Cole delivers report into AWB kickbacks scandal

THE head of the AWB Iraqi kickbacks inquiry has handed the final report on his investigation into the scandal to Governor-General Michael Jeffery.

THE head of the AWB Iraqi kickbacks inquiry has handed the final report on his investigation into the scandal to Governor-General Michael Jeffery.

Terence Cole presented his five volume-report during a short ceremony at Admiralty House, the governor-general's harbourside residence in Sydney, around 2.45pm (AEDT).

"Governor, I have the honour to present you my report," Mr Cole said as he handed over the hefty bundle. The two men then posed for photographs in Major General Jeffery's study.

The delivery of the report will allow the government to table the report in parliament next week.

Until then, Mr Cole's findings about the $290 million oil-for-wheat bribery scandal will remain secret.

Mr Cole's report is expected to recommend a string of charges against current and former AWB executives, and could deliver findings of public service incompetence which could hurt the Howard government going into an election year.

The long-running inquiry heard evidence that ministers and officials missed, largely ignored or failed to fully investigate dozens of warnings about AWB's illicit payments.

AWB has claimed it was the unwitting victim of an elaborate ruse by the corrupt government of Saddam Hussein.

But Mr Cole is expected to find that a large number of senior AWB staff knew the illicit payments breached UN sanctions in force against Iraq, and that AWB deceived the Australian government and the United Nations.

Earlier today, Mr Howard refused to say whether the government has been cleared by the Cole report into the AWB kickbacks scandal, saying only that he would be concerned if the report had been leaked to the media.

The Australian understands the Cole report will clear the Department of Foreign Affairs and Trade of blame, saying the evidence "does not support an inference of actual knowledge" on the part of its officials.

Mr Howard told radio listeners he had not seen yet seen Commissioner Terence Cole's report.

"I have read newspaper reports but I have not seen the royal commissioner's report," Mr Howard said. "When I do get it, which will be this afternoon, I will be obliged not to say anything about its contents until it is tabled in parliament early next week.

"I do not know what is in the royal commissioner's report, I have not seen it, it has not been given to the government. I am always concerned about leaks, but I have not had it and therefore I cannot tell you whether what's in the newspaper is accurate or not."

The Australian believes the final report, due to be delivered to the federal Government at 2.30pm today, will say "no one within DFAT" knew that monopoly Australian wheat exporter AWB had engaged a Jordanian trucking firm called Alia to funnel more than $290 million to the regime of Saddam Hussein.

It is understood that commissioner Cole initially considered a draft of the report that concluded that "no one within DFAT, with the possible exception of Jill Courtney" knew that AWB was dealing with a firm called Alia.

Ms Courtney was a director in the Middle East section of the Middle East and Africa branch of DFAT between April 2000 and January 2001.

Ms Courtney is the only DFAT official who has testified before Mr Cole that she heard the name "Alia", while working for DFAT in 2000.

Other officials - including assistant secretary and branch head Jane Drake-Brockman, and director of the Middle East section and now Egypt ambassador Robert Bowker - told the inquiry they acted as a "post box" for AWB, passing contracts laden with kickbacks from Canberra to a New York-based diplomat, Bronte Moules, without much scrutiny.

But Mr Cole also heard that the Australian intelligence community had known since 1998 that Alia was part-owned by Iraqis and had received kickbacks for Iraq in breach of the UN sanctions.

AWB is accused of funnelling $290 million to the Iraqi government under the UN oil-for-food program in the lead-up to the March 2003 invasion by coalition forces, including Australia.

The inquiry report is due to be tabled in parliament on Monday.

It is likely to recommend charges against several former AWB executives but the terms of reference have been criticised forpreventing Mr Cole from making findings against the Government, its ministers and officials.

Ms Courtney told The Australian this week that she had approached the Cole inquiry not knowing "how helpful I could be, so I decided to simply tell the truth".

"I was only involved for a very limited period of time," said Ms Courtney, who left the department in 2003.

She said she was approached late last year and told to engage with DFAT lawyers, who also handled the testimony of other DFAT staff. "I was chatting with the lawyers and the whole issue of Alia came up," Ms Courtney said. "And I said yes, I had heard of Alia, and they were surprised. And I said, 'But anybody on the Middle East desk will tell you the same thing'.

"And they said, 'No, actually, you are the only person who can remember hearing about Alia. Nobody else remembers that'.

"And I remember thinking, 'That's amazing, because there's no doubt, I knew the name Alia'."

Ms Courtney would not comment directly on the Cole report or the submission of counsel assisting the inquiry John Agius, which is confidential and will remain so, even after the final report is tabled in parliament.

But The Australian understands that Cole inquiry lawyers flew from Sydney to Perth several weeks ago to present Ms Courtney with its findings. She was allowed to read the Agius submission, but not keep a copy.

Ms Courtney told the inquiry on March 17 that she "definitely recognised the name 'Alia' ... (it) did not surprise me at all. I knew that that was the name of the trucking company".

Ms Courtney told The Australian that she did not know Alia was a front for Saddam's regime, "or I would have done something about it, obviously".

"I didn't say I knew about the corruption," she said.

"I said I knew the name Alia. I certainly didn't have enough information to know that corruption was taking place."

Ms Courtney said it had always seemed to her to be "just short of miraculous, the deals that AWB was making" with Saddam's regime.

"Even as we were planning to go to war with Iraq, even after we invaded, they were still getting access to that market," she said.

"To me, it's inconceivable that people did not know something was wrong. There should have been some kind of investigation but there was no investigation. The idea that nobody followed up the allegations, it's very strange."

The federal Government received several warnings in the lead-up to the 2003 Iraq war that AWB was involved in corruption but did not launch an investigation because the allegations came from AWB's rivals.

Ms Courtney said she hoped the Cole report would address "the most important element of the story: the politicisation of the public service".

"Under (former Labor prime minister Bob) Hawke and (former Labor foreign ministers Bill) Hayden and (Gareth) Evans, people were basically encouraged to disagree, to speak their mind, to raise red flags," she said.

"Now there is a false, intellectual hierarchy, like the higher up you are the more you are supposed to know. It means the truth cannot be told. There is a sycophancy in the public service that was not there before.

"We did not used to think that we could not raise our concerns. We were not classified as Liberal supporters or Labor supporters, we worked for the public."

She is full of praise for those officials who tried to bring allegations of corruption to the attention of the Government but said the "central mentality was that we don't encourage people to be whistleblowers".

In October 2000, AWB executive Charles Stott faxed a letter to Ms Courtney at DFAT, seeking permission to enter into a commercial arrangement with Jordanian trucking companies.

The response, dated November 2, 2000, came not from Ms Courtney but from assistant secretary Ms Drake-Brockman, who said there was "no reason" from a legal perspective why AWB could not proceed.

Ms Drake-Brockman told the Cole inquiry she did not know the trucking company was called Alia.

Other officials, including Don Cuddihy and Tony Grenenger, told the inquiry they saw themselves as a post box for AWB and did not have the experience necessary to scrutinise the wheat contracts.

The kickback was hidden in an opaque clause in four early contracts, and later in AWB's inflated prices for wheat.

The kickbacks scandal, first exposed by the UN last year, has cost AWB dearly. It has lost several top managers, including chief executive Andrew Lindberg, and its share price has been hammered.

The fallout has also cost AWB lucrative contracts to supply wheat to Iraq, and it is resigned to losing its monopoly over Australian bulk wheat exports.

It is understood that AWB has accepted that the loss of the so-called single desk, which has protected its monopoly for more than 60 years, is inevitable.

It is now preparing for what it hopes will be an orderly transition to full deregulation of the market, which would allow other companies to export Australian wheat.

- with wires