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Report Names Australian Company In Oil-For-Food Program Scandal

By Raymond Bonner


A high-level commission investigating corruption in the United Nations’ oil-for-food program released a long-awaited report on Monday, stating unequivocally that a major Australian wheat company paid more than $224 million in kickbacks and bribes to Saddam Hussein’s government.

The commission also found that the company, AWB Ltd., had “deliberately and dishonestly” devised a scheme for the payments — from 1999 until the overthrow of Saddam in 2003 — to deceive the United Nations. When the United Nations conducted its investigation, headed by Paul A, Volcker, in 2005, AWB withheld thousands of pages of documents, and its lawyers made statements to Volcker that were patently false, the commission found.

The Australian commission’s report was the most thorough — and damning — investigation of corruption in the United Nations’ oil-for-food program. It is certain to have repercussions for politicians in Canberra as well as in Washington, where incoming Democratic congressional representatives have pledged to hold their own hearings.

The program was intended to alleviate the hardships of the Iraqi people while isolating Saddam Hussein’s government. Its aim was to allow Iraq to trade some oil for food and other necessities under close U.N. supervision while the country remained under international sanctions.

Instead, the report found that both AWB and the Iraqi government used the program for profit.

In Canberra, the government of Prime Minister John Howard claimed vindication because the commission declared that it found no evidence that any government officials had actual knowledge of AWB’s kickback scheme.

But the commission’s chairman, Terence Cole, a retired state supreme court justice, left open the question of whether Australian officials could, or should, have known about the scheme — all AWB contracts were submitted to the government for approval — if they had conducted their own investigation. His mandate from the government for the inquiry did not include that question, he said.

The opposition leader, Kim Beazley, said that even if the government was not criminally culpable, it was at least negligent and incompetent for not knowing about the kickbacks.

The scheme AWB and the Iraqi government set up for making the kickbacks involved using a Jordanian trucking company, Alia, which was a front for the Iraqi government, the report concluded.

At first AWB paid Alia $12 for each ton of wheat it sold to the Iraqi government, money that went into the pockets of Iraqi officials. Later, the amount was increased by the Iraqi government to $55 a ton, which included a so-called service fee. The money was ostensibly for moving the wheat inland from the Iraqi port. But Alia had no trucks in Iraq.

AWB then passed on the cost of the bribes to the United Nations by recovering the inflated payments from the oil-for-food program’s escrow account.