Australian bribes-to-Saddam scandal climbs political ladder

An inquiry into alleged kickbacks paid by the Australian Wheat Board to the regime of former Iraqi dictator Saddam Hussein is moving closer to implicating Australia's highest political offices.

Evidence to the Government inquiry has supported allegations that up to A$300 million ($330 million) paid by the wheat board for road transport under the United Nations' scandal-ridden oil-for-food programme was funnelled to Saddam's coffers.

Yesterday it was revealed that the former Australian Ambassador to Washington, Alan Thawley, tried to block an American Senate inquiry into the board's dealings shortly before the 2004 elections that gave Prime Minister John Howard a fourth term in office.

The Government has confirmed that Thawley did try to deter the investigation but said the bid was motivated only by the desire to protect the board from fierce US rivals who wanted to use the scandal against further Australian sales.

The inquiry was also yesterday shown Iraqi documents detailing the dispersal of millions of dollars of board payments to a number of agencies of the former Iraqi regime, refuting earlier claims by the board that the money was paid only for transporting wheat.

The widening scandal is a growing embarrassment for the Howard Government, given the close involvement of its officials with the board and the implication of direct intervention through Thawley, formerly a personal adviser to Howard and a key conduit between Canberra and US President George W. Bush and the most senior members of his administration.

There are also close personal and political connections between the board and Deputy Prime Minister and Trade Minister Mark Vaile, the leader of the Nationals, the rural-based junior Coalition partner.

The scandal is doubly embarrassing given Howard's relentless condemnation of Saddam, Australia's participation in the invasion of Iraq as a member of Bush's "Coalition of the Willing", and the nation's continued military presence there.

The allegations surrounding the wheat dealings date back to the oil embargo placed on Iraq after the first Gulf War and the development by Saddam of the imposition of kickbacks to create a flow of funds from companies seeking contracts under the oil-for-food programme.

The Australian board became involved in 1999 against fierce US rivalry, with American and Canadian traders later complaining at what they regarded as the suspicious nature of the board's contracts and dealing with Iraqi officials.

Two years ago the first of several US inquiries pointed to the possibility of kickbacks funnelled to Saddam through a Jordanian trucking company, allegedly paid to transport Australian wheat to Iraq.

A UN inquiry last year found that the board had illegally paid kickbacks, sparking a new storm in Australia that forced the Government to launch an inquiry that continues to provide evidence to back the allegations.