April 13, 2006

Australian PM says misled over Iraq deals

By Michael Byrnes

SYDNEY (Reuters) - Australian Prime Minister John Howard
said on Thursday his government was misled by the country's
wheat exporter about its oil-for-food deals in Iraq, which a
U.N. report said involved multi-million dollar kickbacks.

Testifying at an official inquiry into reports wheat
exporter AWB Ltd. allegedly paid kickbacks to Saddam Hussein's
regime, Howard said he was aware U.N. sanctions were broken,
but he did not know at the time that any Australian company was

A 2005 U.N. report alleged AWB was one of more than 2,000
firms that had paid kickbacks worth $1.8 billion to Saddam's
government through the U.N.-managed "oil-for-food" account.

"It was public knowledge that Iraq was rorting the
oil-for-food program. I was aware that Saddam had rorted the
program," Howard told the Sydney inquiry, using an Australian
expression that means to defraud.

"There was absolutely no belief, anywhere in the
government, at that time that AWB was anything other than a
company of high reputation," said Howard at the hearing, under
tight security.

Howard consistently supported the AWB before the inquiry,
but told a news conference after giving evidence that the wheat
exporter had misled the government, its Department of Foreign
Affairs and Trade (DFAT) and the United Nations.

"The government was plainly deceived by AWB. DFAT was
systematically deceived," he said.

The AWB has told the Australian inquiry that it hid details
of inflated wheat prices from the United Nations, after
initially saying it thought the extra payments were


The inquiry has no political brief and can only recommend
prosecution of the AWB and other companies and associated
individuals if Australian laws were broken.

But the government's credibility has been brought into
question with the release of the cables talking of AWB
kickbacks, with local media discrediting its response that it
knew nothing.

In the inquiry, Howard echoed earlier testimony from his
foreign and trade ministers, saying he had not seen 21
diplomatic cables between 2000 and 2004 warning of possible AWB

Howard is the first Australian leader to face such an
investigation since 1983 when then prime minister Bob Hawke
gave evidence to a spy scandal inquiry.

Opposition Labor leader Kim Beazley called on Howard to
sack his foreign and trade ministers for incompetence and to
take responsibility for allowing sanctions to be broken as
Australian forces were enforcing sanctions and later invaded

"Australian soldiers were sent to fight in Iraq. The Howard
government's neglect and turning of a blind eye meant that we
funded their enemies," Beazley told reporters.

Australia was one of the first countries to join the
U.S.-led invasion of Iraq and still has about 1,300 troops in
the region.

Howard rejected calls to dump his foreign and trade
ministers and said he would not change the way the government
in future dealt with diplomatic cables.

AWB was among firms from 66 nations, including the United
States, Russia, France and Germany, mentioned in the U.N.
report. It alleged the AWB provided the most kickbacks, paying
$222 million via a trucking firm that was a front for Saddam's

"It's true we gave very high priority to defending and
protecting the interests of Australian wheat growers, but not
... at the cost of, to our knowledge, undermining the sanctions
regime," Howard told reporters.

Australia is the only country to order an inquiry into the
Iraq kickback allegations.

Under Australian law it is illegal to pay kickbacks or
bribes for deals, but facilitation payments made overseas are

The Cole inquiry will report to the government by June 30.