "not to grant an Inquiry with the widest terms of reference, thus restricting the Inquiry to the bare minimum."

In the "Sydney Morning Herald" Friday, April 28, 2006, by David Marr - Oil for Food Scandal - we were clearly warned "The bribe cable sent to P.M.": Senior Federal Government Ministers were clearly warned in 2001 that Iraq was demanding kick-backs under the U.N. oil-for-food programme, according to last minute evidence before the Cole Inquiry into AWB. A cable from Australia's U.N. mission in March that year reported the concerns of British diplomats, U.N. officials and the Norwegian head of the U.N. Sanctions Committee that Iraq was "blackmailing" companies and "demanding illegal commissions." The cable was sent to the Prime Minister, John Howard, the Foreign Affairs Minister, Alexander Downer, the Trade Minister, Mark Vaile, and intelligence analysts with the Office of National Assessments. Though it carries more detailed warnings of Iraq's conduct than any of the nearly 30 diplomatic cables already seen by the Inquiry, the cable was not shown to investigators until very recently.

The three Ministers escaped questions on its contents when they appeared before the Inquiry two weeks ago, but each has given supplementary statements in the past few days, claiming not to have read, or not to have recalled reading, the cable. In Mr. Downer's case, this was despite his then adviser, Michael Smith, opening the cable and emailing it to the Minister's office. Mr. Downer said: "Having regard to this information, it may be that a hard copy of the cable was printed and distributed to me." But he said he was unaware of the "issues raised." The four-page cable written by Bronte Moules, First Secretary at Australia's U.N. Mission, detailed discussions behind dosed doors in the Security Council about Iraq's exploitation of the U.N. oil-for-food programme. AWB was the biggest single supplier under the programme, and was to pay almost $300 million in kick-backs to Saddam Hussein's regime.

Ms. Moules reported: "The U.K. said Iraq needed to      stop blackmailing companies by demanding surcharges. Iraq has, according to U.N. officials, begun demanding kick­backs and illegal commissions on contracts for humanitarian supplies." Norway said, "Everybody knows about the kick -backs, but the lack of evidence in contracts seen by U.N. made it "difficult to address the issue directly."

Ms. Moules' cable was sent three days after "The New York Times" carried a detailed account of the kick-backs Iraq was demanding on "commodities like wheat, sugar, rice or cooking oil."

Other evidence to emerge before the Inquiry yesterday included an admission from the Australian Transaction Reports and Ma" Centre that it had identified "aberrant" payments by AWB to the Jordanian trucking firm Alia as early as July 2001. According to the statutory declaration of Johann Visser, the Acting Deputy Director of the Centre, no approaches were made to AWB to explain that the payments were referred to the Australian Federal Police. The Federal Government says it did not learn of any link between AWB and Alia until Saddam's fall in 2003, and that it had no reason to question AWB's dealings with Iraq until the U.N.'s Volcker Inquiry into the oil-for-food programme was under way last year.

It is amazing how many people believe Prime Minister John Howard and George W. Bush have brokered a deal to protect the Australian Government from prosecution, even at the expense of the United States wheat growers.

The transcript from the SBS Dateline show hosted by George Negus, which was shown on Wednesday, April 26, 2006 (EST Australian). Our investigators can find no reason to disbelieve what the boss of Alia had to say in this interview. Therefore they found one of his statements of great interest when he admitted that the Australian Government had been aware of kick-back payments to Saddam Hussein through Alia since 1995.

This means that knowledge of these payments was also a reality when the Paul Keating Labor Government was in power. Therefore some senior members of both our major parties would have been aware of these payments. In fact, until the beginning of this year (2006), the leader of the Labor Opposition Kim Beazley, who was the Defence Minister in the Keating Government, never once mentioned AWB kick-back payments to Saddam Hussein via Alia until Prime Minister Howard announced he was appointing his old friend, Terence Cole Q.C., to head a Royal Commission to investigate the AWB. Mr. Howard's decision was hastened due to the results of the U.N.'s Paul Volcker inquiry into same.

We must remember that former Australian Secret Intelligence Service (ASIS) Officer, Warren Reid, said it would be impossible for the Australian Government not to know kick-backs were being paid by the AWB to Saddam Hussein's regime. "In fact, if you look at the core part of the Governmental System in Canberra, that's geared to knowing these things," he said. To back up that Mr. Reid's statement is factual, representatives of the United States and Canadian wheat growers reported their concerns about Australia paying kick-backs to gain wheat contracts in Iraq in 2003.

Our investigators are concerned by the reticence of the Bush Government to call for an Independent Inquiry into the AWB and what part, if any, that John Howard, his senior ministers and bureaucrats, may have played in the "oil-for-food programme" and the kick-back scam. Is it possible that President Bush and his Senior Ministers brokered a deal with the Howard Government, in which the United States would agree to turn a blind eye to the actions of the AWB? Remember, eight members of the Howard Government had past or present A-Shares in the AWB. Let's look at the possibilities. Well begin with a report in the Melbourne Age one week prior to the United States Australia Free Trade Agreement.

"Sugar doubts could kill trade talks" by Mark Forbes - Foreign Affairs Correspondent, Canberra - January 24, 2004. "Australia's hoped-for free trade agreement could collapse, with United States officials stating that their vital sugar market will not be part of any deal. Trade Minister Mark Vaile, departing for Washington yesterday to oversee next week's make-or-break negotiations, said sugar must be part of the deal."  

Agriculture - including beef, dairy and sugar - was key to a potential $4 billion boost to the Australian economy from the agreement, Mr. Vaile said. U.S. trade officials have reportedly asked Australian negotiators to settle for a free trade agreement that does not open the U.S. market to any more Australian sugar. The hard-line U.S. position on sugar is being seen as a major concession by the Bush Administration to the powerful sugar beet and sugar cane industry.

Political support for an agreement is ebbing in the lead-up to presidential elections this year. Yesterday's Age revealed that a third of the U.S. Senate had written to Mr. Bush expressing "deep concern" over the deal's potential impact on American farmers. Negotiations have effectively stalled before Mr. Vaile's talks with U.S. trade representative Robert Zoellick, which begin on Monday. The deal is expected to be made, or fall over, by the end of the week. Mr. Zoellick has told a U.S. radio station that he was opposed to opening up America's highly restricted sugar markets. "Our position is not to have any increase in sugar from Australia," Mr. Zoellick said.

Acting Prime Minister John Anderson has said it would be un-Australian to accept any free trade deal without sugar being included. "I cannot see how Australia can agree to a free trade agreement that did not include a fair and reasonable approach to sugar," Mr. Anderson said. Mr. Vaile said he could not give a watertight guarantee that negotiations would not end in stalemate, but there was a better-than-even chance the agreement would be struck. "We've sought to do a comprehensive deal across all sectors - including sugar - and we've said that sugar must be part of the deal, and we're not conceding that," he said. "If this deal is not good enough for the Australian economy, that is, if we're being asked to pay too much for what we're getting in return, then we've always reserved the right to walk away from this, and not to do the deal."

The following week the Australian Government, headed by Trade Minister Mark Vaile, accepted a United States-Australia Free Trade Agreement without the inclusion of the Australian Sugar Industry. What could have reversed Mark Vaile's strong stance in supporting his country's sugar industry? All this in a period of one week. Is it possible that the Bush Administration brokered a deal to protect Australia's wheat industry in exchange for allowing the United States sugar industry to run their race unchallenged? Remember, eight members of John Howard's Coalition Government were past or present A-shareholders in the AWB. This included Acting Prime Minister John Anderson, who has been accused of ""insider-trading" in that he sold all his shares in the AWB over a two-day period just prior to Prime Minister Howard announcing the AWB Inquiry into the "oil-for-food programme" kick-back scams.

 As you would be aware, the Jewish population in Australia is by far larger than those of the Islamic faith. Therefore our investigators were concerned when they discovered that information regarding George W. Bush's grandfather, Prescott Bush, was to be made public by the National Archives and library of Congress on how he helped Hitler's rise to power. It is now known as the Bush-Hitler Project (attachments).

Although the British and American media reported these facts, there was not one word in the Australian media. It's interesting to note that, in his eleventh year as Prime

Minister, John Howard has refused to open up our media to cross-media ownership until prior to the opening of the Cole Inquiry into the AWB kick-back scams. Is it possible that the Bush Administration brokered a deal with the Howard Administration to find a way to kill the Prescott Bush story in the Australian media, promising to turn a blind eye to the AWB kick-back scam, in the "oil-for-food programme" in exchange?

At this stage we believe there is enough evidence to prove there has been a cover-up of massive proportions by both the Bush and the Howard Administration regarding the kick-backs to Saddam Hussein in exchange for wheat contracts in Iraq for the AWB.

At a forum on e weekend regarding the AWB kick-backs paid to Saddam Hussein, a fourteen year old girl put a number of questions to the floor, which remains unanswered.

 "How can President Bush and his Government remain friends with the Australian Government, knowing full well that the bribes for wheat sales paid to Saddam Hussein were used to buy weapons and reward families of suicide bombers who have murdered more than 2,000 American troops?"

"Does President Bush value the dollar more than the life of an American soldier? I believe the President does, because in the next week he will be honouring Prime Minister John Howard with a State Dinner before the findings into the AWB Inquiry is handed down by Commissioner Cole. This gesture by President Bush leaves a lot of questions unanswered to whether his Government deliberately turned a blind eye to the cover-ups by the Australian Government."

CABLES SHOW PRIME MINISTER ABOUT AWB KICKBACKS

This AAP article was released on Wednesday May 10, 2006 Cables show PM knew about AWB kickbacks

Wednesday May 10 05:39 AEST

Prime Minister John Howard told Australia's ambassador to the United States to distance his government from bribery allegations against AWB only a month before the 2004 election, diplomatic documents show.

The declassified diplomatic cables and correspondence, released by the Cole inquiry into the AWB kickbacks scandal, show Australia's then US ambassador Michael Thawley warned the Department of Foreign Affairs and Trade (DFAT) in September 2004 that any fallout from an investigation into the wheat exporter would be "bloody".

A month later, Mr. Thawley was told that "the PM" did not want "any difficulties" for the government from an investigation, The Australian newspaper reported.

Mr. Thawley then successfully lobbied to stop a US senate investigation into AWB's wheat contracts in Iraq, the newspaper said.

"It is going to be pretty bloody here when the (UN) Volcker committee's focus on AWB Ltd comes out," Mr. Thawley wrote to DFAT's head of the Iraq Task Force in Canberra, Bassim Blazey.

"We ought to try at least to minimise it by starting earlier to try and shape Congress's approach," he wrote.

Mr. Blazey wrote to Mr. Thawley: "You should be aware that the general thrust of guidance we have from the PM and out Ministers on AWB and the IIC (Volcker inquiry) is that we do not want any difficulties AWB might run into because of corruption allegations, to damage the government's reputation."

Mr. Howard has previous said that he became aware of allegations surrounding AWB paying kickbacks to Saddam Hussein's regime in early 2005.

The documents also show Foreign Minister Alexander Downer was determined to prevent access by a US Congress investigation to relevant government documents and cables.

In reply to Mr. Thawley, Mr. Blazey says: "I do not think we could convince Mr. Downer of providing the US Congress with our documents - he was quite clear about this with us."

AUSTRALIAN WHEAT BOARD INQUIRY A 'RED HERRING.'

The Howard Government's reaction to defend the AWB was to set up a Diplomatic counter-offensive, enabling them to trade on Australia's loyalty for supporting the United States (U.S.) occupation of Iraq. The Australian Embassy in Washington was turned into a Campaign Headquarters, as senior Diplomats concentrated on convincing leading U.S. Senators and Congressmen that the allegations against AWB were nothing but self-interested gossip being circulated by U.S. and Canadian wheat producers.

Prior to the release of the Volcker report, the Australian Embassy aided the AWB to secure the services of the prestigious Cohen group of U.S. lobbyists, and is reportedly known to both Messrs. Howard and Downer, of their ability to handle any possible political fallout. The Howard Government had no choice last year (2005) but to set up the Terence Cole Q.C. Inquiry as part of their campaign to nullify any damage control. It was directed at circumventing moves in the U.S. to investigate the AWB more closely, with the potential to have embarrassing consequences.

In October 2004, Michael Thawley, Australia's Ambassador, had already lobbied Senator Norm Coleman, the Chairman of the potent Senate permanent sub-committee on investigations, to forego any further inquiry. The possibility of a U.S. investigation reared its ugly head again in February this year (2006) when Senator Coleman publicly accused Michael Thawley of misleading him, but was temporarily silenced after protests from the Howard Government.

Mr. Howard was the first Prime Minister in more than twenty years to testify at a high-level Commission of Inquiry. He did so in the hope that the Inquiry would retain International credibility of what he continually espouses is "an open and transparent inquiry." Mr. Howard's decision to testify, along with Messrs. Vaile and Downer, was due to the major concerns held in ruling circles that the scandal could seriously destroy Australian economic interests.

Australia, as part of the so-called Cairns Group, has been campaigning for major reductions of U.S. and E.U. agricultural subsidies. Alan Oxley, former Australian Trade Ambassador, told "The Australian" that there was "no question that the whole AWB episode had damaged Australia's credibility for negotiating trade liberalisation," in the current Doha round of talks.

The three Australian Ministers appeared at the Cole Inquiry in the midst of renewed uproar against the AWB in the U.S. Ten days before Mr. Howard testified on April 13, 2006, five senior Senators from U.S. wheat States formally called for an inquiry to decide whether the AWB had violated U.S. Trade Laws or World Trade Organisation (WTO) rules. This argument could create massive tensions within Mr. Howard's Liberal­ National Party Coalition. In efforts to shut the mouths of the Canadian and U.S. wheat representatives, as well as major Australian producers, the Government has intimated changes to the AWB "single desk, wheat monopoly." But these are seriously opposed by the majority of Australia's 32,000 grain producers, who are afraid of lower wheat prices, and who are a significant part of the National Party's political base.

Aware of what is at risk, the result of the Terence Cole Inquiry is a foregone conclusion. Instantly, after he testified, Mr. Howard effectively predicted the outcome by castigating the AWB. In an extraordinary radio interview, Mr. Howard chastised "a pattern of behaviour by AWB, that set out not only to deceive the Government, but also set out to deceive the U.N. and indeed many other people and many other organisations." The purpose is obvious, make the AWB Management the fall guy and possibly give Mr. Howard and his Ministers and their Bureaucrats absolution from their sins. In other words, Mr. Cole will deliver them a not guilty result. Mr. Cole is expected to deliver his findings on June 30, 2006.

Here is the 64 dollar question: Will the George W. Bush Administration continue to back the Howard Government in a U.S. election year? If so, why?

SORTING SPOILED WHEAT FROM NATIONAL’S CHAFF

The following article by Deborah Snow appeared in the Sydney Morning Herald Monday August 28, 2006

Denied chance to speak out against AWB ... Grant Holland sees the Nationals as the political arm of the troubled wheat exporter AWB.

TWO years ago, as the first whispers were emerging about AWB's questionable conduct in Iraq, a NSW grains farmer had a tense encounter with the wheat exporter that left him perturbed about its method of operating and its relations with the National Party.

Grant Holland had taken precious time out from crop-sowing to attend the Nationals' state conference in Dubbo. Most senior party ministers were billed to attend, including the then party leader, John Anderson, and the Trade Minister, Mark Vaile.

Mr. Holland had planned to initiate a debate from the conference floor, attacking some of the company's business practices, which he felt were gouging farmers. But minutes after the conference opened, Mr. Holland says, he was approached by a party office holder who said an AWB delegation wanted to see him.

Mr. Holland accompanied her outside to meet four senior AWB people. They included two directors as well as Jared Doyle, grower relations manager from the company's Sydney office, who had previously been an adviser to the then state National Party leader, George Souris.

Mr. Holland says Mr. Doyle and the two AWB directors, Xavier Martin and Ian Donges, spent an hour trying to talk him out of his motions. "I felt as though I was being interrogated," the farmer recalls. "'What are you doing, what are you up to, what are you trying to achieve?' ... They just went on, and on, and on."

Mr. Holland refused to withdraw the motions and says that later, as he was putting notes on delegates' desks, he was screamed at by someone from the office of the then agriculture minister, Warren Truss, who told him "you will be sued for this". Mr. Holland, a known critic of the company, put one question to Mr. Vaile about the Iraq rumours, but says he was fobbed off.

He never got to start his debate. Conference organisers told him they were out of time.

The farmer left angered at what he saw as the company's attempt to manipulate the political process by ambushing his motions before they hit the conference floor. And he was suspicious about how AWB came to have advance notice of his plans.

He says only his local National Party branch and the party's head office in Sydney knew beforehand about his intention to move motions critical of the company.

Mr. Holland came away convinced the Nationals were "nothing more than the political arm of AWB".

Mr. Donges and Mr. Martin (who is a farming neighbour of John Anderson's) refused to speak to the Herald. So did Mr. Doyle, who has since left AWB.

An AWB spokesman, Peter McBride, would say only "AWB pursues normal commercial interests on behalf of shareholders in discussions with all political parties". The Nationals' state director, Alison Penfold, defended its "democratic processes".

It is not the first time the Nationals have been accused of being too close to AWB. Nor is it the first time the company's behaviour towards critics has been the subject of complaint.

This year, in a submission to the Cole inquiry, the Pastoralists and Graziers Association of Western Australia sought witness protection for those giving evidence against AWB. They argued that the company had developed a "dysfunctional culture where unscrupulous people can prosper" and that AWB might "attempt to deter witnesses and suppress availability of information".

Justice Terence Cole will report next month on the results of his inquiry into AWB's hundreds of millions of dollars in kickbacks to Saddam Hussein's regime under the United Nations oil-for-food program. The findings are sure to ignite fresh tensions in the Coalition over the single desk - the monopoly over Australia's bulk wheat exports that AWB holds.

Growing numbers of Liberals would like to see the Federal Government cut the wheat exporter adrift. But the monopoly remains a centre piece of the Nationals' policy and its party leader, Mr. Vaile, has in effect tied his leadership to the issue. One Nationals senator told the Herald his party was drawing a "line in the sand" over the single desk and had told the Prime Minister, John Howard, as much.

The smaller Coalition partner simply could not afford another internal loss to the Liberals after the Telstra saga, the Nationals' unhappiness with proposed changes in media ownership and Senator Julian McGauran's defection to the Liberals this year.

In defending the status quo, however, the Nationals may pay a political price of a different kind.

Critics say the wheat marketing system, devised and fostered by a succession of the party's ministers, has been flawed by institutionalised cronyism, a lack of scrutiny, and the ability of a small club of interests at the top to call the shots - factors that helped feed and water the roots of the culture from which the oil-for-food scandal sprang.

IN MARCH 2O04, then Nationals senator Julian McGauran told Parliament, in Churchillian terms, that "like the Rock of Gibraltar sitting in the Mediterranean, the wheat board sits firm in this Government". And he warned farmers: "Do not chip away at this Rock of Gibraltar, for any change, no matter how slight or how seductive will bring down the single desk."

His words were revealing. Firstly, they showed the Nationals' view that the monopoly wheat exporter somehow had an immutable place "in" the Government. Secondly, they ignored that the old statutory Australian Wheat Board had expired some years before, morphing into its privatised offspring, AWB Limited, in 1999.

Yet for Nationals ministers, nothing much about the cosy relationship between the wheat exporter and the Government seemed to have altered.

As a former trade department official told the Herald: "The Government doesn't have systems in place to cope with what happens inside the bureaucracy when you deregulate. The wheat board went from a statutory body one day to a listed company the next, but the same individuals went on talking to each other, doing the same deals, having the same close relationships."

AWB became adept at exploiting its ambiguous status, trading on what a rival described as a lingering perception that it was a "benevolent, cuddly operator who would work in the interests of all". Yet after privatisation its character began to change.

Today wheat farmers hold less than 70 per cent of the company's tradeable B-class shares. It has diversified into areas such as fertilisers, rural finance and agricultural supplies, which means less than half its business is in grain. Yet via the single desk the company enjoys a government-bestowed monopoly over an export market worth $4 billion to $5 billion a year.  

The single-desk mechanism forces growers to pool their export crops through one seller to stop them having to compete against each other in overseas markets. But it also robs more enterprising farmers of choice in whom they' sell to.

The orderly marketing of wheat has served many in the bush well. Generations of wheat farmers knew the old wheat board as the only certainty through drought, flood or plague. Single-desk marketing arrangements were later set up for many other crops. But in recent years nearly all have succumbed to deregulation.

Yet the wheat export monopoly endures, shielded by the Nationals from the Government's application of free market economics through the National Competition Policy process. Mr. Vaile says this is because the single desk is the "only equaliser Australia has in a distorted world market".

But wheat's protected status inside the Coalition is explained as much by tradition, sentiment and fears for the Nationals' future. The political analyst Antony Green says the Nationals now hold half as many seats in all lower houses - state, federal and territory - as they did in 1988.

Party strategists are sensitive to grower opinion in the grains belt, particularly in the east, where smaller growers benefit more from the national averaging of export returns via the single desk. The fear is that losing the single desk could hit the Nationals hard in the eastern grains-belt seats of Riverina, Parkes and Gwydir in NSW, Mallee in Victoria, and Maranoa in Queensland.

AWB says its polling shows about 80 per cent of growers still support the desk. The Nationals' political response has been to play it, safe and lead from behind. The former Nationals leader Tim Fischer in effect confirmed this strategy when he told the Herald recently: "Whilst in politics you have the licence to lead as well as be led, it's the responsibility of the wheat industry leadership to sort out their position post-Cole on this single desk ASAP."

Yet this leaves the Nationals with no answers to some pressing questions. One is the mounting agitation in the bush about the huge legal costs being racked up by AWB through the Cole inquiry, and whether growers will ultimately be asked to foot the bill.

IN THE run-up to the last federal election, an intriguing document slid from a fax machine in a Labor Party office in Canberra. It was a misdirected memo from Alison Penfold, then a Nationals staff member attached to the office of Warren Truss and now NSW Nationals' director.

Dated June 2004, it dealt with looming vacancies on the Wheat Export Authority, the body set up by the Howard Government to umpire the wheat industry after the creation of AWB.

In the memo, Ms Penfold wrote that "the WA Nats [Nationals] are going to get back to me on Tuesday next week with some names for consideration for the WEA". It was an apparent glimpse of what all parties attempt - the stacking of industry regulators with political sympathisers.

But the export authority had been a toothless tiger from the start. It detected no sign of the oil-for-food scandal unfolding under its nose, and digging through the authority's pronouncements, it is not hard to see why.

Its annual report for 2002-03 declared AWB to be a "primary stakeholder" in the authority, with the ability to "influence ... the majority of WEA work efforts".

It was a highly unusual relationship for a regulator to have with the company it regulated.

As the South Australian grains group United Grower Holdings complained to a Senate inquiry in 2003, "The board and management of [the export authority] ... are virtually totally reliant on AWB Limited for advice".

That Senate inquiry, chaired by the Liberal Bill Heffernan, in hindsight rang many alarm bells. But they were barely heeded by the Government or the media.

In particular, startling evidence emerged of an unhealthy co-dependence between three key players in the wheat industry: AWB, the Wheat Export Authority and the Grains Council of Australia, known as the GCA.

The grains council is a peak grower body drawn from state and national farming organisations and has long been one of the industry's most forceful advocates for the single desk. It has exerted a powerful influence over Coalition's grains policy through its close ties with successive National Party ministers.

A sign of the council's privileged status was that the Howard Government allowed it to influence the industry regulator, by letting it nominate two of the export authority's five directors.

And when the Government picked a working party to oversee the creation of AWB Limited and the export authority, it was the then-head of the grains council, Brendan Stewart, who was asked to chair the group. Mr. Stewart now heads AWB.

Given these interwoven relationships, it might have seemed prudent for members of this triumvirate to keep their financial affairs separate. But they did not. The old wheat board began giving money to the grains council in the mid-1980s and the practice continued after privatisation. Every year from 2000 until 2005, AWB generously subsidised the council with cash - from $164,000 to $220,000 a year. It often underwrote the council membership fees of state farm associations.

In 2003 the Senate committee heard that AWB was not above calling in favours from the grains council in return for its financial support. Alan Winney, a former AWB employee, alleged he had evidence of this when he worked for the company.

He told the Senate committee of "suggestions ... that if GCA had a contrary view to the AWB then the ongoing funding [of the council by AWB] might be questionable". When asked at what "level" AWB had made those suggestions, Mr. Winney replied: "At a chairman level." He later added that it was a "previous" chairman but was not pressed for further detail. He did not return the Herald's calls.

Mr. Winney's was not the sole warning voice. Netco, a grains co-operative, also put to the Senate committee in 2003 that the grains council's relationship with AWB was "hopelessly compromised" and "a cushy arrangement".

"AWB Ltd have been responsible for large funding streams for GCA and the list of GCA presidents who miraculously end up with seats on AWB's boards is in our view inappropriate," Netco said.

In a statement to the Herald, the grains council implicitly acknowledged there had been a potential conflict of interest.^-It said it stopped taking AWB's money at the end of last year, "to ensure greater independence". But it added that "all farming organisations rely, to a lesser or greater degree, on sponsorship from the private sector for operational funding", and that the loss of AWB's money would leave it with a "significant funding shortfall".

Netco's complaint about "cushy arrangements" highlighted a curious pattern which had become entrenched at the top of the wheat world.

A kind of musical chairs had developed, with a well-trodden path leading via the state farming organisations and the grains council to directorships on the wheat board, and later AWB. On the AWB Ltd board now, four out of 11 directors (including AWB's chairman, Mr. Stewart) have a grains council background. Two more have been prominent in state farming bodies.

A stand-out example was a man who came under early scrutiny at the Cole inquiry - Trevor Flugge. Mr. Flugge, whose image is now indelibly linked with photos of him nursing a pistol against his bare torso in Iraq, trod a classic path in the narrow world at the top of the grains industry.  

A one-time member of the Young Country Party and a former Nationals candidate in the West Australian seat of O'Connor, Mr. Flugge was for many years head of the Australian Wheat growers Federation before it became the grains council.

He moved to the wheat board in 1984 (appointed by a Labor government) and was later made its head, overseeing its privatisation by the Howard Government in 1999. His good standing with National Party ministers also saw him put on key boards in the wool industry.

Mr. Flugge was voted off the AWB board by wheat farmers from his own state in 2002 but was sufficiently favoured by the Howard Government to head a mission to Iraq in the wake of the invasion in 2003.

OTHER prominent AWB executives also have strong Nationals' links. Mr. Stewart, the AWB's chairman, is a former Young Nationals member. Darryl Hockey worked for the former Nationals leader John Anderson before joining AWB as government relations manager, and Libby MacKinnon left AWB to work for a Nationals minister, Ian Campbell.

Jared Doyle previously worked for the Nationals in NSW. In 2004 a Liberal senator, Jeannie Ferris, attacked what she claimed was Mr. Doyle's involvement in drafting press releases for a lobby group orchestrated by AWB, the Single Desk Network. She accused the group of being "duplicitous" because "big brother - the old duchess, Australian Wheat Board Limited - was just behind the door guiding the hand that was guiding the pen".

A company source said Mr. Doyle provided information when asked, and had no control over what others did with it later.

But a number of industry insiders have complained to the Herald about what they see as AWB's  the debate around the single desk.

Ian Wearing, a former grains council director, told the Herald: "Friends of AWB ... are handpicked around Australia to do AWB's bidding, and for that they are duchessed. Their role is to promote the AWB in their area ... they are provided with extensive information to sway people to support AWB, and in return they are flown to corporate headquarters in Melbourne and duchessed with the high life - air fares, accommodation, dinners, nights out and all this sort of thing. It beats farming."

Senator Ferris told the Herald that AWB had a "whatever- it-takes attitude" and had once invited the entire rural executive of the South Australian Liberal Party to an all-expenses-paid weekend in Melbourne, where the company has its corporate headquarters. Long-time and outspoken opponents, by contrast, talk of rough treatment at the company's hands.

Leon Bradley, the head of the grains committee of the Western Australian Pastoralists and Graziers Association, accuses AWB of having had a "culture of impunity". He told the Herald: "They think they are bulletproof, they are absolutely ruthless and unscrupulous. I have been threatened personally by them many times, over a period of years, on many different matters."

Another grower, Ray Brooks, from the Riverina, said AWB had punished him through "predatory pricing and preferential treatment of those around us ... because I was a strong opponent of theirs".

Such critics believe it is time AWB lost its protected-species status with the Nationals. Backing that view are Liberals who believe it is also time the Nationals lost their iron grip on the trade and agriculture portfolios.

"The National Party having control of agriculture is the problem - their constituency want them to over deliver," says a disgruntled Liberal, who has watched the unfolding evidence before Cole with horror.  

Industry realists are braced for change once Cole reports, if not in this term, then after the next election. Even the grains council acknowledged as much recently, its chairman, Murray Jones, warning growers that "the status quo in a post-Cole environment may not be politically acceptable".

It's a message AWB, the Nationals and many grain growers still do not want to hear.

Exporter abandons gifts to politicians

IN A small step towards cleaning up its image before the commissioner Terence Cole issues his report, AWB is set to abandon the funding of political and farming organisations.

A company executive, Robert Hadler, told the Herald he would recommend to the board this week that AWB "not make political donations in any country in which it operates".

Mr. Hadler took on one of the business world's most challenging jobs when he became AWB's corporate affairs manager five weeks ago.

Before the last federal election AWB contributed about $120,000 to Australian political parties, most of it to the Coalition. Mr. Hadler said AWB had not made political donations in any of the other 50 countries in which it does business, but the new policy was "precautionary", to bring AWB into line with best corporate practice.

But the new policy did not prevent so-called facilitation payments to third parties, which would continue to be covered by the company's in-house code of conduct. These payments to foreign officials or agents were permitted if they did not break the law in countries where they were commonly used to "speed up the approval

process". Mr. Hadler said that he would recommend this week that AWB cease sponsoring farm organisations because of "perceived conflicts of interest".

"AWB will continue to protect the interests of growers and shareholders in making transparent and arms-length approaches to farm organisations and political parties about resolutions that may impact on the commercial interests of the company ... but we will do it in an open and transparent way," he said.

Lack of transparency has long been a sore point. Many growers and traders have demanded AWB disclose how it calculates the "services" fee it charges farmers for managing national wheat pools.

Because of its monopoly, critics argue there is no way of telling whether the fee is inflated. Mr. Hadler said that from October 1 AWB would disclose the detail of the previously in-house services agreement.

He confirmed the existence of a secret clause under which AWB could claim compensation from the proceeds of the wheat pool if the single desk collapsed.

"There is a clause that says if the services agreement comes to an end for whatever reason, then AWB Ltd can talk to AWB International about reimbursement," he said. 

NOTE BLOWS LID ON AWB SCANDAL -DOWNER STICKS TO AWB DENIAL

The following articles by Caroline Overington appeared in The Australian on Wednesday, August 30 and 31, 2006

THE Cole inquiry has been given nine pages of handwritten notes by a senior foreign affairs official that prove beyond doubt the Howard Government was warned two years ago that AWB was caught in the Iraq oil-for­-food scandal.

The notes, by veteran DFAT diplomat John Quinn, mention such terms as "AWB Ltd", "service fees", "10 per cent" and "exposure" in the context of the looming investigation into kickbacks to Saddam Hussein's regime.

Mr. Quinn penned the notes during meetings on July 22 and 29, 2004, when he was head of the Govenment's Iraq taskforce.

The taskforce was set up by the Department of Foreign Affairs and Trade before the 2003 Iraq invasion to collect information on Iraq. It was made up of representatives from the departments of Prime Minister and Cabinet and Defence, the Australian aid agency AusAID and ASIO.

A range of government officials and ministers, up to and including Foreign Minister Alexander Downer, have insisted under oath they either did not see, or felt compelled to ignore, the many warnings that AWB was involved in graft, because the allegations were made by rival wheat-sellers.

Mr. Quinn's notes were taken during two meetings with Australian army colonel Mike Kelly, who had been based in Baghdad. Mr. Quinn has transcribed the notes for the Cole inquiry.

The notes show that Mr. Quinn met Colonel Kelly specifically to discuss corruption in the oil-for-food program. His typed version confirms he was told: "AWB Ltd - problems."

His notes from July 22, 2004, show he was told there were "25,000 files - damning material" on the kickbacks. He also notes: "AWB Ltd - exposure - service fees across the board, 10-30 per cent." Colonel Kelly gave a second briefing at DFAT headquarters on July 29, 2004.

Mr. Quinn's notes show it was attended by "AGs (the Attorney-General's Department) PM&C (the Department of Prime Minister and Cabinet); and DFAT legal". The handwritten notes of the meeting are headed "OFF" - for "oil for food".

Mr. Quinn's notes include the phrases "Can't coach - AWB Ltd have legal advisers", "Media hungry" and "Damage very serious". He also writes: "Cabinet - too early" and "Letter Downer to PM."

Mr. Quinn, employed by the Department of Foreign Affairs and Trade since 1979, has not appeared before the Cole inquiry. He was recently promoted to a new post in Honolulu, Hawaii. In a statement, he said Colonel Kelly had told him "AWB Ltd had exposure in relation to its association with across-the-board service fee payments of between 10 and 30 per cent".

Mr. Quinn said he was "keen for Col Keto repeat this briefing as soon as possible to a wider, inter-agency group".

"Colonel Kelly said the food pillar, as one of the largest items in the oil-for-food program in which AWB Ltd had participated, was also of course under close scrutiny," Mr. Quinn said.   

"I do not recall that Colonel Kelly said anything much more specific in relation to AWB Ltd."

Colonel Kelly, who is still employed by the Defence Department, has not been asked to testify before the inquiry. In a statement, he said he was told in March 2004 that AWB was "up to their eyeballs" in the corruption.

On May 19, 2004, he sent DFAT official Heidi Venamore an email saying: "Looks like the jig is up on AWB and the oil-for-food scandal."

Ms Venamore said she didn't take Colonel Kelly's allegations seriously as he was offering a "personal opinion" and included no evidence. Colonel Kelly also insisted he had "seen notes by a colleague, Chris Birrer, which confirms that my concerns regarding AWB were being passed back to those involved in Iraq issues back in Canberra".

Mr. Birrer is employed by the Defence Department. He would not comment yesterday. Like Colonel Kelly, he has not been called to give evidence. His notes have not been made public.

Labor foreign affairs spokesman Kevin Rudd last night said the notes from Mr. Quinn clearly show the Government was warned about the scandal years before it exploded.

"Alexander Downer has always attacked the credibility of the warnings he got because he said they came from American or Canadian sources who had a conflict of interest.

"Colonel Kelly had no conflict of interest. He was an Australian in Baghdad, he was telling the Government straight. But still they didn't act."

THE AUSTRALIAN

 Caroline Overington 31st August 2006

FOREIGN Minister Alexander Downer has repeatedly denied that his Government knew AWB was implicated in the Iraq kickbacks scandal, despite new evidence that his Iraq taskforce was briefed on the issue more than two years ago.

 Mr. Downer claimed yesterday that he was not aware of notes taken at two meetings on July 22 and 29, 2004, that prove that the Government was briefed on AWB's involvement.

The notes were written by senior DFAT official John Quinn, who has since been dispatched to a new post in Honolulu, Hawaii.

He will not be called as a witness to the Cole inquiry into the oil-for-food scandal.

The Australian yesterday published extracts from the nine handwritten notes by Mr. Quinn, who is a former head of the Iraq taskforce. The notes show that he was twice briefed on the kickbacks scandal by an Australian army lawyer, Colonel Mike Kelly, who was sent to Baghdad for the Howard Government after the 2003 Iraq war.

His notes from those meetings, tendered to the Cole inquiry on April 27 this year, include terms such as "AWB" and "problem" and "service fees" and "10-30per cent".

Mr. Downer said yesterday that Mr. Quinn's notes had never been brought to his attention.

However, in October 2004 - on the eve of a federal election, and three months after Colonel Kelly's briefings - Mr. Downer instructed Australia's then ambassador to Washington, Michael Thawley, to kill off a US congressional inquiry into the kickbacks scandal.

Mr. Downer told Mr. Thawley to inform the Americans that there was no substance whatsoever to the allegations.

Mr. Downer has repeatedly said the Government accepted AWB's denials of wrongdoing and its insistence that the kickback claims were rumours spread by rival wheat exporters in the US and Canada.

In February this year, Mr. Downer said at the time of Mr. Thawley's representations "and to be honest with you right up until towards the end of last year, the wheat board were vigorously denying allegations that they had been involved in kickbacks".

"Obviously we - being on Australia's side - were very conscious of the fact that the United States as well as Canada are our principle wheat competitors," he told the ABC.

In response to yesterday's news story, Mr. Downer said The Australian's report was a "massive beat-up" and that Mr. Quinn's notes were "absolutely nothing new".

However, the Foreign Minister did not mention the words "Colonel Mike Kelly" when he gave evidence to the Cole inquiry in April this year. He has maintained that nobody in the Government was told anything official about the kickbacks scandal.

For example, on October 31 last year -just days after the UN's Volcker report named AWB as the largest single provider of kickbacks to Saddam Hussein's regime - Mr. Downer told parliament: "As far as the Government is aware, the first knowledge of Alia and concerns relating to AWB's use of the company, was in the context of the Volcker inquiry."

The Volcker inquiry, which began in April 2004, released its report in October last year.

On February 4, Mr. Downer wrote in The Australian: "The government has always maintained that we had no knowledge of AWB being involved in kickbacks."

On February 3 this year, in an interview with Sky News, Mr. Downer said: "I am convinced that no one in my department knew that AWB was paying kickbacks." Colonel Kelly is an army lawyer. The former administrator in Iraq, Paul Bremer, asked him to investigate allegations of corruption in the oil-for-food program. He collated more than 25,000 documents related to the scandal.

When Colonel Kelly returned to Australia in July 2004, he briefed Mr. Quinn on the scandal.

Mr. Quinn asked him to give a second briefing to a wider group of DFAT officials on July 29, 2004. Mr. Quinn's notes from the second meeting say things such as "AWB Ltd have legal advisers" and "media hungry" and "damage very serious".

Mr. Downer has admitted that he has long known, in general terms, that the oil-for-food program was corrupt, but not that AWB was complicit.

He has also admitted that he was aware that certain organisations - such as US Wheat Associates - had been accusing AWB of corruption for years.

But, he said, he never took those warnings seriously, either because they came from American wheat sellers, or Canadian wheat sellers, or from a US army captain who was not quite senior enough for his liking, or from people who could not provide any concrete evidence.

Yesterday, he said the notes from Mr. Quinn's meetings with Colonel Kelly did not get to him.

Opposition Leader Kim Beazley said the revelations of the notes were "pretty spectacular" and further evidence of the Government's lies about AWB.

'The only reason (Foreign Minister) Alexander Downer has not been sacked for gross incompetence must be that John Howard knows his fingerprints are there as well," Mr. Beazley said.

But the Prime Minister dismissed the note as "old news".

'Those notes of Mr. Quinn's that were taken of his interview with Colonel Kelly, those notes were attached to the statutory declaration that he gave to the Cole inquiry in April of this year," the Prime Minister said.

'They don't conclusively prove anything."

Opposition foreign affairs spokesman Kevin Rudd said the Government had engaged in a "cover-up of the worst order".

 "In July 2004, Mr. Downer, his department, is told directly by Australian government officials that the AWB is into this up to its eyeballs, and three months later Mr. Downer swears on the bible to the Americans there's not a problem," Mr. Rudd said.

"Why did Mr. Downer do that? This is a cover-up of the worst order, and he wanted to save his political hide, and Mr. Howard's political hide, going into the federal election."

IS THE COLE INQUIRY A CLAYTON’S INQUIRY?

We can only provide you with the evidence and leave you to digest it and formulate your own judgment we would mention two of our major concerns:

(1) Was John Anderson the former National’s Deputy Prime Minister guilty of “insider trading” in that he sold his AWB – A Shares in 48 hours just prior to the Prime Minister’s announcement that there was to be a Royal Commission into the AWB?

(2) Why did Commissioner Cole refuse to allow the AWB legal team the right to question Messrs. Howard, Downer and Vaile?

Now it’s time for you to consider your verdict.

LETTERS

Gerard Henderson Joins the Attack With his Right – Wing Media Elite

Peter Jennings of Marrickville (Sydney) writes Gerard Henderson again joins the other of his right-wing media elite in attacking Jack Thomas, one of Australia’s two supposedly great terrorist “threats.”  Why doesn’t Henderson write on the greatest act of terrorism by Australians in recent history:  John Howard, Alexander Downer and Mark Vaile giving $300 million to Saddam Hussein in AWB bribes while sending young Australian Soldiers to fight him in Iraq?

This is just not terrorism, but treason that in any other country in any other age would have resulted in the death penalty, but Gerard like Miranda Devine and the other media elites, remain silent.