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Aussie aid AWB's best friend in Iraq

http://www.aidwatch.org.au/assets/aw00860/Aussie%20aid.PDF
Australian Centre for Independent Journalism – Reportage Anna Hustler, Kate Wheen and Wendy Bacon

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ABSTRACT: Australian aid played a key role in the AWB scandal in Iraq. Western Australian grain producer and ex-AWB chairman Trevor Flugge and AWB employee Michel Long, both closely involved with securing the wheat contracts, were paid over $1 million in aid money to ensure the AWB kept its contracts with Iraq in the after war period.
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Western Australian grain producer and ex-AWB chairman Trevor Flugge was paid $679,000 through the Australian government humanitarian agency AusAID for ‘reconstruction’ work for the Coalition Provisional Authority in Iraq.

His position involved arranging payment for AWB (Australian Wheat
Board) contracts which included kickbacks to the corrupt Saddam Hussein regime which he had personally negotiated for the AWB in 2002.

These contracts included two shipments of wheat on their way to Iraq when the invasion occurred in March 2003. According to evidence given to the Cole Inquiry into alleged kickbacks to Iraq made in breach of the United Nation's oil-for-food program, these contracts included approximately US$51 million for bogus "internal transport fees"

The decision to appoint Flugge as co-head of the Agricultural section of the Coalition Provisional Authority followed a failed attempt by the Australian government to pay the AWB for the shiploads of wheat immediately after the invasion.

Flugge’s controversial appointment, which was announced on April 22,
2003 by the then Agricultural Minister Warren Truss was publicly criticised by the American wheat industry and the aid community as involving a conflict of interest between his Australian agribusiness involvement in exports to Iraq and his brief to deliver humanitarian aid and reconstruction to Iraq’s agricultural sector.

Oxfam Community Aid Abroad chief executive office Andrew Hewett told the Congress Daily in June 2003 that the Australian Government's appointment of Flugge to advise Iraq on reconstruction is "like appointing Henry Ford to advise on public transport." He asked: "Is Mr. Flugge's appointment about helping the Iraqi people reconstruct their run-down rural economy -- or is it about making sure that Australia's $800 million grain deals with Iraq can continue and not be replaced by U.S. or domestically grown products?"

Both the Minister for Foreign Affairs, Alexander Downer and the
Minister for Trade, Mark Vaile personally applauded the appointment. Downer described Flugge as a “a distinguished businessman, not just a farmer, who's been very active in agripolitics in Australia over many years.”. Mr Vaile described him as an “eminent agribusiness figure,” who would spearhead Australia’s agriculture reconstruction efforts. The Australian Centre for Independent Journalism asked Ministers Vaile,Truss and Downers who recommended Flugge to them. Vaile and Flugge have not responded and a spokesperson for Mr Downer referred the Centre to releases and parliamentary transcripts.

In May 2003, Australian government contract database shows that AusAID gave a further $400,000 of funds earmarked for humanitarian and reconstruction work in Iraq to the AWB Ltd itself for the ‘Provision of advice on Grain Handling and Distribution for the Agricultural Assistance in Iraq.’

Oxfam CEO Andrew Hewett said this week that recent events have confirmed his original misgivings about the Flugge appointment and “raise question marks about whether AusAID funds are being used for advancing Australia’s commercial interests rather that for relief and development interests of people in desperate need.”

Part of Flugge’s role in the CPA included settling existing wheat contracts (with the AWB) and choosing which agricultural bueaucrats from the old regime would be rehired after the invasion.

Flugge told the ABC in September 2003: ‘The key people within the ministry had to be removed because they were members of the Ba’ath party at a fairly high level. We sought exceptions for some people within the ministry for Agriculture because they had particular expertise and we felt that they weren’t, you know very high members of the party’.

Flugge was in a position to know the old Ba’ath administration intimately as he had visited Iraq regularly during the Oil for Food program. Even after he left the AWB, he was recruited by his old employer, the AWB, to fly to Baghdad in August 2002 with Michael Long and Andrew Lindberg to settle an iron filings bribe claim by the Iraqi Grain Board and to persuade Iraqis not to cancel future Aussie wheat. Flugge, Long and Lindberg agreed to settle the filings claim of $2m, though they maintained it was a lie and in return Iraq agreed to keep buying AWB wheat.

These meetings in Baghdad and Um Qasr set in motion contracts that would draw Downer and AusAID into the kick back scandal.

These contracts, numbered 1670 and 1680, were finalised in December of 2002 by AWB employee Andrew Whithall The final contracts included the $2 million iron filings bribe, $8 million owned by Iraq to the company Tigris, and an ‘inland transport component’ all of which was illegal under the UN Oil For Food program. AWB employee Peter Geary, in testimony to the Cole inquiry on January 24th revealed that the AWB was concerned that the UN would realise the illegality of these contracts. Yet with the chaos of war, thorough scrutiny did not occur until 2005.

The invasion interrupted the Oil for Food program and meant that two shipments from these contracts were stranded. On March 20 the AWB said they were ‘looking for other customers’.

Just one day later, Downer came to the rescue announcing that AusAID would buy these AWB shipments of 100,000 tonnes of wheat as humanitarian assistance. The total price was $83 million and included what Downer described as $45 million for the “challenging task of distribution and transport” of the wheat. This was surprising as the AWB had never played any role in the distribution of wheat in Iraq.

The AusAID plan did not go ahead because the UN advised that Australia should not spend $83 million of its aid money on buying Autralian wheat and that it should instead go to ‘alternative’ humanitarian assistance.”The government then proceeded to appoint Flugge and later AusAID transferred the $45 million to the Agricultural reconstruction section of the Coalition Provisional Authority in Iraq, headed by Flugge.

The fate of the corrupt contracts then passed then from AusAID to the World Food Program and then finally to the CPA where Flugge was working.

According to Australian aid monitor, AID/WATCH spokesperson Tim
O’Connor: ‘AusAID giving these contracts to AWB affiliates and the speedy turnaround of the 100.000 tonnes of wheat to become aid is a clear indication that the Australian Government and AWB were in very close contact throughout this period’.

In September 2003 a US Defence Department Audit identified AWB as possibly inflating their wheat prices to include kickbacks. The report was addressed to the CPA when ex-AWB chairman Flugge was a senior advisor in the Authority.

In the months following the March 2003 invasion of Iraq, Flugge was in close contact with the government. In October, Minister for Trade Mark Vaile used the opportunity of the then Minister for Trade in Iraq Dr Ali Allawi‘s visit to Australia to note the payment of the pre-war contracts and to commend the “hard work” of Trevor Flugge. In November 2003, the Minister for Agriculture Warren Truss met with then Iraqi Minister for Iraqi Agricultural Minister Dr Abdul Amir Al-Abood who was accompanied by Flugge. In December, Mr Vaile visited Iraq.

The Australian Centre for Independent Journalism has asked the Minister Truss, Vaile and Downer questions about who recommended that AusAID appoint Flugge and whether any mention of inflated contracts in wheat deals during meetings with Flugge at the time when he accompanied the then Iraqi Ministers of Trade and Agriculture on their visits to Australia in 2003. A spokesperson for Mr Downer referred the ACIJ to the Minister Media releases and parliamentary transcripts. Neither Vaile or Truss have answered the questions.

The reporters are part of the ACIJ Investigating Aid.

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