29 August 2009

AWB: No criminal charges for Iraq sanctions-busting

The Australian Federal Police has terminated its investigations into the actions of AWB limited in kicking back almost $300 million to the Saddam Hussein regime on the eve of the invasion of Iraq in 2003, and it is now clear that no-one will face criminal sanctions.

In her report Wheat scandal probe dropped in the Weekend Australian, 29-30 August, 2009 Caroline Overington comments:

It has hardly been a secret that the AFP investigation was under-funded and under-resourced, and it received little co-operation from AWB, which sees itself as a new entity, with all staff associated with the corrupt dealings having left.

Not only not a secret, but not a surprise. The Howard Government had no interest in getting to the bottom of this squalid affair and the current Government seems curiously reluctant to kick over rocks that might uncover the sins of its predecessors – perhaps looking ahead to the day when it in turn becomes a predecessor, but ill-serving the quality of national governance.

This episode is a national disgrace and the fact that no-one concerned faces the possibility of criminal sanctions is nothing short of amazing, as is the apparent opinion of senior barrister Paul Hastings QC who, according to Overington, advised the AFP, “It [is] not even clear that breaching a UN sanction is a criminal offence”.

This is a remarkable finding in view of the fact that advice to the Commission of Inquiry conducted by The Hon Terence Cole QC was that the United Nations sanctions were imported into our domestic law by means of Customs (Prohibited Imports) Regulation 13CA, and Customs (Prohibited Exports) Regulations 4MA and 4QA. It seems remarkable that one can apparently breach the Customs Regulations without committing a criminal offence.

The various excuses offered by the coalition for its scandalous inattention include the claim (voiced again in the last 24 hours by Senator Barnaby Joyce) that the whole episode was just a matter of the United States gunning for the single desk under which the former Australian Wheat Board, privatised as AWB Limited, controlled all exports of wheat from Australia.

In that vein, in a doorstop in 2000 then Deputy Prime Minister Mark Vaile responded to questions about why he had failed to take the matter seriously by saying that these were unsubstantiated allegations made by AWB’s commercial competitors. He might usefully have reflected on Henry Kissinger’s famous comment about Richard Nixon, “Even paranoids have real enemies”. We now know that even commercial competitors can raise concerns that warrant investigation.

In relation to the attitude of Prime Minister Howard (apparently supported at the time by the then Opposition) that allegations about AWB did not need to be followed up because “AWB was an organisation of total integrity and repute”, the words of Ronald Reagan in relation to arms control approaches to the Soviet Union come to mind – “Trust, but verify”.

The reference to Ronald Reagan’s approach to arms control is relevant to the AWB matter, because sanctions against Iraq were, from the time Security Council Resolution No. 661 was passed on 6 August 1990, about limiting the military capabilities of Iraq. One of the main means of doing that was to limit Saddam Hussein’s access to military supplies and, more importantly, to cash.

Accordingly, Section 3 of the Resolution required all States to prevent, inter alia:

(c) The sale or supply by their nationals or from their territories or using their flag vessels of any commodities or products, including weapons or other military equipment, whether or not originating in their territories, but not including supplies for medical purposes, and, in humanitarian circumstances, foodstuffs …

and Section 4 stipulated that

All States shall … prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to [the Government of Iraq] or to any [commercial, industrial or public utility in Iraq] any [funds or any other financial or economic resources] and from remitting any other funds to persons or bodies within Iraq…

Nothing in Resolution 996 of 14 April 1995, which established the Oil-for-Food Program, set aside the above provisions of Resolution 661. What Resolution 996 did was to open a window for Iraq to finance the purchase of medicines, humanitarian food supplies and other essential civilian supplies through the sale of oil. In order to prevent the sort of financial funny business that might enable Saddam’s regime to syphon off cash, the Resolution provided that all sales were to be at fair market price, the full proceeds were to be deposited to an escrow account established by the Secretary-General, and that account ws to be externally audited. A further measure was a requirement that payment for goods could only be made from the escrow account on receipt by the Secretary-General of authenticated confirmation that the goods had arrived in Iraq (ie they could not be diverted and sold for cash).

Australia did more than simply sign up to the above arrangements. From September 1990 we had Australian sailors in harm’s way to enforce them. Under Operation DAMASK, the RAN at that time provided a three-ship task group to participate in the Multilateral Interception Force (MIF), a multi-national flotilla tasked with preventing both the entry of prohibited goods into Iraq and the conduct of any illegal export trade. As the above makes clear, the purposes of the MIF were to prevent Saddam from acquiring unaccounted cash, and from importing weapons that he might acquire with resources that slipped through the net. Needless to say the full cost of this RAN deployment ran to many millions of dollars.

This is the context in which AWB Ltd’s inflating of wheat prices in order to provide $290 million in rebates to Saddam Hussein must be viewed. These actions simply subverted a national security purpose for which the Australian Government had put service personnel into warlike operations and the Australian taxpayer was expending large amounts of treasure.

Another excuse that is often offered is the proposition that kick-backs are just part of the way of doing business in the Middle East. As it happens, the bribing of foreign officials has been a criminal offence under Australian law since 1999 – legislation introduced into the Parliament by no less a person than then Treasurer and would-be Prime Minister Peter Costello.

Aside from AWB’s disgraceful behaviour, what behaviour might we have expected of the Commonwealth Government in a situation in which, to use the words of then Foreign Minister Alexander Downer, it was “a big supporter of sanctions”?

It was certainly not good enough for the Government to adopt the position, as Messrs Vaile and Downer appeared to do, that when it came to the wheat contracts the enforcement of the sanctions was the business of the UN. The UN is a membership organization, and it cannot be more effective than its members permit and assist it to be. This was recognised by the provision of Resolution 661 that required the member states to prevent funds from reaching Iraq by any means – only the member states have direct control over their nationals and corporations.

Accordingly, a Government that was committed to the imposition of sanctions could have been expected to back its commitment (and its responsibilities under the relevant resolutions) by an early and thorough risk assessment of the types of behaviours that could lead to the sanctions regime being violated, and how any violations could be detected. Inflated prices and under the table rebates would be a prime target of any risk assessment – there is no shortage of commentators telling us that this is the way business has always been done in the Middle East.

The Customs Regulations provide the mechanism for oversight of export transactions and there is ample precedent in Australian Government administrative experience for exercising such oversight, as is clearly demonstrated by the history of export controls on minerals.

Harry Pidgeon at Cooks Hill

From 18 September – 12 October Mark Widdup’s delightful Cooks Hill Galleries in Newcastle will be the scene of a one-man exhibition by leading Australian watercolour artist Harry Pidgeon.

I have known Harry for quite some time. After a stint at the pre-school run by the charming Misses Cooper in the big old house that had been the home of their father, the Rt Rev Henry Edward Cooper, the last Anglican Bishop of Grafton and Armidale, 1901-14, in 1949 we were enrolled in Kindergarten at the Armidale Demonstration School, now imaginatively entitled the Armidale City Public School.

Throughout our time at “the Dem School” we had a weekly two-hour art period in which there was no pretence of teaching us anything about technique but we were given a couple of hours for artistic self-expression.

In the infants section of the school (Kindergarten to Second Class), self expression was limited to finger painting. Harry’s finger painting was definitely of a better stamp than that produced by the rest of us, of a different order altogether.

By the time we were in Third Class and were now allowed to attack the cartridge paper with brushes and watercolours, Harry had draughtsmanship, perspective and light and shade pretty well licked, so art periods for most of us became a form of entertainment in which we pursued our own immature daubings while we waited to see what Harry would come up with this time.

In those days the Demonstration School was, as its name implied, closely connected with the Armidale Teachers’ College about three blocks up the hill. The Teachers’ College had the wonderful Australian impressionist paintings of its Howard Hinton Bequest hanging on the walls in its corridors, and we were taken from time to time to see them. I think we grew up thinking it natural for there to be paintings by the likes of Arthur Streeton, Tom Roberts, Elioth Gruner, Han Heyssen and Norman Lindsay hanging on the walls.

In due course our primary school days came to an end and we entered The Armidale School as two of its very small number of dayboys (Alex Buzo was another dayboy classmate – see The Alex Buzo Company). After many adventures and formative experiences we completed the New South Wales Leaving Certificate in 1960 and went our separate ways.

Harry went off to the National Art School in Sydney, graduating in 1965, after which he became Art Director at advertising agency The J. Walter Thompson Company Pty Ltd (1966-79). After a short period running his late father’s newsagency in Armidale, in 1980 Harry embarked on a full time career as an artist, working in watercolour, gouache and oils.

Harry's works are held in many collections including British Royal, Australian Vice- Regal, Australian Government, Regional Art Galleries and corporate and private collections throughout the world. His work is referenced in art encyclopedias and indexes in Australia and USA, and numerous magazine and newspaper articles have been written about him in Australia.

We are fortunate that Mark Widdup is a very systematic person who keeps files of past exhibitions on the Cooks Hill Galleries website. The 2003 exhibition can be found here, and the 2006 exhibition, from which the paintings in this post were selected, can be found here.

If you live anywhere within a bull’s roar of Newcastle, don’t miss this one.

Defence Materials Technology Centre

The Defence Materials Technology Centre (DMTC) was established in June 2008 following the Commonwealth Government’s decision to establish technology development joint ventures, Defence Future Capability Technology Centres (DFCTCs), to combine expertise and resources from defence industries and research providers.

Launched in February 2009, DMTC is Australia’s first DFCTC and focuses on developing and delivering superior technologies to Australia’s defence industry.

Its purpose is to develop and deliver advanced materials technologies and manufacturing processes across four program areas – Aircraft Platforms, Maritime Platforms, Armour Applications and Propulsion Systems.

Projects within these programs will deliver new materials technologies that will increase strength, payload capacity and operating range while improving performance and durability in Australia’s defence industry. New manufacturing processes will increase efficiency in production, reduce costs and waste, customise equipment for specific Australian conditions and provide access to new markets.

The business structure of DMTC is modelled on the successful Cooperative Research Centre (CRC) program. Its core and supporting partners from defence industries, universities and research agencies are already experienced in providing a wide range of industrial and technological disciplines within the supply chain that supports Australia’s defence industry capability.

Partners provide DMTC with access to their skilled personnel, materials and manufacturing facilities and work with the company to ensure that all research is focused on delivering to the end-user – the Australian Defence Force.

DMTC operational funding is drawn from several sources with an initial underwriting in excess of $85 million in cash and in-kind contributions. The Commonwealth contributed $30 million with the State Governments of Victoria, Queensland and New South Wales putting in a combined $9 million. Collaborative partners are responsible for providing the remaining resources.

DMTC operates as a private company, and is funded for an initial seven-year term. Its Chief Executive Officer is Dr Mark Hodge, a professional engineer who prior to his recruitment in June 2008 had been for three years the CEO of Australian Aerospace and Defence Innovations (AADI).