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So it looks like the CWB might not be squeeky clean after all!

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    So it looks like the CWB might not be squeeky clean after all!

    Dropping the bundle
    Email Print Normal font Large font March 4, 2006
    Page 1 of 3 | Single page
    Australia might have nipped the Iraq wheat scandal in the bud if it had chosen to look more closely at what was not being said, writes David Marr.

    THIS is bullshit," said the man from AWB and that was good enough for the Government.

    In late January 2000, Canberra was moving in a leisurely way to deal with allegations coming from deep within the United Nations that the national wheat trader AWB was sanctions busting.

    Disbelief greeted the charge when it reached Bob Bowker, head of the Department of Foreign Affairs and Trade's Middle East branch, in the middle of the month. He reassured Australian diplomats in New York: "We think it unlikely that AWB would be involved knowingly in any form of payment in breach of the sanctions regime."

    Why was he so certain? Because the month before, AWB had assured him it was "fully aware of, and respected, Australian Government obligations and UN Security Council sensitivities and would act accordingly".

    We know now - and AWB executives knew then - that this was a lie. At this time, AWB was paying its first corrupt "trucking fees" to Iraq. The system that would eventually yield Saddam Hussein's regime a fortune in bribes and kickbacks was in its very early days. What follows is the story of Australia's failure to nip the whole system in the bud.

    What Canberra had learnt by cable from its UN mission was that Iraq was pressuring a "third country" - easily identified as Canada - to make payments "outside the oil-for-food program". Iraq was claiming these payments were already being made by AWB.

    It was absolutely true.

    Bowker's response was highly curious. This senior Foreign Affairs official sent his reassuring cable to Australia's diplomats at the UN before putting the allegation to anyone at AWB. Sometime in the following week, Bowker rang the wheat trader's chief of "government relations", Andrew McConville, who assured him it was all "bullshit" and emphatically denied the allegations.

    It's not clear Bowker even bothered to pass AWB's denials to Australia's UN mission. It seems over in New York the denials had already been made. But what is known is that neither Felicity Johnston, chief customs expert at the UN's Office of the Iraq Program, nor the Canadians were satisfied with Australia's response. Canada was threatening to make its complaint official and public.

    After letting the matter lie for a month, Johnston had another go - this time bypassing Australia's diplomats at the UN and raising the matter with the trade commissioner, Alistair Nicholas. His was an entirely different response. Within about 10 days he was putting the problem to AWB's chairman, Trevor Flugge, its New York representative, Tim Snowball, and McConville at a meeting in Washington.

    They were furious at this intrusion into their affairs. The executives played down the issue. This perturbed Nicholas even more. He reported back to Canberra: "Trade Commissioner is concerned that AWB do not understand the seriousness nor the urgency of the matter. It may be necessary to advise the minister of the situation." He meant the Trade Minister, Mark Vaile.

    What's clear from written accounts of that meeting is that they discussed trucking fees. Canada's original complaint was about "transportation costs" and the claim that AWB was already paying them. By this time, Canada had been officially informed by the UN not to pay "transport costs of wheat within Iraq". At the heart of this crisis for Australia and AWB were these bogus trucking fees.

    But here's a strange thing: while AWB emails at this time were headed "UN Inquiry Concerning Trucking Fees", none of the diplomatic cables so far produced at the Cole inquiry say anything about this. They talk of payments "in breach of the sanctions regime" and possible "irregularities in [AWB's] dealings with Iraq". But nothing about trucking.

    Was this an accident? A crucial issue for the Cole inquiry to pursue over the next few weeks is the strange redrafting of the terms of complaint in these official documents being read at higher and higher levels in Canberra - because this shift was to give AWB and the Government a way to escape the UN's allegations.

    Rather naively, UN officials believed there must be a written contract somewhere setting out the terms of the "trucking fees". The truth - that AWB was paying millions of dollars per ship without any written contract - was too bizarre for these men and women to comprehend. They wondered if the written terms might lie hidden in the "standard terms and conditions" referred to - but not spelt out - in the AWB grain contracts regularly inspected by the UN.

    This came up at the Washington meeting. Afterwards, Snowball emailed AWB headquarters in Melbourne: "If all the UN wants is some understanding on our standard terms and conditions in AWB contracts then I think we have nothing to worry about." He also rang Bronte Moules at Australia's UN mission to persuade her to sideline Austrade. She reported to Canberra: "We understand AWB's preference is that follow-up discussions be pursued with [the department], but with Austrade kept in the loop."

    Moules's cable was heavy on reassurance, light on details of the allegations and didn't name Canada. Another pattern was emerging by this time: the more positive the cables were about AWB, the higher they went into Canberra's bureaucratic stratosphere. But no evidence has emerged that any of these deputy secretaries - and eventually Howard Government ministers - ever asked what exactly AWB was accused of doing and what exactly was the wheat trader's response.

    Moules glowed. "While all indications from the AWB are, as expected, that the concerns of the [UN] and the third country have no basis, until we are able to provide a formal reassurance of this, there will remain a question mark over the matter."

    Her message to Canberra was that once AWB gave the UN a copy of its "standard terms and conditions", the crisis would pass.

    AWB had a more nuanced understanding: Canada had also to be squared away. In the days after the Washington meeting, McConville and Flugge flew north to meet Canadian Wheat Board officials over breakfast in Winnipeg, and executives of the Saskatchewan Wheat Pool at a transit hotel at Vancouver Airport.

    Though a haze of amnesia descended on these men when they appeared before the Cole inquiry, it's clear they were mounting a big effort to ingratiate the AWB with the Canadians, who had an immediate problem: as part of its effort to force them to pay "trucking fees", Iraq was refusing to unload Canadian ships.

    Australia was there to help. Snowball jotted a note in his diary: "Trevor wants to keep alongside them - see if we could help them … mkts to put the cargoes into."

    What happened there is unknown, but it is clear that Canada, which had been pursuing its complaints against Australia fairly vigorously, let them drop. Over the following year, Canada was to send a further 300,000 tonnes of wheat to Iraq through an "accredited exporter". None of those ships would have been landed without paying "trucking fees".

    Back in Canberra, Foreign Affairs was not going to force AWB to hand over its "standard terms and conditions". The wheat trader was calling the shots. In a fax to AWB's New York office, McConville wrote: "Spoken with Canberra - they are OK with waiting for Mark's OK." He explained to the Cole inquiry last week what he meant: that Foreign Affairs was happy to let AWB's Mark Emons decide what went back to the UN.

    But Emons was the executive who designed the machinery for paying - and hiding - the trucking fees. At this point he was still bedding down the system. He has given clear evidence to Cole that he knew right from the start these fees were a breach of UN sanctions. He has also told the commissioner that the "standard terms and conditions" of AWB contracts had nothing at all to do with Canada's complaint to the UN.

    News that AWB had decided to provide the documents was sent in a jubilant cable from Bowker to the UN mission in late March 2000. The cable was copied all round Canberra to the highest levels, including to the Minister for Trade and the Prime Minister. This distribution list clearly indicates that the UN's inquiries about AWB had been discussed at the highest levels.

    The UN received the documents on April 5, 2002. The Australian mission cabled back that the Office of the Iraq Program (OIP) "has confirmed that this clarifies the matter and removes any grounds for misperception".

    It was another three years before the UN's tough-minded investigator, Paul Volcker, looked at this and wondered what had happened to the original, clearly focused - and accurate - complaint that had come to the UN in late 1999. His people interviewed an unnamed Australian official, almost certainly Moules: "The official did not recall the issue of inland transport being discussed with anyone from OIP or the UN."

    Cole will have to decide if this was an appalling oversight, a brilliant snow job or a superb bureaucratic operation in defence of an iconic Australian corporation. The result was the same: AWB would pay almost $300 million in bribes to Saddam.

    They were furious at this intrusion into their affairs. The executives played down the issue. This perturbed Nicholas even more. He reported back to Canberra: "Trade Commissioner is concerned that AWB do not understand the seriousness nor the urgency of the matter. It may be necessary to advise the minister of the situation." He meant the Trade Minister, Mark Vaile.

    What's clear from written accounts of that meeting is that they discussed trucking fees. Canada's original complaint was about "transportation costs" and the claim that AWB was already paying them. By this time, Canada had been officially informed by the UN not to pay "transport costs of wheat within Iraq". At the heart of this crisis for Australia and AWB were these bogus trucking fees.

    But here's a strange thing: while AWB emails at this time were headed "UN Inquiry Concerning Trucking Fees", none of the diplomatic cables so far produced at the Cole inquiry say anything about this. They talk of payments "in breach of the sanctions regime" and possible "irregularities in [AWB's] dealings with Iraq". But nothing about trucking.

    Was this an accident? A crucial issue for the Cole inquiry to pursue over the next few weeks is the strange redrafting of the terms of complaint in these official documents being read at higher and higher levels in Canberra - because this shift was to give AWB and the Government a way to escape the UN's allegations.

    Rather naively, UN officials believed there must be a written contract somewhere setting out the terms of the "trucking fees". The truth - that AWB was paying millions of dollars per ship without any written contract - was too bizarre for these men and women to comprehend. They wondered if the written terms might lie hidden in the "standard terms and conditions" referred to - but not spelt out - in the AWB grain contracts regularly inspected by the UN.

    This came up at the Washington meeting. Afterwards, Snowball emailed AWB headquarters in Melbourne: "If all the UN wants is some understanding on our standard terms and conditions in AWB contracts then I think we have nothing to worry about." He also rang Bronte Moules at Australia's UN mission to persuade her to sideline Austrade. She reported to Canberra: "We understand AWB's preference is that follow-up discussions be pursued with [the department], but with Austrade kept in the loop."

    Moules's cable was heavy on reassurance, light on details of the allegations and didn't name Canada. Another pattern was emerging by this time: the more positive the cables were about AWB, the higher they went into Canberra's bureaucratic stratosphere. But no evidence has emerged that any of these deputy secretaries - and eventually Howard Government ministers - ever asked what exactly AWB was accused of doing and what exactly was the wheat trader's response.

    Moules glowed. "While all indications from the AWB are, as expected, that the concerns of the [UN] and the third country have no basis, until we are able to provide a formal reassurance of this, there will remain a question mark over the matter."

    Her message to Canberra was that once AWB gave the UN a copy of its "standard terms and conditions", the crisis would pass.

    AWB had a more nuanced understanding: Canada had also to be squared away. In the days after the Washington meeting, McConville and Flugge flew north to meet Canadian Wheat Board officials over breakfast in Winnipeg, and executives of the Saskatchewan Wheat Pool at a transit hotel at Vancouver Airport.

    Though a haze of amnesia descended on these men when they appeared before the Cole inquiry, it's clear they were mounting a big effort to ingratiate the AWB with the Canadians, who had an immediate problem: as part of its effort to force them to pay "trucking fees", Iraq was refusing to unload Canadian ships.

    Australia was there to help. Snowball jotted a note in his diary: "Trevor wants to keep alongside them - see if we could help them … mkts to put the cargoes into."

    What happened there is unknown, but it is clear that Canada, which had been pursuing its complaints against Australia fairly vigorously, let them drop. Over the following year, Canada was to send a further 300,000 tonnes of wheat to Iraq through an "accredited exporter". None of those ships would have been landed without paying "trucking fees".

    Back in Canberra, Foreign Affairs was not going to force AWB to hand over its "standard terms and conditions". The wheat trader was calling the shots. In a fax to AWB's New York office, McConville wrote: "Spoken with Canberra - they are OK with waiting for Mark's OK." He explained to the Cole inquiry last week what he meant: that Foreign Affairs was happy to let AWB's Mark Emons decide what went back to the UN.

    But Emons was the executive who designed the machinery for paying - and hiding - the trucking fees. At this point he was still bedding down the system. He has given clear evidence to Cole that he knew right from the start these fees were a breach of UN sanctions. He has also told the commissioner that the "standard terms and conditions" of AWB contracts had nothing at all to do with Canada's complaint to the UN.

    News that AWB had decided to provide the documents was sent in a jubilant cable from Bowker to the UN mission in late March 2000. The cable was copied all round Canberra to the highest levels, including to the Minister for Trade and the Prime Minister. This distribution list clearly indicates that the UN's inquiries about AWB had been discussed at the highest levels.

    The UN received the documents on April 5, 2002. The Australian mission cabled back that the Office of the Iraq Program (OIP) "has confirmed that this clarifies the matter and removes any grounds for misperception".

    It was another three years before the UN's tough-minded investigator, Paul Volcker, looked at this and wondered what had happened to the original, clearly focused - and accurate - complaint that had come to the UN in late 1999. His people interviewed an unnamed Australian official, almost certainly Moules: "The official did not recall the issue of inland transport being discussed with anyone from OIP or the UN."

    Cole will have to decide if this was an appalling oversight, a brilliant snow job or a superb bureaucratic operation in defence of an iconic Australian corporation. The result was the same: AWB would pay almost $300 million in bribes to Saddam.

    #2
    20

    21 I am sorry, I just have a bad copy:

    22

    23 We do not want Alistair sticking his nose

    24 into our Iraq business and causing us

    25 problems. If this was a big issue he

    26 should have picked up the phone straight

    27 after his visit to the UN to tell me rather

    28 than waste our Chairman's time in

    29 Washington!!

    30

    31 And then he goes on to say:

    32

    33 With regards to the Canadian wheat vessels

    34 rejected by Iraq, I did not find out much

    35 from CWB.

    36

    37 I take it that's the Canadian Wheat Board:

    38

    39 We did not meet with Benoit. Bill Spafford

    40 said the rejected vessels were not CWB

    41 sales. There was some business done by the

    42 trade to cover the Russian shorts last

    43 year. SAS Pool were linked to this at the

    44 time.

    45 If I find out any more I will let you

    46 know.

    47 Regards


    .3/2/06 (20) 1920 M A EMONS (Mr Agius)

    Transcript produced by ComputerReporters

    Comment


      #3
      Incognito, I asked Chairman Ritter if I could attend Bill Spafford's going away party Tues night (FEB 28/06)... wasn't given an invitation:
      I wonder why?

      http://72.14.207.104/search?q=cache:stZfy2xZSi8J:www.ag.gov.au/agd/WWW/rwpattach.nsf/VAP/(2A296B295C1E058B328FED2164E40B7D)~OFI060203.doc/%24file/OFI060203.doc David Marr AWB CWB&hl=en&gl=ca&ct=clnk&cd=1

      1 Tim.

      2

      3 Well, that is a recap offered by Mr Snowball. Were you

      4 aware at that time of any additional background information

      5 which we do not see recorded in the email?

      6 A. Background information in the nature of?

      7

      8 Q. Relating to the complaint by what we now know to be

      9 the Canadians?

      10 A. I recall now, having seen this, that the Canadian

      11 Wheat Board, I think, had authorised the Saskatchewan wheat

      12 pool, which is the SAS pool, to sell some wheat obviously

      13 to some Russian traders with contacts to Iraq, and when

      14 those vessels had been rejected, for whatever reason, the

      15 Canadians became involved.

      16

      17 Q. Mr Snowball says, or the substance seems to be, that

      18 he called the Australian mission to the UN to find out

      19 whether the UN had actually requested some information

      20 about the nature of the AWB contract with the IGB, and he

      21 had also asked Bronte Moules to call Alistair, being

      22 Alistair Nicholas from Austrade. He goes on to say that

      23 she had confirmed that the UN were asking for information

      24 on the contract clause and that she had forwarded that

      25 request through to DFAT in Canberra, and that you were to

      26 expect a contact from DFAT. It is the next sentence that

      27 I want to ask you about:

      28

      29 If all the UN wants is some understanding

      30 on standard terms and conditions in AWB

      31 contracts then I think we have nothing to

      32 worry about.

      33

      34 That seems to imply that there was something to worry

      35 about, Mr Emons?

      36 A. You are correct. What he was implying there is that

      37 if the contract terms just listed the quality

      38 specifications, conditions, et cetera, it wouldn't be an

      39 issue, but if there was a mention of the trucking discharge

      40 fee, then there would be an issue.

      41

      42 Q. Something to worry about?

      43 A. Something to worry about.

      44

      Comment


        #4
        Chaffmeister;

        Ever heard of "Teflon Management"?

        1 2000.

        2

        3 THE WITNESS: March, I believe, Commissioner, but I stand

        4 corrected.

        5

        6 MR AGIUS: Q. Could we bring up, please, MAE.0003.0063.

        7 These appear as "Notes of Meeting on Code of Conduct" held

        8 on 2 February 2000 in the second floor meeting room. It is

        9 a meeting that you attended, Mr Emons?

        10 A. Yes, it was.

        11

        12 Q. The meeting concerned the code of conduct?

        13 A. It did.

        14

        15 Q. Can you relate the meeting to the document that you

        16 have seen, which was exhibit 22?

        17 A. Yes, I can.

        18

        19 Q. What's the relationship?

        20 A. The relationship with the document concerns the

        21 facilitation payments and fees issue.

        22

        23 Q. The meeting is on 2 February. The published code of

        24 conduct that we have is signed by Mr Lindberg?

        25 A. Correct.

        26

        27 Q. It is not likely that he would have signed it as an

        28 officer of AWB prior to this meeting of 2 February?

        29 A. Not likely, no.

        30

        31 Q. What is the temporal relationship?

        32 A. The concern for myself and my colleagues was that it

        33 was - the corporation was asking the individual to take the

        34 responsibility on for the actions that the corporation had

        35 sanctioned. In my parlance, it was evidence of more Teflon

        36 management.

        37

        38 Q. Can you assist us? What do you mean by "Teflon

        39 management"?

        40 A. That all responsibilities and actions of the

        41 organisation were trying to be passed down to the

        42 individual.

        43

        44 Q. And the meeting had been called to deal with the

        45 request by AWB that individuals --

        46 A. Sign this agreement, yes.

        47


        .3/2/06 (20) 1931 M A EMONS (Mr Agius)

        Transcript produced by ComputerReporters

        Comment


          #5
          Tom - yes, I have heard of Teflon Management. In fact, I've worked for a couple of people that use it.

          Comment


            #6
            interesting.
            the cole commision wants the terms of reference and time frame extended past the march 31 dead line.
            I may or may not be proven that the kick backs were being paid well before oil for food programme started ie back to 97/98
            the head of the enquiry has asked for search warrants of awb head office due to there lack of co-operation.
            4 other aust companys have been given the right to export wheat so i believe once it happens there will be no going back to old single desk ways, its not an open market but better than what we have

            Comment


              #7
              malleefarmer,

              Did farmers have any inkling that the AWB was not telling the truth in the beginning of the investigation?

              Parsley

              Comment


                #8
                Parsley,

                Remember the 24th Feb posting"

                "I asked at the Stettler CWB accountability meeting about the Iraq problem... what an interesting response!

                asked the CWB yesterday about the Iraq Oil for Food deal between the SWP and the CWB.

                I got a VERY unsatisfactory answers... particularily from Chairman Ritter.

                THe CWB's Brian Wittal went on for a little bit about how the CWB uses Agents of the Board to do Business with that part of the world... and that corruption was just part of selling grain in many parts of the world... which is... in as many words... why the CWB used SWP on this Iraq sale.

                Then Chairman Ritter angrilly went off on a rant about the CWB not having anything to do with Iraq... or any wheat sales to Iraq... that they had absolutely nothing to do with it... bla bla bla.

                All I want is the truth about this file... and Chairman Ritter WAS NOT telling me the truth!

                I believe it is time for an investigation."


                When will western Canadian Farmers demand a full disclosure independant audit of all CWB dealings since 2000?

                Comment


                  #9
                  "AWB kickbacks inquiry extended
                  Email Print Normal font Large font March 5, 2006 - 11:55AM

                  The federal government has extended the deadline for the inquiry into kickbacks paid to Iraq by wheat exporter AWB until at least May, Prime Minister John Howard says.

                  Commissioner Terence Cole is investigating $300 million in kickbacks AWB paid to Saddam Hussein's regime in breach of sanctions under the UN oil-for-food program.

                  He had been expected to wrap up the hearing and report back to the government by March 31.

                  But Mr Howard today said Mr Cole wanted the deadline extended by "another couple of months at least".

                  "He's conducting an independent inquiry, there is no ongoing contact in relation to those matters between him and government," Mr Howard told reporters.

                  "If he wants extra terms of reference, he'll ask for them, if he wants people from the government to appear, he'll ask for them."

                  "If he wants extra time, which he does, he will ask for it, and it's my understanding he wants probably until the end of May or June."

                  "I'm not going to comment on his motives or anything of that kind, he's a very good lawyer, he's doing a very thorough job and we'll see what he finds."

                  Mr Cole had not asked to extend its terms of reference but the government "would consider it very positively" if he did, Mr Howard said.

                  AAP"

                  Comment


                    #10
                    "The worst scandal I have seen as an MP, says Beazley
                    Email Print Normal font Large font By Cynthia Banham and Josh Paine
                    March 1, 2006


                    THE Foreign Minister, Alexander Downer, has admitted he would have seen cables sent during 2000 warning the Government of AWB's possible breach of UN sanctions.

                    He said the Government had "checked out", on several occasions, allegations made by the Canadian Wheat Board and contained in the cables.

                    He said his department later obtained "with some difficulty" documentation from AWB requested by the UN Office of the Iraq Program to establish the veracity of the Canadian claims.

                    Mr Downer said the UN studied the contracts and concluded that the allegations against AWB "were unfounded".

                    "What I do know is that, through this period, the department was quite assiduous in making sure that it furnished the United Nations - which was responsible for the administration of the oil-for-food program - investigators with the material they asked for."

                    The Government came under sustained attack over the cables in 2000 from Labor in question time yesterday.

                    The Prime Minister, John Howard, said he believed the Government had "responded competently" to the cables but said it was something on which the Cole inquiry would make a judgement.

                    He said the UN query about the Canadian allegations and AWB was "resolved to the UN's satisfaction after the provision by the AWB of its contract terms and conditions", in March 2000.

                    The Opposition Leader, Kim Beazley, moved a censure motion against Mr Howard and Mr Downer.

                    He accused them of turning a blind eye to "stark warnings" that AWB was doing illicit business with Saddam Hussein, ignoring cables informing the Government what was going on, and of treating the Parliament and Australians "with contempt by refusing to come clean".

                    He said the AWB saga was "the worst scandal that has confronted a national political government in my lifetime in Parliament, and I would suspect the lifetime of everybody here in this place".

                    Mr Beazley accused the Government of "tipping off" AWB when it received the 2000 cables.

                    Mr Howard also defended the $1 million payment to the former AWB chairman, Trevor Flugge, to give advice in postwar Iraq.

                    While Mr Howard admitted it was "a lot of money", he said "it was a challenging assignment and a potentially dangerous environment"."

                    Will the CWB be called to testify?

                    Comment


                      #11
                      TOM4CWB

                      At the CWB, which staff members handle the sales to the Middle East, do you know?

                      Parsley

                      Comment


                        #12
                        I like your questions here......will ask for answers....

                        Comment


                          #13
                          an inkling was probably all it was nothing more parsley.
                          but by day 3 in the first week it was blatently obvious now here we are in week 9 i think and the plot is getting thicker and thicker now its being asked how many other brown paper bag deals were done with other countries to achieve our so called "premiums"

                          At the AGM of the awb not once was there the slighest admission of guilt or apology from directors they are adamant they have done nothing wrong and are just doing there best for farmers,apparently it didnt go down well.

                          Comment


                            #14
                            Question.

                            If the CWB and the AWB are competing for the same sale and only one is successful, which monopoly failed in exercising it's market clout?

                            Was it the winning seller that offered the grain at the lowest price or was it the losing seller who didn't make the sale at all?

                            Comment


                              #15
                              malleefarmer,

                              Thanks. That's interesting...the "inkling" word .
                              Was the inkling because the AWB acted in a secretive manner? Was the AWB open and forthright during their discussions with farmers?

                              Would you agree that your educated elite in the AWB are ethically bankrupt?

                              Parsley

                              Comment

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