Cole's dirty dozen to face jail

ELEVEN former executives of wheat exporter AWB could face criminal charges and jail terms of up to 10 years after the Cole inquiry found they had engaged in an elaborate deception that illegally funnelled $290 million to Saddam Hussein's regime and cast a shadow over Australia's international reputation.

ELEVEN former executives of wheat exporter AWB could face criminal charges and jail terms of up to 10 years after the Cole inquiry found they had engaged in an elaborate deception that illegally funnelled $290 million to Saddam Hussein's regime and cast a shadow over Australia's international reputation.

A 2065-page report by Commissioner Terence Cole, tabled in federal parliament yesterday, named former AWB chairman Trevor Flugge and former executives Mark Emons, Peter Geary, Dominic Hogan, Paul Ingleby, Michael Long, Nigel Officer, Murray Rogers, Charles Stott, Michael Watson and Jim Cooper as being involved in the kickbacks scheme, in which illicit payments were disguised as trucking fees to Jordanian company Alia.

A former BHP executive, Norman Davidson Kelly, was also named in the Cole report and may be extradited from London if charges are laid.

Mr Davidson Kelly set up a front company called Tigris Petroleum to extract $US8.8 million from Iraq's UN bank account.

But Mr Cole found that evidence presented to his inquiry did not implicate John Howard, his senior ministers or any government official.

And he cleared former AWB managing director Andrew Lindberg - who resigned from the wheat exporter after a humiliating seven days in the witness box - of blame for the scandal.

Mr Cole said the Department of Foreign Affairs and Trade, which was responsible for monitoring the UN oil-for-food program, did not have in place "any systems or procedures in relation to how its staff should proceed" when allegations of corruption were made.

"No specific officer was given responsibility for responding to, or investigating, such matters," Mr Cole said.

"It does not appear that there was in place any protocol, if DFAT itself was not proposing to investigate, for referring matters to other agencies, such as the Australian Federal Police."

A top-level taskforce comprising AFP officers and Australian Securities and Investments Commission investigators will now be set up to consider prosecuting those adversely mentioned in the report.

Mr Cole found the AWB executives may have been accessories to offences committed by the company, including possible breaches of the Crimes Act, Criminal Code, the Banking (Foreign Exchange) Regulations and the Corporations Act.

Among three changes to the law recommended in the report is that, to avoid a repeat of the wheat kickbacks scandal, it become a criminal offence to breach a UN sanction agreed to by Australia.

Companies committing such offences would be fined three times the value of any offending transactions, with executives sent to jail for up to 10 years.

Mr Cole said AWB had "cast a shadow over Australia's reputation for international trade".

But he added: "The shadow has been removed by Australia's intolerance of inappropriate conduct in trade, demonstrated by shining the bright light of this independent public inquiry on AWB's conduct."

AWB's corporate reputation is in tatters and the Prime Minister said yesterday the Government would "urgently review" the so-called single desk that gives the publicly listed company a monopoly over Australia's wheat exports.

Mr Howard rejected suggestions that his Government could have done more to uncover AWB's rorting of the UN program.

"I don't believe, when you are dealing with people who behave like this, it is right to say that we should have done more," he said. "We didn't have anything to hide and the commissioner has found that there was no wrongdoing on the part of any of my ministers."

Foreign Minister Alexander Downer last night also rejected suggestions he should have been forewarned.

He said AWB had practised a "deliberate policy of deceit", hiding key information from the Government and the UN.

"What you don't know, you don't know - and you can't get to the heart of what you don't know," he said.

Opposition Leader Kim Beazley described the wheat kickbacks saga as the worst corruption scandal in Australia's history. "Well, this is the Government defence. They're incompetent, not criminal."

But Deputy Prime Minister and former trade minister Mark Vaile said Mr Cole had completely discredited the attack by Mr Beazley and Labor foreign affairs spokesman Kevin Rudd on the Government and its officials.

"Mr Beazley and Mr Rudd should hang their heads in shame today following the tabling of the Cole inquiry report," he said.

Mr Cole found that AWB had deliberately withheld information from the Government, and went to great lengths to hide the kickbacks.

He said AWB had asked itself: "What must be done to maintain sales to Iraq?" And it had answered: "Do whatever is necessary to retain the trade. Pay the money required by Iraq. It will cost AWB nothing. But hide the making of those payments, for they are in breach of sanctions."

He said: "No one asked: what is the right thing to do?"

Mr Cole said AWB had not told the Australian Government or the UN of its true arrangements with Iraq and there was no evidence that "anyone from AWB ever informed the Prime Minister, the Minister for Foreign Affairs, the Minister for Trade or any other minister of the relevant dealings between AWB, Alia and the Iraqis".

Mr Cole said DFAT had done "very little in relation to the allegations (of corruption) it received over the years".

"DFAT's response to the information and allegations was limited to seeking AWB's assurance that it was doing nothing wrong," he wrote.

But he said it was "immaterial whether DFAT was in a position to find out, or could have, or should have, discovered the information from (an)other source".

He said there was "no direct evidence that DFAT obtained" knowledge about the kickbacks, from AWB or other sources.

Mr Cole said he did not accept the evidence of former Middle East desk officer Jill Courtney, who said she knew in 2000 that AWB was using Alia as a trucking company in Iraq. Alia was later exposed as a front company for the Iraqi government.

He noted that bureaucrats had heard allegations of corruption. Veteran diplomat Bob Bowker, now ambassador to Egypt, raised the allegations with AWB, which told him they were "bullshit".

Mr Cole said Mr Bowker "conducted no independent inquiries. He did not endeavour to ascertain whether DFAT or the Australian intelligence communities held any relevant intelligence".

Mr Cole said DFAT's lack of action was "explicable" for a number of reasons.

But it was "difficult, if not impossible, to see what possible motive DFAT would have for turning a blind eye, or how DFAT could conceivably see that turning a blind eye would advance either AWB's or Australia's interests".

Mr Cole concluded that there was a "culture of superiority and impregnability, of dominance and self-importance" at AWB. The board and management had failed to create, instil or maintain a "culture of ethical dealing".

In a bold move, Mr Cole all but recommended AWB be stripped of its monopoly over wheat exports. "It is not my function to comment on the grant of monopoly power," he said, in the prologue. "I do not do so."

But he added: "In my report, I describe the conduct of AWB in its dealings with Iraq.

"It is for others to determine whether, as a matter of public policy, it is appropriate for the law to require persons to deal with a group that behaved in the manner I describe."

AWB's new chairman, Brendan Stewart, expressed regret at the firm's dealings. In a brief statement, he said AWB would make a formal response after the board had read the report.