Australia has lost Iraq wheat trade to US

The Australian, August 7 – AUSTRALIA has lost almost the entire Iraqi wheat market to US farmers as AWB battles against claims it bribed the regime of Saddam Hussein.

On the eve of the next round of a court battle over documents on AWB’s payment of kickbacks to Iraq, the US Department of Agriculture said it had secured 72 per cent of Iraq’s wheat market this year, up from nothing in 2002.

Iraq was the second-biggest buyer of American hard red winter wheat in 2005-06, it said.

Three years ago, AWB, as Australia’s monopoly wheat exporter, had 90 per cent of the Iraqi market, with deals worth $800 million a year.

Iraq has refused to deal with AWB since it was revealed last year that the company had funnelled $300 million in kickbacks to Saddam’s regime under the UN’s oil-for-food program.

AWB, which sold billions of dollars worth of wheat to Iraq under the program, paid the bribes in the lead-up to the US-led invasion of Iraq in 2003.

Since Iraq suspended trade with AWB in February, Wheat Australia — a consortium of CBH, GrainCorp and ABB — has won a $90 million wheat export contract with the war-torn Middle Eastern country.

But North American farmers, who have launched a $1 billion claim against AWB for alleged racketeering, are winning the majority of wheat sales to Iraq.

AWB’s loss of the Iraqi market comes as the Federal Court prepares to hear the next round of the company’s battle to keep documents secret from the inquiry into the kickback allegations, run by Terence Cole.

The Government is hoping for a swift resolution, so Mr Cole can complete his report, due on September 29.

AWB barrister James Judd, who has won the past two battles in the war over the paperwork, will argue that the 1000-plus pages in 40 spring binders should not be handed to Mr Cole because they are covered by legal professional privilege.

AWB shovelled about 30,000 pages of documents towards lawyers from three of Melbourne’s top firms when it became apparent it might be exposed as having breached UN sanctions and paid kickbacks to Saddam’s regime.

But the privilege does not cover any document sent to a lawyer, only those that were created for the purpose of seeking advice. And legal professional privilege cannot be claimed over documents created in pursuit of an illegal activity.

It is not yet clear whether deceiving the UN, or the so-called "Tigris transaction" — a questionable deal involving a former BHP employee who wanted to secure oil exploration rights in Iraq — is illegal. That is one of the things Mr Cole is supposed to decide.

The commonwealth, which is fighting the case on behalf of the Cole inquiry, has argued it would be cheaper, quicker and easier for Mr Cole, who has sat through 69 days of testimony, to decide if the claim of privilege is valid.

But Mr Judd maintains that Mr Cole is the last person AWB wants to see the documents.

The commonwealth will argue that AWB gave up its privilege over some documents when it made a computer-based presentation to Foreign Minister Alexander Downer in Canberra before the UN report into corruption in the oil-for-food program was released last year.

AWB has spent $20 million on legal advice and representation since the Cole inquiry began.