Fran O'Sullivan: Kiwis avoid harsh light of independent scrutiny

Before Kiwis pass judgment on the embarrassing disclosures daily made public in Australia over the role of its Wheat Board in channelling kickbacks to Saddam Hussein's Iraqi regime - let's ponder what might have been disclosed if governments here had the integrity to really plumb what was behind commercial disasters such as the failures of DFC New Zealand or Bank of New Zealand.

Unlike Australia, which appears to believe that "sunlight is the best disinfectant", New Zealand's power-brokers are more likely to indulge in high-level cover-ups when the proverbial hits the fan in relation to a government-linked commercial body. There was no public inquiry into the failures of either of these government-backed institutions.

Government reports which did finger high-profile players for their role in failing to avert the catastrophes were stamped "top secret" or "classified" and simply filed away, their subjects safe in the knowledge their reputations would be protected.

The only public inquiry of any consequence in recent times was into the "wine-box tax dodging" affair. Its terms of reference were not sufficiently broad or targeted to probe obvious questions and appeared concentrated more on disproving allegations by a prime protagonist, NZ First leader Winston Peters, than getting to the bottom of a disgraceful episode in our commercial history.

Contrast this with Australia. Yes - it's true that the Cole inquiry would not have been set up in the first place if it wasn't for the damning revelations in Paul Volcker's report into just who was rorting the United Nations' oil-for-food programme.

Volcker found the Australian Wheat Board was the biggest culprit channelling almost $A300 million ($353 million) in various "fees" into the coffers of Saddam and his henchmen. Australian Prime Minister John Howard could not ignore the Volcker report.

The resultant inquiry is relatively narrow, focusing on the Wheat Board's actions, not whether officialdom should have seen it coming and stopped the kickbacks from occurring. In essence, Cole has to determine whether the Australian Wheat Board or its officers broke any federal laws in their dealing with Saddam's regime. But some embarrassing truth has come out.

Australia's Department of Foreign Affairs and Trade (DFAT) came across information which suggested kickbacks were being paid - but says it was merely acting as a "post box". Diplomatic cable traffic between Canberra and New York highlighted the board's role. But, despite Howard's belief that the UN scheme had been corrupted, he did not become suspicious over the board's involvement until last year.

Deputy Prime Minister Mark Vaile - who is also Trade Minister - said he believed the board's denials because it was a highly respected company that was straightforward to deal with. Vaile had thought the claims were being driven by the board's competitors and stopped believing only when he had been told of the Volcker report's contents.

Foreign Minister Alexander Downer said he wasn't sure he had seen a critical cable sent in January 2000 drawing Canberra's attention to allegations made by Canada that Australia was paying kickbacks to Iraq. He was on the distribution list.

No one could explain why no further investigations were taken.

The important distinction between New Zealand and Australia is that first, our bigger neighbour is more inclined to allow inquiries to proceed even if Cabinet ministers will take reputational risk. Second: the Cole inquiry has been allowed to question not just government officials' actions but also that of ministers, right up to Howard himself - the first time this has occurred in 23 years.

It may not be empowered to make direct findings against the Government - yet.

Over here we've been very quick to take at face-value the results of an inquiry into how New Zealand dairy giant Fonterra benefited selling product to Iraq - through a Vietnamese intermediary - during the sanctions. The Vietnamese company was named in the Volcker report as having paid bribes to the Iraq regime. But the inquiries into Fonterra's actions were made by the Ministry of Foreign Affairs and Trade - not an independent party.

What assurances do we have over the level of checking that took place before MFAT could give the company a clean bill of health?

MFAT said it found no evidence the dairy giant simply evaded the sanctions by exporting product to Vietnam knowing it would be rebagged and sent on to Iraq.

Fonterra says: "We have always complied with New Zealand and UN sanctions with regard to trade with Iraq. Fonterra, and before it the NZ Dairy Board, have not sold dairy products directly into Iraq since UN sanctions were applied."

I'm not suggesting Fonterra had direct knowledge over the kickbacks to Saddam's regime which smoothed the way for the Vietnamese company to export such big amounts of product to Iraq. But with the "Powdergate" trial impending - which concentrates on whether dairy executives exported product under false labels to circumvent rules - I would have thought it more prudent to have undertaken an independent inquiry in the first place.

As it is, the questions will linger.