Australia angered by Iraq wheat boycott report
(AFP)
Updated: 2005-11-12 15:08

The Australian government has reacted angrily to a report that Baghdad had suspended wheat imports worth hundreds of millions of dollars a year over oil-for-food kickbacks paid to Saddam Hussein's regime.

Prime Minister John Howard said contracts could not be disregarded "willy-nilly", while Foreign Minister Alexander Downer said Australians would be irritated by a boycott as they had contributed troops to the US-led invasion that ousted Saddam.

The Australian newspaper quoted Iraqi Deputy Prime Minister Ahmed Chalabi as saying all future orders for Australian wheat had been suspended and Iraq was demanding compensation for kickbacks paid to Saddam's regime under the UN's oil-for-food programme.

The Australian wheat orders are worth up to 800 million dollars (600 million US dollars) a year.

A spokesman for Trade Minister Mark Vaile said the government had received no formal notification of the suspension and had asked its ambassador in Baghdad to seek clarification.

Howard said that as far as the government was concerned, wheat trade with Iraq was proceeding as normal.

"AWB (Australian Wheat Board) does have a contract with the Iraqi government so there are obligations and those obligations just can't be torn up willy- nilly," he told reporters.

Downer said that because of Australia's active military role in removing Saddam from power, a boycott of the country's wheat would annoy many Australians.

"A lot of people certainly would make that argument," Downer said.

"Australia is one of the coalition of the willing, one of the three countries that moved decisively to rid Saddam Hussein's regime from Iraq so there's no doubt about the principled position Australia has taken against Saddam Hussein and his regime.

"Our wheat trade in Iraq has been progressing at a steady pace and we've heard nothing about it being disrupted."

Chalabi told the newspaper in a telephone interview from Washington that he expected the AWB to compensate the new Iraqi government for 290 million dollars in kickbacks paid to the former regime.

The money was sent by AWB, Australia's monopoly wheat exporter, to a Jordanian trucking group, Alia, that was in fact a front company for the former Iraqi president.

AWB, which sold 2.3 billion dollars worth of wheat to Iraq under the oil-for-food programme, admits making the payments to Alia but denies that it was involved in corruption, saying it was duped.

Chalabi said, however, that he and the new Iraqi government believed the AWB must have known that the money was being funnelled to Saddam's regime.

"The excuses they are making are lame," he was quoted as saying.

"I don't want to be specific but they should organise compensation, because that money belonged to Iraq and to the Iraqi people," Chalabi said.

AWB spokesman Peter McBride said wheat exports to Iraq would continue and officials would seek an explanation from the Iraqis.

"We've got a contract in place and we are delivering against that contract," he said. "That will take us into the new year."

The Australian government last week announced the appointment of a commission of inquiry into AWB's alleged involvement in the oil-for-food scandal.

A UN report found that AWB, the largest humanitarian provider under the programme, did not directly pay bribes to the Iraqi government but that some of its officers probably knew what was going on.

The 18-month UN probe named AWB as one of more than 2,200 firms that paid kickbacks to the Iraqi government under the programme that ran from 1996 to 2003, allowing sanction-hit Iraq to export oil and import humanitarian goods.