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Volume 2
Negotiations and sales
July 1999 - December 2000
Commissioner
The Honourable Terence RH Cole AO RFD QC
November 2006
© Commonwealth of Australia 2006
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Attorney General's Department, Robert Garran Offices, National Circuit, Barton ACT 2600 or posted at http://www.ag.gov.au/cca
Report of the Inquiry into certain Australian companies in relation to the UN Oil-for-Food Programme
ISBN
Volume 1 0-9803082-0-8
Volume 2 0-9803082-1-6
Volume 3 0-9803082-2-4
Volume 4 0-9803082-3-2
Volume 5 0-9803082-4-0
CD-ROM 0-9803082-5-9
www.oilforfoodinquiry.gov.au
Contents
9 AWB Limited and the AWB group of companies . 1
AWB Limited and AWB (International) Limited .. 2
Other companies in the AWB group .. 4
The Boards of AWB Limited and AWB (International) Limited .. 6
Responsibilities within AWB Limited .. 8
AWB's corporate structure . 23
The Wheat Export Authority . 23
10 AWB's sales to Iraq before July 1999 . 31
A US$480 million dollar debt 32
Further sales to Iraq after the first Gulf War . 33
11 AWB's participation in the Oil-for-Food Programme . 37
The alleged payment of 'kickbacks' in relation to contracts for the supply of humanitarian goods 38
AWB's contracts under the Oil-for-Food Programme . 42
The amount of inland transportation and after-sales-service fees AWB paid .. 43
The steps involved in AWB's sale of wheat to Iraq during the Oil-for-Food Programme 44
The contracts with the grain traders . 53
12 The role of the Department of Foreign Affairs and Trade . 57
General information about the Programme disseminated by DFAT .. 59
Specific advice and assistance to exporters . 64
The processing of UN contract approval applications: did DFAT 'approve' contracts? 69
Granting permissions to export under the Regulations . 83
DFAT's role in investigating breaches or potential breaches of the Programme . 87
13 July to December 1999: Iraq introduces an inland transportation fee . 95
AWB concludes three contracts for the sale of wheat 111
Inland transportation fees: two matters requiring consideration .. 123
Insurance of the wheat shipped to Iraq . 139
14 October 1999: further sales of wheat to Iraq .. 155
Contracts for the indirect supply of wheat to Iraq: the Russian trade . 158
15 January 2000: a deletion to the AWB short-form contract 173
Negotiation of a further sale of wheat 173
Two further contracts with Savas Grain & Commodities Limited .. 182
Another sale to Commodity Specialists Company . 184
16 January to March 2000: the Canadian complaint 189
January 2000: the initial query . 189
March 2000: the IIC raises the issue again .. 201
Ms Johnston's Irregularities File . 224
17 April to July 2000: delays and demurrage . 233
April 2000: a visit to Jordan and Iraq
Appointment of Alia as protective agent
April-May 2000: strategies and donations
May 2000: reports from Mr Watson prior to another visit to Iraq . 248
May 2000: Mr Emons' and Mr Watson's further trip to Jordan and Iraq . 251
June and July 2000: further developments . 257
July 2000: another visit to Iraq . 267
The donation of bobcats finalised .. 269
July 2000: consideration by the ELG meeting . 270
The possibility of a despatch and demurrage account 273
July 2000: another sale to the IGB .. 277
18 April to July 2000: changes within International Sales and Marketing . 287
April 2000: the restructure of International Sales and Marketing under Mr Lindberg 287
The manner of payment of inland transportation fees prior to August 2000 . 294
The use of shipowners as a conduit for payment 297
February 2000: payments directly to Alia . 305
Interposition of Ronly and Tse Yu Hong Metal Limited .. 315
Resumption of payments by Hyundai Merchant Marine Co. Limited .. 333
Summary of methods of payment prior to August 2000 . 333
An end to the use of Ronly and other shipowners . 335
Utility of AWB's arrangements with Ronly and the other shipowners . 342
Postscript: AWB's communications with Ronly in September 2002 . 347
19 October 2000: a visit to Iraq and subsequent events . 365
Discussions during the visit 365
Events following Mr Stott's and Mr Hogan's trip to Iraq . 375
20 October 2000: an 'eloquent solution' 391
Mr Stott's letter to DFAT .. 392
Whether Mr Stott spoke with DFAT before sending his facsimile . 406
DFAT's letter to Mr Stott in reply . 409
Whether Mr Stott spoke with DFAT after he received its letter of 2 November 2000 . 414
November 2000: the Board report 417
21 November 2000: introduction of the 10 per cent after-sales-service fee . 425
The first references to 'after-sales service' 425
Negotiation of a further sale . 429
Conclusion of the sale and imposition of the 10 per cent after-sales-service fee . 433
Shipments under contract A0430 . 439
Further discussion of the supply of laboratory equipment 440
22 December 2000: the Arthur Andersen report 445
The course of investigations . 446
The final Arthur Andersen report 447
