Wheat probe pulls Howard and ministers further into scandal

CANBERRA - The deepening scandal over Australian wheat kickbacks to the regime of former Iraqi President Saddam Hussein yesterday reached the highest political office in the land, with Prime Minister John Howard asked to explain himself to the inquiry into the affair.

Howard, who has agreed to provide a statement and to appear before the commission of inquiry if required, follows yesterday's appearance by Deputy Prime Minister and Trade Minister Mark Vaile and evidence to be given today by Foreign Minister Alexander Downer.

Howard, who could appear as early as Thursday, would be the first Prime Minister to be called before such an inquiry since Labor's Bob Hawke in 1983.

Vaile and Downer are the first Cabinet ministers to face an inquiry since then-Labor Health Minister Carmen Lawrence in 1995.

The decision by Commissioner Terence Cole, QC, to seek evidence from the Prime Minister, the Deputy Prime Minister and one of the most senior Cabinet ministers - and their agreement to be questioned - underlines the political significance of an inquiry that has ballooned beyond the original allegations of commercial misdeeds.

Coles inquiry is investigating the payment of almost A$300 million ($358 million) to a Jordanian trucking company acting as a front for Saddam.

The payments were made to secure wheat contracts under the scandal-ridden United Nations oil-for-food programme during the blockade of Iraq after the first Gulf War, and were exposed late last year by a UN inquiry. The payments continued as Australia prepared to join the United States and Britain in the invasion of Iraq.

The Government, which has oversight of AWB and was responsible for ensuring compliance with UN sanctions, has denied knowledge of the kickbacks, despite a series of official cables implicating AWB given as evidence to the Cole inquiry.

These have included diplomatic warnings of kickbacks and "surcharges", many of which were addressed to Vaile and Downer, some signed and notated by the ministers.

Howard established the inquiry to head off a rising flood of allegations pointing beyond AWB to foreign affairs officials and senior ministers. He has had no alternative but to continue widening the scope of his co-operation as Cole's investigation revealed a chain of evidence suggesting either complicity or incompetence.

Observers in Canberra believe that given the inquiry and the extent of his co-operation, Howard must be confident that he can ultimately firewall the Government from any fallout, even if heads roll further down the chain.

Unless Cole uncovers incontrovertible evidence of Government fault, Howard's judgment is likely to be vindicated: Polls show a majority of Australians do not believe the Government knew nothing, but the scandal has yet to gain sufficient popular traction to threaten its survival.

Last night a UN official responsible for examining oil-for-food contracts told ABC TV's Four Corners programme that details of kickbacks paid to Iraq by AWB had been given to Australian diplomats in January 2000.

Former UN chief customs officer Felicity Johnson said that Vaile and Downer had failed to carry out their legal obligation to ensure Australia abided by UN resolution 661 regarding kickbacks.

"Mr Vaile may try to wash his hands of it, but they do have a responsibility to ensure that their nationals abide by the rules and regulations," she said.

Howard, who will provide a statement to the inquiry today, denied impropriety or incompetence by his Government.

"I've said all along that this is an utterly transparent process, which is not protecting the Government.

"I do not believe on the information known to me - and I don't use that expression in any way designed to give me ground to move later on - that any of my ministers have been guilty of dereliction of duty, and I am very, very happy to provide the statement and, if asked, to appear."

Downer at the weekend said he had no problem with the details of the affair emerging from the commission.

"The suggestion that somehow people in my department were involved in some kind of conspiracy with AWB Ltd to break the laws of Australia, or international law, is absolutely preposterous," he told Channel Nine's Sunday show.

Vaile, whose evidence continued late yesterday, said he had not been told about the Jordanian trucker, Alia, acting as a front for Iraq until March 2004, when the UN announced its oil-for-food inquiry.

Nor had he seen more than 20 cables filed since 2000 warning of "irregularities" in AWB contracts and was surprised the allegations had not been brought to his attention. "When I read the cable ... I must admit I was surprised that it hadn't been brought to my attention," he said.

But Labor Leader Kim Beazley said the full story would not be revealed unless the Cole inquiry was widened. "Howard should front the commission and through them explain ... how his own personal sloth and incompetence has allowed a situation where Australia ended up funding Saddam Hussein."

The story so far

The Cole commission is investigating almost A$300 million ($358 million) in kickbacks paid by wheat exporter AWB to the regime of former Iraqi President Saddam Hussein. The commission of inquiry headed by former judge Terence Cole has unearthed evidence suggesting the Government missed or failed to fully investigate key warnings that AWB was making illicit payments to the Iraqi Government.