CANBERRA, Australia – Top officials from Australia's monopoly wheat exporter deceived the United Nations and likely broke Australian law by paying more than $200 million to the Saddam Hussein regime under the U.N.'s Iraqi oil-for-food program, an inquiry reported Monday.
Former Judge Terence Cole said he found no evidence of wrongdoing by government officials in his monthslong investigation into the kickbacks, but recommended police investigate 11 executives from the wheat exporter and a 12th from another company.
Prime Minister John Howard said the inquiry's key recommendations would be acted upon immediately. Howard's government launched the inquiry after AWB — formerly the state-owned Australian Wheat Board — was named as the largest single payer of kickbacks in the corruption-ridden U.N. program.
Howard said a police task force would be set up to investigate AWB executives mentioned by Cole, who identified possible crimes but did not have the power to file charges.
Howard also said the government would review the system granting AWB a monopoly over Australia's wheat exports. The system has been criticized as unfairly protective by Australia's competitors on world grain markets.
Howard said the report vindicated him, Foreign Minister Alexander Downer and former Trade Minister Mark Vaile, who claimed to have no prior knowledge of the kickbacks.
In his five-volume, 2,000-page report, Cole said he found no evidence of illegal activity by the government.
"The government has hidden nothing," Howard told a news conference after the report was released. "The commissioner has found in the most emphatic terms imaginable that there is no evidence of wrongdoing" by the government.
The inquiry's government-given mandate was to examine company executives — not government officials. Howard denied the investigative powers were set deliberately narrow to ensure the government was not implicated in the scandal.
The report said 11 AWB officers may have breached Australian corporate and criminal law. Among them was AWB's former chairman, Trevor Flugge, who became widely known after a photograph became public of him, shirtless, brandishing a revolver during a trip to Iraq in 2003.
At the inquiry, Flugge said he was unaware the payments were in breach of U.N. sanctions. He was not immediately available to comment on the findings.
Brendan Stewart, AWB's chairman, said in a statement that his board "deeply regrets" the way in which the wheat trade with Iraq was conducted.
From 1999-2003, AWB executives allegedly authorized $222 million in bogus transport fees to a Jordanian trucking company, Alia Transport, that was partly owned by Saddam's government. Payments to Saddam were illegal under U.N. sanctions.
AWB allegedly inflated the cost of wheat it was charging to the oil-for-food program by as much as $50 per ton to cover the bogus transport fees, which the Iraqi Grain Board demanded as a condition of lucrative grain contracts.
"AWB knew that the fee it was paying to Alia was not for the provision of transport services. It knew the fee was a payment to Iraq," Cole said, noting AWB went to "extraordinary lengths to hide the payment."
"These subterfuges were undertaken because AWB knew that the fees were not approved by the United Nations," Cole said.
Cole also found, however, that the world body knew Iraq was breaching sanctions by requiring extra payments for transport fees and after-sales service fees.
"It took no steps to publicize or warn member states of the Iraqi practices and it took no steps to stop the practices," Cole said.
In New York, U.N. spokesman Stephane Dujarric said files from the larger inquiry into oil-for-food "continue to be accessible and available to all judicial authorities investigating these allegations."
Critics say the Australian government failed to respond to a string of diplomatic cables sent from Australian officials at the U.N. and in the Middle East warning that AWB may have been violating the sanctions imposed on Baghdad after its 1990 Kuwait invasion.
Howard, Downer and Vaile testified before the inquiry board in April and denied ever seeing the cables or knowing that AWB was violating U.N. sanctions.
Labor opposition leader Kim Beazley said Howard's claims of vindication rung hollow, because the government should have known about the kickbacks, and stopped them.