Australia wheat board apologises for Iraq payments

SYDNEY - Australia's monopoly wheat exporter broke UN sanctions on Iraq by paying Saddam Hussein's government kickbacks for wheat sales, its former chief admitted in a draft apology letter released yesterday.

Former managing director Andrew Lindberg said the Australian Wheat Board (AWB) took a purely "commercial and technical" approach to UN sanctions in order to maximise returns for Australian farmers in UN oil-for-food deals with Iraq.

"AWB accepts that in paying money for inland transportation and after-sales service it paid money to the Iraq government in contravention of the UN sanctions," said the January 1 apology letter released by a federal court.

A 2005 UN report alleged that AWB was one of more than 2,000 firms that had paid kickbacks worth $1.8 billion (NZ$2.2bn) to Saddam's government through the UN-managed "oil-for-food" account.

It said AWB had provided the most kickbacks, paying $222 million via a trucking firm that was a front for Saddam's regime.

An Australian inquiry is investigating whether the AWB broke any Australian laws in its dealings with Iraq. The apology letter was tendered to the inquiry in March but had a suppression order placed on it until the court released it on Thursday.

Lindberg said in February he was stepping down as managing director as internal AWB documents to the inquiry showed AWB had deliberately hidden the Iraqi payments in "service fees".

The inquiry is due to report to the government on June 30.

The inquiry can only recommend prosecution of AWB and other companies and associated individuals, but the Australian government's credibility has been brought into question with the release of diplomatic cables talking of AWB kickbacks.

Prime Minister John Howard and his foreign and trade ministers have all denied seeing at least 21 diplomatic cables between 2000 and 2004 warning of possible AWB kickbacks.

AWB broke the UN sanctions against Iraq at a time when Australian troops were trying to enforce them. Australia was one of the first countries to join the US-led invasion of Iraq and still has about 1,300 troops in the region.

In his letter, Lindberg said AWB had ignored "warning signs" and failed to challenge the Iraqi payments, which AWB has said it thought were initially approved by the United Nations.

He blamed the "culture" of AWB at the time for having no proper checks in place and for failing to realise "the potential consequences of these payments".

"For this we are truly sorry and deeply regret any damage this may have caused to Australia's trading reputation, the Australian government or the United Nations," said the letter.

The Iraqi Grain Board has suspended business with AWB until the inquiry ends. Other Australian companies have set up Wheat Australia to export wheat to Iraq.

- REUTERS