Australia's deputy PM faces Iraqi kickback inquiry

April 11, 2006

Yesterday, Australia's Deputy Prime Minister, Mark Vaile, appeared before the Cole Inquiry into kickbacks paid to Saddam Hussein's Iraqi regime. It is the first time in over a decade that a senior government official has been called to give evidence before a royal commission in Australia.

The inquiry heard that Mr Vaile could not recall being told any specific details of the allegations made against the wheat exporter AWB before 2003, and despite his department receiving information about the allegations, it came as no surprise that he was not informed as he held no responsibility for the UN Oil-for-Food program.

Mr Vaile has been Australia's trade minister since 2000 and the deputy prime minister since 2005.

Mr Vaile told the commission that despite the cables received by his department in 2000 alleging that the AWB agreed to pay a kickback to Hussein's regime in Iraq, inflating wheat prices and paying money into another non-Iraqi account, he does not recollect being told specific details of the allegations.

When asked by counsel assisting the commission John Agius about how such cables are dealt with, Mr Vaile told the commission that they are looked at by department officers who decide whether or not they need the minister's attention. Mr Vaile said that if a particular cable needed his attention it was generally put into a ministerial submission. He said that such submissions may require ministerial action, while others just contain information which he may need to make a note of. Once the submission has been read, the minister signs it and it goes into the system.

Mr Vaile told the commission that on occasion he receives information from cables via briefings from his advisors and departmental officers.

When questioned about a cable sent to the department of trade containing concerns raised by the UN about AWB's dealings in Iraq dated January 13, 2000, Mr Vaile said that he was briefed in a general sense on the issues raised. Despite the UN's concerns being stated in the cable, Mr Vaile said that he "can't recall being aware of the substance".

Mr Vaile said he was under the belief that the Department of Foreign Affairs and Trade (DFAT) and Australia's UN mission were taking care of the UN's concerns. He said that he did not have responsibility over the issues being raised "That's my recollection, and my recollection is that there were concerns that had been raised about an AWB contract, and that DFAT and the Mission in New York were dealing with it, bearing in mind that I was not - I didn't have direct ministerial responsibility for either the UN Mission in New York or the Oil-for-Food Program" he said.

When asked if he would have expected to be briefed in detail on the issues in the cable, Mr Vaile said "Given the circumstances at the time, in terms of my direct ministerial responsibility and being new in the portfolio, probably not."

Mr Vaile told the inquiry that he was surprised that he had not been briefed about a cable dated March 11, 2000 from Austrade to the department of trade. The summary of the document said "It may be necessary to advise the minister of the situation."

The inquiry heard that in April, 2000 Mr Vaile was told by an advisor that the issue raised in January, 2000 had been resolved with the UN.

When questioned by Mr Agius about why he did not follow up on the allegations made against AWB in 2000, Mr Vaile said he was too snowed under with work. "My best recollections are that I was pretty well snowed under in taking on the responsibilities of a new portfolio and the breadth of issues, having come from a much narrower base in the previous portfolio, and I recall early in 2000 being very, very focused on what to do next in the WTO process after the Seattle ministerial failed in the December of 1999" he told the inquiry.

Mr Agius then questioned Mr Vaile about allegations made by US Wheat Associates in 2003 that AWB had been inflating wheat prices to Iraq. At the same time there were also allegations that money was being paid to Hussein's regime, that AWB was not being transparent in their dealings. At the time Mr Vaile defended AWB based upon information provided to him by his department. He claims that it was some time later that he learned the information he was given was provided to the department by AWB. Mr Vaile said that his department did not conduct an investigation into the allegations despite them being raised in 2000 and again in 2003 by separate parties.

Mr Vaile also admits that at the time, he dismissed the allegations made by US Wheat Associates as he believed that they were putting pressure on the US administration with regards to WTO negotiations between Australia and the US.

Mr Vaile told the inquiry that the first ha became aware of possible corruption with connected with AWB was in April, 2004. The inquiry heard that Mr Vaile and Alexander Downer (Australia's foreign minister) had received a submission claiming that AWB had acted properly, but the company they paid to transport wheat in Iraq had been paying kickbacks to Hussein's regime. Mr Vaile said that at the time he saw no need to review procedures within his department for the distribution of information regarding AWB.

According to Mr Vaile, the only time the department of trade investigated its files to locate information it had received on AWB's dealings in Iraq was around March 2004 to assist the UN's inquiry into the Oil-for-Food programme.