Ministers' defence built on ignorance

CANBERRA - Australia's most senior politicians are pleading ignorance as their defence against implications of complicity or incompetence in the scandal surrounding kickbacks paid by the nation's monopoly wheat trader to the regime of former Iraqi President Saddam Hussein.

Deputy Prime Minister and Trade Minister Mark Vaile and Foreign Minister Alexander Downer have continued this defence in evidence before the inquiry into the scandal, despite a series of official cables warning of illicit payments by wheat trader AWB, claims of personal advice, and intelligence notes to the Cabinet's national security committee.

The two ministers were responsible for ensuring companies trading with Saddam's regime under the now discredited oil-for-food programme complied with United Nations rules.

They rejected suggestions they were remiss in not ensuring their departments followed up warnings of AWB funnelling kickbacks eventually worth almost A$300 million ($359 million) through a Jordanian front company at the time Australia was preparing for war against Saddam.

Vaile and Downer said they believed the warnings were attempts by rival American and Canadian traders to undermine Australia's big Iraq market.

Yesterday, as Downer arrived to give evidence to the inquiry led by commissioner Terence Cole, QC, new statistics showed that AWB's illicit payments have, in fact, cost Australia one of its most lucrative markets.

Iraq suspended dealings with AWB after a UN inquiry named the company as a major source of illegal funding to Saddam.

US Foreign Agricultural Services grain and feed director Bob Riemenschneider told ABC radio that America had since captured almost three-quarters of the Iraqi wheat market and a large share of its rice trade.

The potential political consequences continue to mount, with Prime Minister John Howard providing a written statement to the Cole inquiry and agreeing to give evidence in person, possibly tomorrow. Most political observers believe Howard is certain he can isolate the Government from the fallout from the scandal.

Yesterday, a Newspoll in the Australian showed that under the preferential voting system that determines government in Australia, Labor leads Howard's ruling Coalition by a margin sufficient to win power and that dissatisfaction with Howard's performance has risen six points this year.

Although polling confirms that Labor's internal problems remain Howard's biggest advantage, the Government could be seriously wounded if it cannot contain damage from the Cole inquiry.

On Monday Vaile admitted to the inquiry that his department had not checked warnings of illicit AWB payments contained in more than 20 official cables but did not fault his officials and said he regarded the allegations as the machinations of Americans trying to steal the market.

His most common answers were "I have no recollection" and "I don't know".

Vaile's performance was ridiculed by cartoonists, opinion writers and commentators, with columnist Matt Price writing in the Australian: "During 87 minutes in the dock, Vaile transparently made a dill of himself."

Yesterday, Downer took the stand after providing a written statement absolving himself and foreign affairs officials of blame, complicity or incompetence.

Like Vaile, Downer could not recall seeing most of the official cables regarding possible AWB kickbacks dating back to January 2000, when Canadian wheat traders complained that the Australian company was making illicit payments.

He said he later thought AWB had been absolved of the Canadian allegations by the UN, believed a 2003 complaint by US Wheat Associates was just American manoeuvring, and dismissed a warning of across-the-board kickbacks of 10 per cent by an official of the post-war Coalition Provisional Authority because it came from a junior military officer.

Downer also found no fault in the failure of his department to investigate kickback allegations.

He denied a claim by former AWB managing director Andrew Lindberg that Lindberg had telephoned him in March last year advising him of payments to the Jordanian trucking company Alia and that these payments may have been passed on to Saddam's regime.

Downer said he had not heard of Alia - now known to be a fund-raising front for Saddam - until some months later.

He told the inquiry that his department's ability to investigate kickback claims was limited because it had no legal right to demand to see AWB records and that it had not had sufficient evidence to warrant calling in the federal police.