Howard says he was unaware Australian firm broke Iraq sanctions

SYDNEY - Australian Prime Minister John Howard said today he was aware Saddam Hussein had broken sanctions in UN oil-for-food deals, but he did not know that any Australian company was involved.


Howard was testifying to an official inquiry into reports the country's monopoly wheat exporter AWB Ltd. had allegedly paid multi-million-dollar kickbacks to Saddam's Iraqi regime.


A 2005 UN report alleged that AWB was one of more than 2,000 firms that had paid kickbacks worth US$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 programme. I was aware that Saddam had rorted the programme," Howard told the 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 Sydney hearing, held under tight security.


The prime minister 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 kickbacks.


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.


The inquiry, headed by former Supreme Court judge Terence Cole, 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.


Opposition Labour 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 at a time when Australian forces were trying to enforce sanctions and later invaded Iraq.


"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 US-led invasion of Iraq and still has about 1,300 troops in the region.


AWB was among firms from 66 nations, including the United States, Russia, France, Germany and Switzerland, mentioned in the UN report, but Australia is the only country to have ordered an inquiry into the kickback allegations.


Before testifying, Howard held a news conference at his Sydney office to avoid a media scrum that besieged his ministers as they entered the inquiry earlier in the week.


He told reporters that his appearance at the hearing proved the investigation was open and free, countering criticism that the terms of the inquiry were too limiting and that it should rule on the government's knowledge and actions of possible kickbacks.


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


The UN report alleged that the AWB had provided the most kickbacks, paying US$222 million via a trucking company that was a front for Saddam's regime.


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 UN-approved.


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


- REUTERS