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Volume 3
Sales, allegations and inquiries
January 2001 - December 2005
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
23 January 2001 to June 2002: more sales to Iraq.. 1
February 2001: a further sale to the IGB.. 1
DFAT's report on the Secretary-General's report into Oil-for-Food Programme. 13
May 2001: discussions in Iraq. 30
June 2001: another trip to Iraq. 36
August 2001: a further trip to Iraq. 41
September 2001: withholding inland transport fee payments. 42
The shipping industry's knowledge of the 10 per cent after-sales-service fee. 45
20 December 2001: another sale. 47
February 2002: AWB discussions with the United Nations and the Australian mission 56
February to May 2002: AWB's donation of further equipment 57
June 2002: another sale concluded.. 57
24 June 2002 to March 2003: contracts A1670 and A1680. 73
AWB concludes its final sale under the Oil-for-Food Programme. 73
Two features to the background to the negotiation of these contracts. 75
25 March to September 2003: renegotiation of AWB contracts. 83
March 2003: the incursion in Iraq. 83
The Pearl of Fujairah and Andromeda shipments. 83
April 2003: renegotiation of contracts A1441 and A1680. 92
AWB's participation in the Coalition Provisional Authority. 95
September 2003: renegotiation of contracts A1670 and A1680. 97
An inland transportation agreement with Alia. 101
Insurance of the shipments to Iraq. 104
Further renegotiation of contract A1670. 106
26 August 2000 to March 2003: inland transportation fees. 111
The manner of payment of the fees. 112
The decision to pay the fees direct to Alia. 113
An increase in the fees payable. 113
Payment in currencies other than US dollars. 114
Responsibility within AWB for payment of the fees. 118
Inland transportation fees paid by AWB during the Oil-for-Food Programme. 119
The amount of the inland transportation fees paid by AWB.. 120
Alia's payments to the Iraqi State Company for Water Transport 125
Bank statements from Alia. 129
Application of AWB funds within Iraq. 131
27 BHPP, the Iron Filings Claim, and Tigris. 143
The BHP and Tigris companies. 143
Events leading up to the BHPP wheat shipment in 1996. 145
A further approach to DFAT.. 168
DFAT's rejection of credit sales again.. 177
2000: BHPP 'debt' raised again by Mr Stott 185
BHPP assigned the 'debt' to Tigris. 187
AWB engaged by Tigris to assist with recovery. 191
Negotiations with Iraq recommenced.. 192
2001: approaches to IGB continued.. 193
2002: the pursuit continued.. 196
The August 2002 delegation: AWB agreement to pay compensation.. 201
Tigris and AWB agree on debt recovery commission.. 209
Loading up of contracts and requests for payment through Alia. 213
ELG told compensation to be paid directly and debt repaid by 'loading up' contracts 215
Advice from DFAT on quality refunds to Iraq. 222
Sale on 'loaded-up' contract confirmed.. 223
Executive advised of inflated sale. 225
2003: The 'Iron filing rebate payment and Tigris Petroleum' memorandum... 232
Approval for export given.. 241
Payments to 'influential people' 245
A further draft of the Tigris agreement: 'debt' became 'compensation' 246
'Compensation' became 'commission' 248
2004: negotiations continued as 'debt' was collected.. 253
A renegotiation: Tigris surrendered 10 per cent of debt to AWB.. 256
Tigris agreement with BHPP renegotiated.. 260
Further negotiation of agreement between Tigris and AWB.. 260
Sign-off of the Tigris agreement 267
Authorisation, execution and payment 274
Payment to Iraq of the agreed compensation and excess funds collected.. 287
28 May 2003 to December 2005: allegations and inquiries. 305
Further rumours of kickbacks. 305
AWB's internal investigation: 'Project Rose' 313
The US Wheat Associates allegations revisited.. 316
The Wheat Export Authority: issues for examination.. 323
The commencement of the IIC investigation.. 324
Notification to the Boards of AWB's internal investigation.. 328
Further meetings and briefings. 344
The IIC investigation continues. 358
The IIC's final report and AWB's response. 406
