Australian inquiry says AWB misled UN over Iraq

CANBERRA, Nov 27 (Reuters) Australia's monopoly wheat exporter AWB Ltd. misled the United Nations over kickbacks paid to Saddam Hussein's Iraq, a judicial inquiry found today.

Prime Minister John Howard said the government would give urgent consideration to the future of Australia's wheat export system, in light of the inquiry's findings.

The inquiry, headed by retired judge Terence Cole, said up to 11 former AWB managers could face criminal or other charges over 222 million dollars in payments to Iraq before 2003 under the UN's oil-for-food programme.

Cole, in his five-volume report, found no evidence Australian government ministers were aware of the payments, despite calling Howard and other senior ministers to give evidence.

Cole spent 11 months examining whether AWB had broken any Australian laws over the payments, mostly paid as trucking fees through Jordanian company Alia ahead of the 2003 Iraq war.

Cole said AWB knew the fee it was paying Alia was not for the provision of transport services.

''It knew the fee was a payment to Iraq,'' he said. ''AWB went to extraordinary lengths to hide the payment of the fee to Alia.'' Throughout the inquiry, Australia's conservative government, a close ally of the United States, said it had done nothing wrong and was not aware of the payments until they were made public by a UN inquiry headed by former U S Federal Reserve Chairman Paul Volcker.

The centre-left Labor opposition said the government should have noticed the payments, and said Downer had ignored 35 official warnings about AWB's activities.

Howard earlier reaffirmed the government had done nothing wrong, saying it had been deceived by AWB.

AWB for years has fought hard to keep its controversial monopoly, despite repeated attacks by the United States wheat industry, global grains trading giants and Australian rivals.

Last week, AWB took the unusual step of releasing a report which it commissioned, that recommended a gradual dismantling of its wheat export monopoly.

''Now that the report has been received, the government will give urgent consideration to the future of marketing operations for the export of Australian wheat,'' Howard said in a statement.

AWB shares have lost over 60 per cent of their value since the Cole inquiry began in January this year, leaving the company with a market capitalisation on Friday of A0 million (8 million).

Reuters BDP DB1114