KEVIN RUDD M.P.

Shadow Minister for Foreign Affairs, Trade and   International Security  1 February 2006

WHAT DID JOHN HOWARD KNOW ABOUT THE AWB WHEN HE TOLD  THE AMBASSADOR TO BLOCK THE US CONGRESSIONAL INQUIRY?

John Howard directed Australia’s Ambassador to the US to try and block a US  Congressional Inquiry into AWB’s corrupt payments to Saddam Hussein’s  regime.



John Howard did this in the middle of the 2004 Federal Election Campaign -  when he was desperate to ensure that his national security credentials would not  be undermined by revelations about the AWB’s dealings with Saddam.

In particular, Howard didn’t want information to become public about the fact  that the $300 Wheat for Weapons scandal had provided Saddam with funding to  buy guns, bombs and bullets for use against Australian troops - troops which  Howard then deployed in a war against Saddam.



This demonstrates the worst form of cover-up by the Howard Government that  we have seen since Children Overboard.

But the cover-up gets worse once we understand what other information  Howard had in his hands in September October 2004 when the Ambassador was  sent up to Capital Hill.

On 30 September 2004 the official report of the CIA-lead Iraq Survey Group was  released. This report was called the Duelfer report and can be found at   http://www.cia.gov/cia/reports/iraq_wmd_2004/chap2.html#sect1





The Iraq Survey Group, headed by the CIA was sent to Iraq in 2003 and 2004 to  try and track down Saddam’s missing WMD. It is a matter of public record that  several Australian officials also participated in the ISG work on the ground in  Iraq.  This report not only deals with Saddam’s unsuccessful efforts on the WMD  front it also deals with where Saddam got the money from to try and buy  weapons on the international market.



The Duelfer report concluded two things on this score:

Ã¢ÂÂ¢ that Saddam had raised $US 1.5 billion ($A2 billion) through corrupt  contracting arrangements under the UN Oil for Food Program; and

Ã¢ÂÂ¢ that these funds were used to procure weapons and military equipment  which were prohibited under the UN Sanctions regime.

“During 1997 to 2003, Saddam generated enough revenue to procure sanctioned  military goods and equipment”

It would have been analytical impossible for the CIA (aided by the Australians  on the ISG) to arrive at a figure of $US 1.5 billion without first establishing the  component parts of this rort.  The single largest component part of this $US 1.5  billion rort was the AWB which contributed $US 230 million to Saddam’s slush  fund.



In other words, it would have been absolutely clear cut to the Howard  Government through the work of the ISG that they had a major political and  legal problem on their hands with the AWB.

And given that Australian officials were working on the ISG in the two years  prior to September 2004 report we can only conclude that well before the  publication date the Howard Government knew it had a major AWB problem on  its hands.

Finally, the ISG was not poking around in the dark.  Its conclusion in September  2004 that the total scam under the Oil for Food Program added up to $US 1.5  billion was the same figure arrived at by Volcker the head of the UN inquiry who  reported a year later in October 2005. In other words, they must have been  drawing on much of the same material.



Therefore when Howard and Downer initiated the cover-up through  Ambassador Thawley during the 2004 election campaign, they didn’t just think  they had a problem.  By that stage they knew they had a major political and legal  problem with AWB’s dealings with Saddam Hussein.

And their response?  A cover-up.  Howard must now expand the Cole Inquiry’s  terms of reference so that Commissioner Cole can reach findings about the  legality and propriety of the Howard Government’s knowledge, actions and

decisions throughout the five years that this $300 million scandal ran.



Ends. 1 February  2006











Comprehensive  Report  _____________________

of the

Special Advisor to the  DCI  on  Iraq’s WMD



30 September 2004

This report relays the findings of the Special Advisor to the  Director of Central Intelligence on Iraq's Weapons of Mass  Destruction.

The files comprising the PDF edition of this 1,000-page  report are extremely large and, in practice, available only to  visitors who have a broadband connection. The HTML  edition is available to all, regardless of connection speed.

Please see the correction regarding Niro Atomizer Inc.

In March 2005, the Special Advisor added addenda to his  original report:

Note for the Comprehensive Report with Addenda  (PDF,17KB)  Addenda to the Comprehensive Report (PDF, 705 KB)

HTML edition:

Volume 1

Charles Duelfer's Transmittal Message  Acknowledgements  Scope Note  Regime Strategic Intent  Regime Finance and Procurement

Regime Strategy and WMD Timeline Events

Volume 2

Delivery Systems  Nuclear

Volume 3

Iraq's Chemical Warfare Program  Biological Warfare  Glossary and Acronyms

Complete Table of Contents



http://www.cia.gov/cia/reports/iraq_wmd_2004/chap2.html#sect1

Comprehensive Report of the Special Advisor to the Director  of the CIA on Iraq’s WMD

The Duelfer Report, 30 September 2004

Extracts from the Chapter “Regime Finance and Procurement”

Iraq’ s Revenue Sources.

“The Regime filtered the majority of the illicitly earned monies through foreign bank  accounts in the name of Iraqi banks, ministries, or agencies in violation of UN  sanctions. According to senior Iraqi officials at SOMO, oil suppliers and traders, who  sometimes brought large suitcases full of hard currency to embassies and Iraqi  Ministry offices, so that the payments would be untraceable, filled these illegal bank  accounts.”

“During 1997 to 2003, Saddam generated enough revenue to procure sanctioned  military goods and equipment, dual-use industrial material, and technology as well as  some legitimate uses. These sanctioned goods transactions will be described in  detail in later sections. He used those funds to slow the erosion of his conventional  military capability in contravention of UN SC resolutions. Available information also  indicates Iraq used trade Protocols with various countries to facilitate the delivery of  some dual-use items that could be used in the development and production of  WMD.”

United Nations OFF Program

“The UN OFF program saved the Iraqi Regime from financial collapse and  humanitarian disaster. When Iraq began exporting oil under UN OFF in December  1996, the Regime averted economic conditions that threatened its survival. The  program also provided Iraq with unprecedented opportunities to earn significant  amounts of hard currency outside the control of the UN.“

Kickbacks on Commercial Goods Import Contracts

“The fourth revenue source for Saddam’s Regime was kickbacks from UN OFF  program commercial goods contracts being imported into Iraq. According to a former  senior MoT official, beginning with the 8th phase in June 2000, Iraq began to demand a  kickback on all UN OFF program import contracts to generate illicit income. The amount of  the kickback could vary, but generally was around 10 percent. ISG suspects, however, that  Iraq had been receiving similar types of kickbacks since the beginning of the UN OFF  program to varying degrees.

Contracts were written for 10 percent above the actual price and the supplier company would  deposit this amount into Iraqi accounts. The fee was often included for spare parts or after  sales service. The fee was often applied, particularly in Jordan, through the mechanism of the

supplier providing a 10 percent performance bond in advance, which was then automatically  transferred to an Iraqi account when the supplier was paid for the goods.

Ã¢ÂÂ¢ A source described how it often worked for one front company. For instance, the Al-Eman Group (a Jordanian Company) would sign a contract with Iraq and deposit the  10 percent performance bond in an escrow holding account. When the goods were  delivered to Iraq, the UN Iraq account would pay the full contract price to Al-Eman. At  that point, the Jordan National Bank would automatically kick back the performance

bond to an Iraqi account instead of returning it to Al- Eman, as would normally be the  case.

Ã¢ÂÂ¢ ISG does not have information from Iraqi sources regarding the revenue earned from  these kickbacks; but we estimate, using a 10 percent average, that these kickbacks  totaled approximately $1.512 billion from late 2000 until OIF (see Figure 21). For  more information on the methodology used to generate this estimate, see Annex E:  Illicit Earnings Sources and Estimation Methodology.

According to senior MoT and official sources, kickback payments were deposited into  temporary accounts controlled by the Iraqi ministry involved with the contract at banks in  Jordan and Lebanon. These “bridge” accounts were not in the name of the ministry, but used  false names to disassociate the Iraqi government from the transaction. Within 24 hours, the  funds were transferred to a CBI account at the same bank. At the end of each day, the  ministry bridge accounts had a zero balance. Kickback payments also were made to at least  two Iraqi front companies: Alia in Jordan and Al-Wasel & Babel in the UAE. Ultimately, the  kickback funds were couriered back to the CBI in Iraq.

Each individual ministry that engaged in the import kickback contract scheme had copies of  their respective contracts or deals. The MoT was responsible for monitoring these contracts  but was not involved in negotiating the terms. Each of the following ministries (see Figure 22)  engaged in the 10 percent fee scheme:

Although the kickback was paid to the particular ministry that entered into the contract, those  ministries were not able to use the funds—they usually were transferred to the CBI as  mentioned above.

Ã¢ÂÂ¢ In order to encourage kickback collections by the ministry, and in order to  compensate the ministry for the difficulties involved with the scheme, the CBI  returned 5 percent of the 10 percent kickback to the ministry collecting the kickback.

Ã¢ÂÂ¢ These funds were distributed to the employees of the particular ministry as an  incentive to collect the kickbacks.

Another method of generating kickbacks from UN OFF import contracts emerged in the later  years of the UN OFF program. This method was based on deceiving the UN over the quality  of the items being imported to Iraq. For this illicit revenue scheme, Iraq arranged for a co-operative supplier to obtain a legitimate UN OFF contract specifying “first-quality”  humanitarian goods. Iraq would then be authorized under UN OFF to pay top quality prices  for the items via the UN OFF-controlled accounts. In reality, however, the co-operative  supplier substituted cheap, poor-quality goods for the contract. This generated very high  profits for the co-operative supplier. Saddam then arranged for the excess profits to be  returned to Iraq via diplomatic channels, after the co-operative supplier took its “fee.” This  revenue scheme was particularly nefarious since it left the people of Iraq with second-quality,  sometime useless, humanitarian goods. (see the Use of Foreign Banks sections.) “



