Sydney Letter Pádraig CollinsTrevor Flugge, the chairman of the Australian Wheat Board, was pictured on the front page of a Sydney newspaper last weekend. The fact he was bare-chested would have been unusual enough - if only he wasn't also pointing a handgun at the camera.
The picture beside Flugge's featured AWB's global sales chief Michael Long holding a Rambo-like machine gun. Both pictures were taken in Iraq. Neither was helpful when AWB stands accused of giving $290 million (€179.5 million) in bribes to Saddam Hussein's regime.
Australia's prime minister John Howard said of the pictures: "I know that looks bad, I know that it looks silly and it's very unhelpful . . . I don't know that all the photographs taken of all of us, in certain circumstances, wouldn't in some way published in a newspaper end up embarrassing us." Howard's mangled answer was not surprising given his government controlled the wheat board before it was privatised and became AWB in 1999.
In 1996 the UN set up the oil-for-food programme to relieve a humanitarian crisis caused by sanctions against Iraq. Saddam's regime was allowed to export oil and use the proceeds to buy food and medicine. To stop money going directly to the Iraqi government, all payments went through a UN escrow account. From 1997 to 2003 AWB was the largest single provider of humanitarian goods to Iraq and was paid $2.3 billion out of the escrow.
But Saddam found a way to corrupt the programme. A secret "after-sales service fee" and, sometimes, a "trucking fee" were added to UN contracts. So, if AWB had $100,000 worth of wheat to sell it would inflate the price to $120,000. They would then submit the contract to the UN and get paid from the escrow account. AWB would keep the $100,000 for the wheat, and "kickback" the extra money to Iraq.
As Australian wheat can be exported legally only through the "single-desk exporter" of AWB the country's wheat farmers are understandably outraged that their produce contributed to, at best, new palaces for Saddam or, at worst, bombs and bullets used against Australian soldiers in Iraq.
In 2004, allegations emerged that contractors under the oil-for-food programme had paid kickbacks to the regime and the UN appointed Paul Volcker to investigate. He found last October that AWB illicitly paid $290 million to the Iraqi regime through a Jordanian trucking company, Alia. It was the largest amount of illicit funds paid under the programme.
AWB admitted it had paid the $290 million in fees to Alia, but pleaded ignorance of how it ended up in Saddam Hussein's pocket. The "we didn't know" defence is in tatters since the Cole inquiry into the matter was set up though.
Senior counsel for the inquiry, John Agius, has provided reams of documentary evidence suggesting many people at "very senior levels" in AWB knew exactly where the money was going, and went to considerable lengths to hide it.
When AWB's managing director, Andrew Lindberg, repeatedly denied it, Agius responded with: "It's ridiculous to suggest that you did not know, Mr Lindberg. Are you a complete fool?" At a meeting of senior AWB executives on May 6th, 2003 - two months after US, British and Australian troops invaded Iraq - there was a clear suggestion bribes would have to be paid to "a number of influential people".
When Lindberg was unable to recall this at the inquiry, Agius read him a memo which said: "A number of influential people will need to start receiving funds?" But Lindberg said he didn't know what this meant.
"It's a code, isn't it?" Agius suggested. Commissioner Cole added: "It's not a very subtle code." Agius continued: "Are you the only one in the room who doesn't know what it means, Mr Lindberg?" "I don't know what's meant by that," said Lindberg.
"Have a wild stab," said Agius. "I just don't know," Lindberg insisted.
The opposition Australian Labor Party had a field day yesterday when parliament resumed after the summer recess; accusing the government of knowing more about the scandal than it was letting on. "The prime minister, the foreign minister and the trade minister were the three wise monkeys: they saw no evil, they spoke no evil, they heard no evil but they knew all about it," Labor leader Kim Beazley told parliament.
"It's a sorry story of a government in a mode of reckless negligence." The prime minister has said he will appear before the Cole inquiry if called, but this seems highly unlikely given its narrow terms of reference.