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Last Updated: Monday, 16 January 2006, 06:33 GMT
Australia probes Iraq 'kickbacks'

Threshing wheat in Iraq
Iraq bought Australian wheat under a UN deal
Australian wheat exporter AWB paid millions of dollars in illegal kickbacks to the former Iraq regime, a government inquiry has been told.

Lawyers at the hearing said the Australian Wheat Board, now known as AWB Ltd, knowingly paid huge kick-backs to Saddam Hussein's government.

They also said AWB deceived the United Nations about the payments under the UN's oil-for-food programme.

AWB has denied any wrongdoing and says it was deceived by Iraqi officials.

The BBC's Phil Mercer, in Sydney, said the official investigation's first day of hearings was explosive.

Lawyers claimed that AWB knew millions of dollars it had paid for transport services had ended up in the hands of the former Iraqi government.

The hearing was told that this was in direct breach of UN sanctions which were imposed on Iraq.

AWB has consistently denied that it knew that these transportation fees - which were paid to a Jordanian firm - were ending up in the Iraqi government's hands.

Key role

The Australian wheat exporter was the largest single supplier of humanitarian goods under the oil-for-food programme, which began in 1996.

The programme allowed the Iraqis to sell oil and import food and medicine at a time when sanctions had been introduced.

The official Australian inquiry was requested by the United Nations, which released a report last October showing that AWB had made a total of US$222m in so-called "side payments" for the transportation of wheat.

The UN found no direct evidence that AWB had knowingly paid bribes.

However, investigators said that the company's staff should have realised where the money was going.

The inquiry in Sydney will determine if AWB and two other smaller organisations have broken any Australian laws in their oil-for-food dealings.

The commission can recommend that executives be prosecuted if these allegations are substantiated.

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