Australia PM to be quizzed at Iraq wheat inquiry

CANBERRA, Apr 12 (Reuters) Australian Prime Minister John Howard is to testify tomorrow at an official inquiry into alleged kickbacks paid by the country's monopoly wheat exporter to Saddam Hussein's Iraqi regime.

He will be the first Australian leader to face such a hearing since 1983, when Bob Hawke was quizzed over a spy scandal.

The inquiry, headed by former Supreme Court judge Terence Cole, has no political brief and can only recommend prosecution of the wheat exporter AWB Ltd and other companies and associated individuals if Australian laws were broken.

A 2005 UN report alleged AWB was one of more than 2,000 firms that had paid kickbacks worth 1.8 billion dollars to Saddam's government through the UN-managed ''oil-for-food'' account. If proven, AWB would have broken UN sanctions against Iraq.

''The Cole Commission of Inquiry has requested that I appear at its hearings,'' Howard said. ''The inquiry has indicated that it would suit its convenience for me to do that at 10 am (0000 GMT 0530 hrs IST) tomorrow.'' Deputy Prime Minister and Trade Minister Mark Vaile and Foreign Minister Alexander Downer both appeared at the inquiry this week, saying they did not recall some 21 diplomatic cables between 2000 and 2004 raising concerns about kickbacks.

Downer also dismissed warnings of kickbacks by a US military captain in Baghdad, contained in a June 2003 Australian foreign service cable, saying that the information came from a junior officer and that Saddam had by then been toppled so the issue of sanctions was no longer so important.

SECRET SERVICE FEES The UN report alleged that AWB had provided more money in kickbacks than all the other companies implicated, paying 222 million dollars via a trucking firm that was a front for Saddam's regime. The payments came out of wheat prices inflated by secret ''service fees'' and other charges and put through the UN-managed ''oil-for-food'' account, which ended in November 2003.

AWB was among firms from 66 nations, including the United States, Russia, France, Germany and Switzerland, mentioned in the UN. report. Australia is the only country to call an inquiry into the kickback allegations.

After almost three months of public hearings, the Cole inquiry has publicly released AWB documents that show it was aware it could have breached UN sanctions against Iraq.

The Howard government says the first warning of possible Iraq sanction breaches came with last year's UN report.

But the government's credibility has been brought into question with the release of the cables talking of AWB kickbacks, with local media discrediting its response that it knew nothing.

One leading newspaper, the Australian, said that if the alleged kickbacks were proven it would show ''the monumental hypocrisy'' of a government deploying troops to topple Saddam, while the country's wheat exporter paid millions of dollars to his regime.

Australia was one of the first countries to join the US-led invasion of Iraq and still has about 1,300 troops in the region.

Under Australian law it is illegal to pay kickbacks or bribes for deals, but facilitation payments made overseas are allowed.

Polling by the Sydney Morning Herald newspaper has shown 60 per cent of Australians disbelieve the government's explanation.

But political analysts say voters at next year's election would be more swayed by low interest rates than the AWB inquiry.

The Cole inquiry will report to the government by June 30.

REUTERS