Wheat trade built on years of kickbacksSydney Morning HeraldDecember 6, 2005By Marian Wilkinson National Security Editor
AUSTRALIA'S wheat exporter paid millions of dollars in kickbacks to Pakistan, Indonesia and Yemen before it became embroiled in the illicit payments to Saddam Hussein's regime in the oil-for-food scandal, according to two former employees.
Describing a system of kickbacks for contracts within the Australian Wheat Board when it was still under government control in the 1990s and after it was privatised in 1999 to become AWB, one former employee with direct knowledge of the payments said bluntly, "The culture of the organisation was: get the job done."
According to the former employees, who asked not to be named, the largest kickbacks before Iraq were paid in the 1990s to Pakistan, where up to $8 million was paid in one year to a local agent who would pass on payments to officials in the Ministry of Food and Agriculture.
"Basically, the officials in Pakistan, in the Ministry of Food and Agriculture, wanted to get a kickback on this type of business and AWB were given a third party to deal with. So funds were transferred into this third party's account," a former employee told the Herald.
"We would transfer $US4 a tonne. That would be on transferred to the officials and whoever else was needed to make sure the business flowed smoothly. We were not given the names to whom he was transferring the money. We left it up to this guy who was professional in what he did."
A second employee told the Herald the agent in Pakistan would arrange an annual memorandum of understanding between the wheat board and the ministry and set the price and the commission before a contract was signed.
"If we were shipping to Pakistan, we would have made sure we were looking after people in the ministry," he said.
Both former employees believe the kickbacks were known to individuals at senior levels of the AWB.
"This was not looked on as something that was bad," said one. "It meant you could get more money for that wheat, so what's your problem? Culturally that's the way the organisation worked."
In Indonesia, under President Soeharto, the AWB paid a special rebate on its wheat contracts to the Bogasari Flour Mills. The company was controlled at the time by a close friend of Soeharto and the rebate was paid into an offshore account that avoided government taxes and charges.
It was a deal that "would not have reached Australian business practice standards", said one former AWB employee.
Both the Pakistani and Indonesian kickbacks were reviewed in 2000 after the Government passed new laws making it a criminal offence to bribe foreign officials anywhere in the world to win or retain business. AWB held internal meetings with a law firm and the anti-corruption organisation, Transparency International, to brief employees on the anti-bribery laws.
The new claims will bolster calls by the Opposition foreign affairs spokesman, Kevin Rudd, for a royal commission into the AWB and the Iraq oil-for-food scandal.
Last month, the Howard Government set up a judicial inquiry under a former judge, Terry Cole, QC, into the kickbacks paid to Iraq by AWB in the oil-for-food scandal. But the inquiry is narrowly confined by its terms of reference to investigate whether any officer with AWB and two other Australian companies named in the UN's oil-for-food investigation broke the law.
The Cole inquiry was forced on the Government after the UN's inquiry, led by Paul Volcker, found that AWB Ltd had paid more than $US220 million in illegal fees on its wheat contracts to Iraq. The payments were channelled to Saddam's regime in contravention of the UN sanctions against Iraq.
AWB executives, including Andrew Lindberg, managing director since 2000, have repeatedly denied any knowledge that the payments made for trucking services to a Jordanian company called Alia were being channelled to Saddam's regime. The trucking fees leapt from about $US12 a tonne to more than $US45 a tonne in two years.
The Volcker report said it was unable to find "sufficient" evidence that AWB directly knew the payments were kickbacks to the regime but there were "numerous documentary and circumstantial warning signs" that the trucking payments were "in whole or in part for the benefit of the [then] government of Iraq".
Murray Rogers, who served as chief executive from 1997 to 2000, declined to comment, saying it was up to Mr Cole whether he examined the new claims. AWB had no comment yesterday.
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