BHP to cut ties with AWB accused

MINING giant BHP Billiton is preparing to sever ties with former executive Norman Davidson Kelly, who was described by the Cole inquiry as having "no commercial morality".

MINING giant BHP Billiton is preparing to sever ties with former executive Norman Davidson Kelly, who was described by the Cole inquiry as having "no commercial morality".

BHP Billiton chief executive Chip Goodyear signalled the mining giant would attempt to dump his Tigris company as a joint venture partner in Iraq.

But BHP was still keen to pursue the massive Halfayah oil field in southern Iraq. Mr Cole found that Mr Davidson Kelly cooked up a scam to extract millions of dollars from Iraq's UN bank account, in breach of UN sanctions.

The highly prospective Halfayah region, which the Cole commission was told could be bigger than Bass Strait, was the original prize BHP was after when it sought to curry favour with Saddam Hussein by donating through AWB a $US5 million wheat shipment to Iraq in 1996.

But BHP became embroiled in the AWB kickbacks scandal after Mr Davidson Kelly and Tigris allegedly misrepresented the shipment as a loan and sought to recover the money by conspiring with AWB to inflate wheat prices under the UN oil for food program.

Mr Davidson Kelly declined to testify before the inquiry.

Releasing the company's own internal investigation into the scandal in Brisbane, Mr Goodyear warned that his staff faced "serious consequences" for any breaches of ethical behaviour.

But current executives would not be reprimanded as a result of the kickbacks scandal, with an internal review blaming three executives who had already left the company.

BHP's internal review effectively exonerated recently retired head of Petroleum Phil Aiken and current had of corporate development Tom Harley from any blame.

The review by a steering group headed by company secretary Karen Wood and chief legal counsel John Fast pinned the blame on "personal failings" on the part of Mr Davidson Kelly, former AWB executive Charles Stott, who worked at BHP between 1996 and 2000, and BHP Petroleum legal counsel Jim Lyons, who retired in 2004.

"The steering group has found that the events of 2000 weren't caused by inadequate systems or controls but rather by personal failings on the part of Messrs Davidson Kelly, Stott and Lyons," says the report.

While BHP accuses Mr Stott and Mr Lyons of failing to act with reasonable care, BHP notes Mr Davidson Kelly may have been motivated by personal gain "given that he later directly benefited from the assignment of the 'debt"'.

The report blames Mr Lyons for his role in finalising a 2000 agreement with Mr Davidson Kelly's company Tigris.

In that agreement the gift was treated as a loan when Mr Lyons knew it was a gift.

He did not tell then Petroleum boss Mr Aiken, who signed the agreement, Tigris was not entitled to recover a loan. Standing by Mr Aiken, Mr Goodyear said Mr Aiken had "relied on an individual who had knowledge of the 1996 event and the 2000 event and he had the right to rely on that individual."

He also backed up Mr Harley who had previously worked closely with Mr Davidson Kelly, noting that Mr Harley had been excluded from the 2000 discussion on retrieving the "debt".

"We continue to see Tom as a valuable member of the organisation," Mr Goodyear said.