A government-appointed Commission of Inquiry has revealed that then Australian Wheat Board (now AWB) paid hundreds of millions of dollars in kickbacks to the regime of Iraqi dictator Saddam Hussein.
The regime demanded the kickbacks from more than 2000 companies from around the world who were supplying goods under the oil-for-food program. This was a way of illegally collecting money for the bankrupt regime and evading UN sanctions imposed after Iraq invasion of Kuwait in 1990.
Now the inquiry has revealed the involvement of BHP Billiton – or BHP as it was back in 1996.
The Big Australian funded a shipment of wheat to the country in 1996.
The company has denied that its donation of wheat was made on the understanding it would receive oil exploration rights in return.
But AWB said that, “BHP had paid AWB for the wheat on behalf of Iraq in exchange for the grant of oil exploration rights.”
In any case, responsibility for the debt was handed to a joint venture partner founded by two former BHP executives, Gibraltar-registered Tigris Petroleum, which hired the AWB to help recover the money, A$10.45 million - comprising the original $5 million fee, plus interest.
With the Iraqi government being broke, the AWB decided to inflate wheat prices through the oil-for-food program until the money was recovered.
To conceal this illegal arrangement, the AWB hired Tigris as a lobbyist to help the wheat marketer resume its stalled wheat trade with Iraq following the US-led invasion in 2003.
The fee paid to Tigris was A$10.45 million – the same amount as its debt to BHP.
BHP Billiton says it is ‘concerned’ by the evidence revealed so far and is working to clarify the facts as quickly as possible.
Meanwhile, the inquiry has now been told that an Australian oil industry supplier paid kickbacks to the Saddam Hussein regime. These illegal payments were then concealed from the federal government and the United Nations.
Melbourne-based Rhine Ruhr Pty Ltd supplied almost $A266,000 worth of components to Iraq's oil industry under the program.
Counsel assisting the inquiry, Michael Wigney, said Rhine Ruhr paid more than $A26,000 in ‘after sales service fees’ demanded by the Iraqi government.
Then managing director of Rhine Ruhr, Bruce Thurgood, agreed that the payments were unusual but said he was led to believe that this was the accepted system for doing business in Iraq.
He denied a suggestion by counsel assisting the inquiry, Michael Wigney’ that he had had a “head in the sand” attitude to the kickbacks. Thurgood he had not considered they would amount to breaking the UN santions then in place.
After paying the fee, the company then hid its actions by failing to detail the payments in contracts approved by the UN and the Department of Foreign Affairs and Trade (DFAT).
“(The fee) was plainly designed to extract funds from the UN escrow account for payment to the Iraqi government in circumvention of the sanctions regime,” Wigney told the inquiry.
"There is no evidence to suggest that either DFAT or the UN were informed about the fee," Wigney said.
Wigney said Rhine Ruhr's actions "could almost be a case study" of the Iraqi government's imposition of the kickbacks.
In 2001, Rhine Ruhr contracted with Iraq’s Northern Gas Company, which was controlled by the Iraqi Oil Ministry, to supply trays for regenerator towers.
The $A266,000 contract price included the 10% kickbacks ‘service fee’ levied by the Iraqi government. But contract documents never revealed this.
The description of the fee as an engineering services fee was designed to hide the payment’s true nature, he said.
“[It] was nothing more than an impost to be paid to the Iraqi government in apparent circumvention of the UN sanctions” Wigney said.
The Commission of Inquiry is continuing.
