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Australia wins iraq wheat contract despite bribery { March 3 2006 }

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Australia wins Iraq wheat contract
Friday, March 3, 2006 Posted: 0322 GMT (1122 HKT)

SYDNEY, Australia (AP) -- Australia has won a 350,000-ton Iraqi wheat contract worth up to Aust. $70 million ($52.3 million), the trade minister said Friday, despite evidence that Australia's monopoly wheat exporter may have violated U.N. sanctions by bribing Saddam Hussein.

Meanwhile, a senior figure in Australia's opposition Labor Party charged it was "unbelievable" that Prime Minister John Howard and other government ministers did not know about the alleged bribes.

Deputy Prime Minister and Trade Minister Mark Vaile said he had received a cable from his Iraqi counterpart, Ahmad Chalabi, announcing that Iraq was allocating 350,000 tons of a 1.5 million ton wheat contract to Australia.

Last month, Iraq suspended its wheat trade with Australia amid allegations the country's monopoly wheat exporter, AWB Ltd, paid up to $222 million in kickbacks to Saddam Hussein's government under the corruption-riddled U.N. program.

But Iraq later agreed to resume imports as long as AWB was not involved in the shipments.

Under Australia's so-called "single desk" system, AWB has the exclusive right to sell Australian wheat overseas and can exercise a veto over other companies that attempt to market the grain.

Vaile said the deal would require "some flexibility exercised by AWB," which has not yet guaranteed it will not veto the deal.

Vaile made an emergency visit to Iraq last week to discuss the suspension, which effectively barred Australia from its second largest wheat export market. He credited the trip with Iraq's turnaround.

AWB is currently the focus of a government-backed inquiry examining whether its executives knowingly paid millions of dollars in bogus transport fees to a Jordanian trucking company partially owned by the Iraqi government.

Investigators allege AWB executives knew the fees were illegal under U.N. sanctions but paid them to secure lucrative wheat deals.

A series of diplomatic cables submitted to the inquiry suggest officials in Howard's center-right government knew that a Canadian wheat company had raised its concerns with the United Nations about AWB's oil-for-food dealings as early as 2000.

Howard has said his government looked into the concerns and accepted assurances by AWB that no improper payments were being made.

Howard has also said the government believed the complaints were coming from rival wheat companies in Canada and the United States, which were also vying for the lucrative Iraqi wheat market, and there was no evidence that AWB was actually paying bribes.

"A concern was raised, that concern was communicated to AWB, the allegation was denied, AWB was required to provide some contracts to the United Nations and the United Nations said that the provision of those contracts removed the misconception," Howard told reporters in Sydney.

"That's the reality of what happened then, it doesn't alter in any way the position my government has taken," he said.

Labor's foreign affairs spokesman, Kevin Rudd, said Howard should have investigated further.

"It is simply unbelievable that John Howard has nothing to hide on this matter," Rudd told the Australian Broadcasting Corporation radio. "Why did he simply ... take the AWB's words at face value without making any further investigations whatsoever?"

The inquiry, headed by former state Supreme Court judge Terence Cole, is expected to report its findings later this month.

Cole cannot file any charges, but can recommend that officials or executives be prosecuted if they are found to have broken any Australian laws in their oil-for-food dealings.

A majority of Australians do not believe Howard's claims of ignorance, according to a poll published Tuesday.

Some 59.5 percent of voters who responded to the ACNielsen poll published by The Sydney Morning Herald said they thought the government was aware of AWB's dealings in Iraq. (Full story)

Nevertheless, 52 percent of voters still approved of Howard's performance as prime minister, unchanged from a similar poll last month, and 55 percent backed his coalition government.

Copyright 2006 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

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