The Attorney-General has tabled the Report of the Inquiry into Certain Australian Companies in relation to the UN Oil-for-Food Programme in Parliament.
The 5 volume report sets out the Commission's findings of fact.
The Report concludes that breaches of the law might have been committed by AWB Limited and AWB (International) Limited and certain of its directors and officers (see summary of findings in Volume 1). No such findings were made in respect of Alkaloids of Australia, Rhine Ruhr, BHP or Tigris Petroleum. However the Commissioner was highly critical of Davidson Kelly, the President of Tigris and found that Kelly might have committed an offence.
In respect of AWB, the Commissioner did not find any basis for breaches of the law relating to bribery or corruption, money laundering or terrorism.
The Report also states that there is no evidence "that any of the Prime Minister, the Minister
for Foreign Affairs, the Minister for Trade or the Minister for
Agriculture, Fisheries and Forestry were ever informed about, or
otherwise acquired knowledge of , the relevant activities of AWB".
The Commissioner found there was no evidence to support
an inference that the Department of Foreign Affairs and Trade turned a
blind eye to allegations.
The Report also concluded that the Wheat Export Authority did not have knowledge of the true arrangements between AWB and the Iraqi government (principally because of a lack of vigour in WEA's questioning and supervision of AWB). There was no evidence that AWB officers obstructed WEA.
The Oil-for-Food Programme was established by the United Nations in 1995 to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humanitarian needs for ordinary Iraqi citizens. The Programme modified the strict sanctions on Iraq imposed after its 1990 invasion of Kuwait.
If you were a director or manager of a company which traded with Iraq, what would you have done if you found that you could not keep trading with a long-standing (at least 55 years) significant customer of your country’s products without breaking the law?
When you decided what to do, how would you document your decision and archive records relating to it? How would you respond to a finding from the UN that your decision to keep trading most likely involved corrupt special payments? And how would you respond to a decision by your own government to investigate the UN finding?
In the case of Australia’s AWB Limited a Commission of Inquiry has concluded that rather than accept the sanctions and find alternative markets for Australian wheat, AWB decided to disguise the true nature of its transactions and pay fees not permitted under the sanctions to a company controlled by the Iraqi Government.
The Independent Inquiry Committee of the United Nations (‘IIC’) estimated that AWB accounted for more than 14% of the illicit payments made to Iraq in connection with humanitarian purchases under the Programme . Their report concluded that AWB paid 'trucking charges' of more than $US222 million to Alia, a Jordanian trucking company owned by the Iraqi Government. AWB was identified as one of the 5 largest food suppliers to Iraq under the Programme which collectively accounted for US$5billion in contracts.
In its final report, the IIC concluded that Alia was a front company for the Iraqi regime headed by Saddam Hussein and that Alia channelled these payments to Iraq in contravention of the United Nations’ sanctions. A key issue in the Cole Inquiry was whether AWB or any of its employees knew or suspected that this was the case.
Despite significant evidence in support of the IIC conclusions, AWB denied any wrongdoing to the UN, the United States Senate, the Australian Government and ultimately to the Cole Inquiry.
AWB conducted 2 internal inquiries, retained 3 external legal firms and obtained various counsels’ opinions and then claimed that it was vindicated but that the documents could not be used by the Commission as they were subject to legal professional privilege. The claim for privilege was largely unsuccessful.
AWB's corporate reputation is in tatters. It has had to replace its Chair and CEO and other senior executives. The documents show a failure of culture, systems and procedures: a willingness to break international conventions, to pay bribes and then to cover up their activities.
Counsel assisting argued that there was "a policy of doing whatever it took to get the business done."
In the final analysis much will also be said about subsidiary issues: the function of in-house lawyers and the tension between commercial loyalty to their employer and professional ethics, the role of lawyers in internal investigations and the use of legal professional privilege to restrict access to incriminating documents, internal document management and systems for retrieving documents and emails and the appropriate corporate position to take when an investigation is launched.
Ultimately this inquiry will be about corporate culture and the harm that can be caused by a failure of board and management to show leadership.
LESSONS LEARNED
Organisations need to understand their risks and have in place systems to manage knowledge related to those risks. They need to know who does what in their organisation and how and where knowledge is stored. It should not take weeks or months to locate important information.
They need to have a corporate culture which frowns on “getting around” the law and which encourages telling the truth when problems have been identified.
UPDATE: For those who have an interest in what laws might have been breached, look at Appendix 26 , page 313 in Volume 5 of the Report.
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