Federal police drop AWB investigation

THE nation's worst trade scandal -- the $300 million in kickbacks paid to the regime of Saddam Hussein on the eve of the Iraq war in 2003 -- will go unpunished by criminal sanction.

THE nation's worst trade scandal -- the $300 million in kickbacks paid to the regime of Saddam Hussein on the eve of the Iraq war in 2003 -- will go unpunished by criminal sanction.

The Australian Federal Police said yesterday it had dropped its investigation into the scandal, in which wheat exporter AWB was found to have been funding the Iraqi regime in breach of UN sanctions. The decision means no former employee or director of AWB will face criminal charges, although an investigation by corporate watchdog ASIC continues.

The decision is a relief for those named during the scandal, who have argued they either did nothing wrong or did no more than was asked of them by AWB.

However, it means civil actions that have been on hold pending the outcome of the criminal investigation can now proceed.

The AFP announced yesterday that the decision to drop the investigation was made after a review of the evidence by senior barrister Paul Hastings QC, who declared the prospect of convictions was limited and "not in the public interest".

"Based on the advice provided by Mr Hastings, and following consultation with the Australian Securities & Investments Commission, the Commonwealth Director of Public Prosecutions and the Commonwealth Attorney-General's Department, the Commissioner of the Australian Federal Police, Mick Keelty, has decided to discontinue the Australian Federal Police investigation and to offer such assistance as is required to the Australian Securities & Investments Commission to assist that agency to complete its investigation," the AFP said.

It has hardly been a secret that the AFP investigation was under-funded and under-resourced, and it received little co-operation from AWB, which sees itself as a new entity, with all staff associated with the corrupt dealings having left.

Mr Hastings told the AFP that in his opinion there was no reasonable prospect of a conviction. It was not even clear that breaching a UN sanction is a criminal offence.

AWB had not been notified of the decision when The Australian phoned yesterday, but spokesman Peter McBride said last night: "AWB notes the decision by the AFP and believes this is another step in allowing the company and former directors and individuals to move forward."

AWB chairman Peter Polson has previously described the investigation as an "ongoing distraction".

None of the former AWB staff who faced possible prosecution had been notified yesterday. They included former chairman Trevor Flugge, who did not respond to calls for comment.

Former manager for international sales Michael Long, who last worked for AWB more than eight years ago, said it was a relief, but would not comment further.

Marketing manager Charles Stott said: "I don't know what to think. It's been such a long ordeal."

Australia was by far the largest supplier of illegal funds to Hussein's regime, and the payments continued until the war broke out in 2003.

The kickbacks were disguised as trucking fees, and paid by AWB to a Jordanian trucking company in exchange for wheat contracts worth more than $1billion.

It was because of the kickbacks that AWB was able to secure about 90 per cent of the lucrative Iraq market.

AWB has since lost its hold in the region. In the wake of the scandal, AWB also lost its monopoly over wheat sales.

The scandal was the subject of a year-long investigation by Commissioner Terence Cole in 2006, during which former prime minister John Howard and former foreign minister Alexander Downer were called to the stand.

Mr Howard was strongly criticised, in particular, by then foreign affairs spokesman Kevin Rudd, for drawing the terms of reference tightly, to prevent a proper examination of the role of government.

The decision to drop the investigation was made independently of government.

AWB this week announced it expected to report a net loss of $120m to $156m this financial year.