On 14 March 2003 Australian Prime Minister John Howard publicly announced that Saddam Hussein had “cruelly and cynically manipulated the United Nation’s oil-for-food programme. He’s rorted it to buy weapons to support his designs, at the expense of the wellbeing of his people.”

What he didn’t say on that day was that the biggest rorter of all in the oil-for-food programme was the Australian Wheat Board. The monopoly Australian wheat exporter and former government authority was the largest supplier of humanitarian aid under the programme. In total, it paid $AUS294 million (about £120 million) in bribes to Saddam’s regime in the form of inland transportation costs to a Jordanian trucking company owned by members of Saddam’s family.

Howard claims he knew nothing of the illegal payments despite his government receiving 29 sets of warnings over five years. It was the US-led Volcker inquiry that blew the lid on the corruption scandal.

Following the publication of that report in October 2005 Howard announced a Royal Commission into the AWB kickbacks. However, Howard failed to announce that he had stripped the commission, led by the Hon. Terence Cole, QC, of any judicial power and narrowly defined its terms of reference.

The Cole inquiry – set to report at the end of June – is limited to investigating whether the AWB breached Australian criminal law in its illegal payments under the oil-for-food programme. It has no power to investigate, or make findings on, whether Australian government officials were complicit in the payments; whether they knew, had no idea or turned a blind eye. All 41 contracts between Iraq and the AWB were authorised by the Howard Government but the inquiry can make no finding at all on ministerial responsibility.

The inquiry has nevertheless revealed some interesting points. One of the most fortunate was a draft confession drawn up last December by former AWB managing director Andrew Lindberg. The confession states in part:

“As a result of the Volcker inquiry into the OFF (oil-for-food) Program AWB accepts that in paying money for inland transportation and after sales service it paid money to the Iraq government in contravention of the UN sanctions.”

The AWB chairman and directors prevented the statement from being publicly issued. It was mistakenly found by the Cole inquiry in a folder of other documents. The AWB’s lawyers went to court to try to stop Cole from releasing it, but the Federal Court found against them.

The accidental discovery of this document, and the subsequent legal action to get it back, casts more doubt on the truthfulness of AWB executives’ testimonies.

UN worker Felicity Johnston provided the most explosive testimony of the inquiry. It was Johnston’s job to check contracts under the oil-for-food programme at the UN. She claimed she warned Australian government officials six years ago that AWB might be paying kickbacks to Saddam’s regime.

As early as 2000 Canadian wheat exporters complained to Johnston that Iraq was demanding payments in US dollars as bribes – ostensibly for transport costs – and said they thought AWB was already paying them.

Johnston spoke to both Bronte Moules at Australia’s Permanent Mission to the UN and to Australia’s trade commissioner in Washington, Alistair Nicholas. Both Moules and Nicholas sent diplomatic cables to Australian government officials outlining the bribes claims raised by Johnston, but both left out the crucial detail that kickbacks were in the form of transport costs. Moules and Nicholas deny ever being told specifically about transport costs by Johnston, and while Johnston said she went through an AWB contract with Nicholas and left him a copy, he said he never saw a contract.

Moules sent a further cable in April 2001 following a UN Security Council debate about alleged corruption in the oil-for-food programme. It was widely distributed across the government, going to Prime Minister John Howard, Foreign Affairs Minister Alexander Downer, Trade Minister Mark Vaile and their respective departments. It also went to the Attorney-General’s Department, the Defence Department, the Defence Intelligence Organisation and the Australian Bureau of Agricultural and Resource Economics.

No evidence has been found to indicate the government launched any kind of investigation into the AWB contracts in spite of the warnings in these cables.

Even warnings from a highly regarded Australian colonel in Iraq’s Coalition Provisional Authority went unheeded. Colonel Mike Kelly says he warned the Australian military as well as foreign affairs officials in Baghdad in 2004 that suppliers were paying kickbacks to Saddam through the oil-for-food programme.

“I acquired knowledge from a variety of sources about the OFFP and the mechanisms that were being used to corrupt it by virtually all contracting parties.

“All food contracts, including those for Australian wheat, were subject to the same illegal practices, which involved dealing with a Jordanian trucking company, Alia, and charging 10 per cent onto the contract.

“AWB Ltd, as the largest supplier of food under the OFFP, was almost certainly, directly and knowingly, involved in the making of these payments,” Col Kelly told the Cole inquiry.

Ministers claim this information was not passed on to them and the Baghdad official Kelly spoke to told the inquiry the information was second-hand and not appropriate for reporting. Back in Australia later in 2004, Kelly again told foreign affairs officials that AWB was “up to their eyeballs” in the illegal payments and “things were going to get ugly sooner or later”. Still no further investigation by government officials took place.

At least one senior defence official has spoken out in support of Kelly. “It seems really odd to us that when we attach a senior officer to the Coalition Provisional Authority, who’s an expert on international law, he passes a warning back and some diplomat somewhere airily dismisses it as being of no importance. That’s pretty hard to believe, isn’t it?” the Australian Defence Association’s Neil James told ABC Television.

The Cole inquiry has been able to question ministers despite its limited terms of reference in so far as their testimony can shed light on what was happening in the AWB. The questioning has shown up some suspicious happenings in government departments, which if true amount at best to severe incompetence.

The Minister for Foreign Affairs, Alexander Downer, claimed he was not shown – or does not remember seeing – one of the 21 cables sent to his department about the corruption allegations.

One of the cables, sent in June 2003 from the Australian embassy in Baghdad, reads: “Every contract since phase 9 [December, 2000] included a kickback to the regime from between 10 and 19 per cent.” The AWB payments continued for a further 16 months until the end of 2004.

Although Downer and Howard were both copied in on this cable, they claimed not to have seen it. Apparently no one had seen fit to show them even after government officials in Washington lobbied US congressmen and women to prevent a US senate inquiry into the AWB’s dealings with Iraq. Those officials vouched for the honesty of the AWB despite there being no investigation into whether the claims were true or not.

In March 2004 Downer received a ministerial submission warning him of the impending Volcker inquiry. Downer marked on the submission: “This worries me. How are AWB prices set and who set them? I want to know about this.” A letter to Downer denying corruption by the AWB in June 2004 seems to have satisfied Downer’s worries and the issue wasn’t followed up by his department. The corrupt contracts continued to be paid until the end of 2004.

The Australian government was obliged to enforce the sanctions against Saddam’s regime under Security Council Resolution 661. That was directly translated into Australian law through the Customs (Prohibited Exports) Regulations 1958.

The Howard Government had to issue export permits for each of AWB’s 41 contracts with Iraq.

During the Cole inquiry, the Minister for Trade – who is also the Deputy Prime Minister – claimed it was the Department of Foreign Affairs’ job to issue the permits. Minister for Foreign Affairs Alexander Downer claimed it was the UN’s job to make sure the contracts he had approved were not corrupt. The Prime Minister of Australia said no one in his government did anything wrong because when asked, the AWB said it wasn’t making illegal payments.

What has become clear through the inquiry is the long-term unwillingness of the Howard Government to participate in any inquiry about corruption in international wheat deals. Back in 1998, when the AWB was still owned by the federal government, it was suspected of paying a bribe in a deal with India. The Indian Central Bureau of Investigations abandoned the investigation in 2004 owing to the failure of the Australian government to co-operate.

Volcker also accused the Howard government of being uncooperative, describing the Government’s approach as “beyond reticent, even forbidding”. Howard on the other hand had publicly claimed that he had fully co-operated with Volcker. Even the Cole inquiry – the commission Howard set up – had to subpoena documents from the Prime Minister’s office; five days after he announced he had provided all documentary evidence required.

With the inquiry now over, the only place with the power to investigate is Parliament. Senate Estimates Committees have traditionally been the places such investigations take place. The hearings into the AWB scandal however have been hamstrung by the gagging of officials. John Howard and Senate leader Nick Minchin have banned all government officials from testifying in Senate hearings into the AWB affair.

The Labor Party opposition in Australia has dubbed this the “wheat for weapons” scandal. They claim it’s the biggest corruption scandal in Australia’s history – a claim taken up by some of Australia’s media.

The Australian public meanwhile waits to see if anyone will be held responsible for the massive rorting of the oil-for-food programme. Rorting that took place, as John Howard told Australia, “at the expense of the wellbeing of [the Iraqi] people.”