February 24, 2006

US, British governments knew of Iraq kickbacks: inquiry

By Michael Byrnes

SYDNEY (Reuters) - The U.S. and British governments knew
over four years ago that Iraq was demanding extra fees from
importers through U.N. oil-for-food funds, an Australian
commission of inquiry was told on Friday.

Shipping group P & O Nedlloyd Ltd. (PONL) told the inquiry,
which has so far concentrated on $222 million in alleged
kickbacks paid by Australian wheat exporter AWB Ltd., that it
had advised the U.S. and British navies, as well as the British
Embassy in Dubai, of 10 percent kickbacks demanded by Iraq.

P & O's Dubai manager Michael Wallbanks said in a statutory
declaration to Commissioner Terence Cole's Australian
government-appointed inquiry that he had given information to
British and the United States on the 10 percent "after sales
tax" in 2001.

"I recall that they were all aware of the requirement to
pay the after sales service tax and advised that if PONL was
merely advising exporters what it was told in relation to
requirements for shipping goods to Iraq it was doing nothing
wrong," Wallbanks' statement said.

Other shipping lines dealing with Iraq were aware of the 10
percent after sales service tax, he said.

"It was well known and widely communicated, and anyone
involved in shipping goods to Iraq from August or September
2001 would have known about it," he said.

Australia's AWB has been accused by the Cole commission of
deceiving the United Nations by not disclosing such fees in
details of contracts for wheat sales.

The 10 per cent fee, which formed a large part of
"kickbacks" described in the U.N. report last October, was in
addition to inland transport fees demanded of the AWB by Saddam
Hussein's former government.

Such fees allowed Saddam to evade economic sanctions
against Iraq, giving it access to foreign currency in the
now-defunct U.N. oil-for-food account which allowed Iraq to
make limited exports of oil to pay for imports of food and
humanitarian supplies.

Australia's monopoly wheat exporter AWB was the largest
supplier of food to Iraq before the overthrow of Saddam in