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Last Updated: Wednesday, 18 January 2006, 12:08 GMT
Australian wheat scandal widens

Managing Director of the Australian Wheat Board, Andrew Lindberg, leaves a government inquiry in Sydney, Tuesday, Jan. 17, 2006.
AWB CEO Andrew Lindberg admits the problematic deal
An Australian wheat exporter at the centre of a scandal over its dealings with Iraq has admitted in an official inquiry that it inflated its prices.

AWB confirmed on Wednesday it raised the price of wheat it sold to Saddam Hussein's Iraq regime to cover a debt owed to an Australian oil firm.

The inquiry has already heard that AWB was aware it was paying kickbacks to Iraq through bogus transport costs.

Australia's opposition has accused the government of ignoring AWB's actions.

The inquiry heard on Wednesday that AWB inflated the price of wheat it sold to Iraq through the UN-managed oil-for-food programme in order to recover US$7.8m owed to oil giant BHP.

The debt dated to 1996, when BHP sold 20,000 tonnes of wheat, supplied by AWB, to the Iraqi government in return for oil rights.

AWB collected US$500,000 for its aid in recovering that debt, the inquiry heard.

The AWB is now a private listed company but was the government's wheat board at the time.

The Australian government commission is also investigating the government's own role in the AWB exports.

Labor's spokesman on foreign affairs, Kevin Rudd, claimed on Wednesday that in January 2000 the government received formal warning from the UN about the activities of the AWB.

He questioned what key ministers did in response, and said they should be brought before the inquiry.

Key role

The Australian wheat exporter was the largest single supplier of humanitarian goods under the oil-for-food programme between 1996 and 2003.

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

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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