House debates

Thursday, 16 August 2007

International Trade Integrity Bill 2007

Second Reading

12:37 pm

Photo of Simon CreanSimon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Hansard source

The  International Trade Integrity Bill 2007 will finally see the government doing something to shut the stable door that was left wide open while AWB officials were shovelling money into Saddam Hussein’s coffers. The bill is the government’s response to the wheat for weapons scandal—the payments, allowed through the government’s negligence, made by the Wheat Board to Saddam Hussein. It is the greatest corruption scandal in Australia’s history. The Cole inquiry which was set up to investigate this scandal was a flawed and limited inquiry. It revealed that these payments took place and that the Howard government and its ministers did nothing to stop them. The best construction that can be put on the whole sordid wheat for weapons affair is that the government was ignorant, incompetent and negligent—hardly the mob you would want to be running this country.

When I said that the inquiry itself was flawed, it was not to criticise the commissioner himself. Commissioner Cole did a thorough job, but he was constrained by the terms of reference which were specifically designed by the government to deflect blame away from the Prime Minister, the Minister for Foreign Affairs, the Minister for Trade and the Minister for Agriculture, Fisheries and Forestry. Commissioner Cole found that the Prime Minister and other senior ministers were warned at least 35 times that these matters should be investigated but, instead of following up on those warnings and investigating the serious allegations, what did these highly paid ministers do? They did nothing—absolutely nothing. It was sheer incompetence. So concerned were they about the serious allegations—all 35 of them—that they ignored them. It is negligence in the extreme. Indeed, the defence put forward by these dozy ministers was that they couldn’t recall, they hadn’t read the cables or that the warnings came to their offices but were not passed on by their minders. It is unbelievable. I do not think there is anyone in Australia who believes those defences. These denials amount in essence to a plea of guilty to the charge of negligence because the only other course would have been to admit that the government had detailed knowledge of the whole corrupt affair but did nothing about it.

The failure of the Howard government to respond to the 35 warnings has seriously damaged Australia’s international reputation and has left Australian wheat growers with only very limited access to the once lucrative Iraqi wheat market. The illegal payments by the Australian Wheat Board were bribes to a regime so bad, we are told, that it had to be invaded and destroyed. Day after day the Prime Minister came into this place and trumpeted his reasons for invading Iraq, yet time and time again he, his ministers and their advisers ignored allegations that a major Australian company was topping up Saddam Hussein’s war chest to the tune of $300 million. No wonder it has been called the ‘wheat for weapons scandal’.

The Cole inquiry, as I said before, was flawed and limited in that it was not asked to examine the role of ministers in the discharge of their duties. In particular, the commissioner was not able to determine why the foreign minister did not enforce the UN sanctions against Iraq. In a sense, this bill belatedly responds to the questions that could not be asked by the Cole inquiry. The bill is welcome; it does strengthen Australia’s capacity to enforce UN sanctions and to combat foreign bribery. It is just a pity that the government only took this action following a great national scandal. Despite repeated warnings, the foreign minister and trade minister failed to take any action to prevent an Australian company making illegal payments to a foreign government. What is more, it was a foreign government which Australia then, in company with other governments, in particular the US, attacked and invaded on the pretext that it had weapons of mass destruction—weapons never found and weapons which in fact did not exist. It was a nation which was invaded on the false premise that Saddam Hussein was allied to al-Qaeda. We sent our soldiers to war against an enemy that we partly funded. What sort of incompetence is that?

Labor have always supported those brave men and women who were sent on government orders. We have full admiration for their courage and professionalism. We in the Labor Party opposed the Howard government decision to send them. Our argument is with the government of the day, not the troops that went over. What this government did through its negligence was to allow the funding of a regime that our troops were sent to overthrow. This war is Australia’s greatest military and foreign policy disaster since Vietnam. It is a military morass in which we are now trapped—trapped with the United States with no plan for peace and no exit strategy. History, unfortunately, does repeat itself. This indeed is the Vietnam of the desert. The Australian Wheat Board scandal—the deceit and duplicity that characterised that sorry saga—is itself symptomatic of the wider tragedy of that Iraq war.

The Attorney-General, in introducing this bill, had the absolute effrontery to say that this bill:

... continues Australia’s tough stance against foreign bribery and contravention of United Nations sanctions.

What hypocrisy. What sheer cant. It is as though, in the Attorney-General’s mind, the Australian Wheat Board scandal had never occurred, as though an Australian company had not paid a foreign government in excess of $300 million in contravention of those very UN sanctions. If that is the case, why is this bill necessary? The Attorney-General went on to say:

Australia is a significant player in international trade. We have a reputation as a corruption-free trading partner, and an important participant in enforcing UN sanctions ...

As the spokesperson for trade on this side of the House, I can say that I have been enormously impressed by the quality, commitment and honesty of Australian exporters. But the Attorney-General needs to know that our hard-earned reputation for that honesty, for that integrity, in international trade has taken a huge hit through the actions of the Wheat Board. The fact that, through its demonstrated ignorance, its incompetence and its negligence, the Howard government allowed the Wheat Board’s dishonesty to occur unchecked and unpunished has seriously damaged our international reputation as honest traders.

As well as the damage to our international reputation, the behaviour of the Wheat Board and the negligence and incompetence of the Howard government have cost our wheat farmers and have cost our economy, and cost them very dearly. The present Leader of the Opposition, who was our former shadow trade minister, identified in the prosecution of this saga 25 separate warnings received by the government about the activities of the Wheat Board, even before the Prime Minister sent Australian troops to Iraq. These included warnings like the cable from Australia’s United Nations mission raising concerns about an allegation that the Wheat Board was paying $14 a tonne into a Jordanian bank account owned by a son of Saddam Hussein. That was a cable sent on 13 January 2000. That same mission again cabled, reporting on Iraqi demands for kickbacks and illegal commissions on humanitarian supplies. That cable, by the way, went to the Prime Minister, the foreign minister and the trade minister, all on 9 March 2001. The foreign minister, when questioned about this in the Cole inquiry, said that he could not recall reading it. You would think that something like that would stand out. It reported on demands for kickbacks, the very things that were outlawed through the United Nations sanctions.

We on this side of the House welcome the bill. We hope that the amendments will be effective in curbing the type of dishonest and corrupt conduct that occurred during the wheat for weapons scandal. That said, the truth remains that no amendments and no legislation will be effective without the will to enforce them. It is all very well to get up on a soapbox and announce legislation giving departments and agencies powers to demand information and providing for new penalties for noncompliance. That is the easy bit. But this lazy, tired and stale government has not demonstrated through its term of office the will or the strength to confront the problem and to take the hard decisions. The hard part, of course, is the follow-up to the legislation and the commitment to enforcing it.

The bill contains information gathering and handling provisions to improve the ability of agencies to administer the UN sanctions. It also introduces new offences for individuals or companies which provide false or misleading information in connection with the UN sanctions regime, which import or export goods prohibited by UN sanctions and which otherwise act in contravention of a Commonwealth law that enforces a UN sanction in Australia. We welcome these provisions, provided they are enforced and provided the Howard government does not fall asleep again. They will help restore Australia’s reputation as an honest and reliable exporter.

Even a cursory glance at the government’s sorry record during the wheat for weapons scandal will reveal a government unwilling or unable to use the considerable powers that it already had to demand information of the Wheat Board. As the former Minister for Primary Industries and Energy, I am well aware that the Wheat Marketing Act already provided the government with all the power it needed to demand documentation and other evidence of the Wheat Board’s illegal support for Saddam Hussein.

The approach of the current government stands in stark contrast to the approach which was taken by Labor when it was in office. In those days, Labor had to oversee the activities of the Australian Wheat Board in similar circumstances. During the first Iraq war, when sanctions were imposed on the regime by the United Nations, Labor saw to it that there was no rorting of this requirement under its watch. The then foreign minister, Gareth Evans, insisted that his department satisfy itself that the sanctions were not breached by Australian companies. During the Gulf War, there were no bribes paid.

Labor also managed to ensure that Australian wheat interests were protected. As the minister for primary industries, I announced ex gratia payments to grain growers who would have lost out because of the rigorous application of the sanctions. Labor did the right thing. That is the point: Labor ministers fulfilled their responsibilities. They did not display negligence, they did not go to sleep at the wheel, they did read the cables and they did pursue rigour in ensuring the implementation of sanctions, the imposition of which they had been party to insisting on. Labor protected the integrity of the UN sanctions, at the same time looking after the interests of grain growers. That is what effective ministers do—that is what they are paid to do; that is what they are elected to do—but not the sorry lot on that side of the House, on that occasion. We have to fulfil our international responsibilities and, if there is an impact on a section of Australian industries, seek to ease the burden.

What a contrast we have between the way Labor governed in the context of this situation and the way the government has so badly handled the situation this time around. The ministers in the Howard government failed to fulfil their responsibilities to the international community, and they must bear a very large part of the blame for the loss of major wheat markets and a tarnishing of the Wheat Board brand in the international marketplace. All we can hope is that the government will use the new powers provided under this legislation more effectively than it used the similar powers it already possessed under the Wheat Marketing Act.

The government has also provided funds for the Department of Foreign Affairs and Trade to coordinate implementation of United Nations and bilateral sanction regimes and to monitor and ensure compliance with the sanctions. It could be argued that this is what DFAT should have been doing anyway; nevertheless it is a positive move.

The bill has been the subject of scrutiny by the Senate Standing Committee on Legal and Constitutional Affairs. That committee invited submissions and held a public hearing. The committee examined the bill in detail, analysed some differing views put to it, set out what it saw as the key issues and reported in August—this month. The committee considered that the bill would strengthen the implementation and enforcement of the United Nations sanction regimes in Australia and recommended that the bill be passed.

We welcome the government’s commitment to promoting a culture of ethical dealing in connection with the United Nations sanctions and international trade. The Attorney-General is right to say that legislation alone is insufficient and that Australian businesses have the responsibility of maintaining a reputation for ethical dealing and integrity.

The commencement arrangements for the bill—on a date to be fixed by proclamation, or six months after royal assent—allow for consultation with businesses and industry stakeholders about the amendments and their implementation. The government is to run a general public information campaign and will also focus specifically on import and export businesses.

I want to make two points with regard to this. Whilst we welcome the process as a positive way of ensuring that businesses appreciate the moral and legal necessity to trade honestly and ethically, we would like to hear from the Attorney-General, when he sums up, some details about how this consultation and education process will be undertaken.

Secondly, regarding the campaign to inform the public of the changes, foreshadowed by the Attorney-General in his second reading speech, I am very suspicious of any public information campaign run by this government—and well we should be. One has only to look at the most recent manifestation, the Barbara Bennett Work Choices advertisements, to see how public information campaigns for this government become blatant political advertising. ‘Know where you stand,’ indeed! I would hope that any public information campaign would not be simply an exercise in exonerating the government from any blame or responsibility in the Wheat Board wheat for weapons affair.

Some unfinished business will remain after this bill is passed. The 2006 OECD report on bribery of foreign officials raised concerns about Australia’s lack of monitoring of foreign bribery. The report also recommended a review of whistleblower provisions so that Commonwealth officials can report suspicions of foreign bribery without fear of retaliation.

The lesson of the Australian Wheat Board wheat for weapons scandal is clear. There needs to be substantial reform to protect and strengthen the integrity of Australia’s public and private sectors. In the case of the Wheat Board scandal, our honest and hardworking wheat growers deserve it. All of our exporters, working hard to establish themselves in tough and competitive foreign markets, need it to be known that Australians are fair and honest traders. I move:

That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House:

notes that it has been 18 months since the OECD Working Group on Foreign Bribery in International Business Transactions released its Phase 2 Report on Australia and nine months since the Cole Inquiry, and yet we are only now seeing this legislation pass through Parliament;
notes that this lax approach to Australia’s obligations on bribery of foreign officials is unsurprising, given that the government—either through complicity or incompetence—allowed AWB to funnel $350million to the former Iraqi Dictator, Saddam Hussein;
condemns the government for failing to take action on the scandal despite the repeated communications made to senior public servants, Ministerial offices and Ministers themselves;
condemns the government for its failure to bring forward the full range of measures needed to bring Australia into compliance with our international obligations on bribery—which includes a failure to bring forward proper legislative protections for whistleblowers;
notes that other key statutory instruments of Australia’s fight against money-laundering and terrorist financing were delayed for years, with many still yet to be brought before Parliament; and
condemns the government for its abject failure to uphold Australia’s international reputation on these issues of importance”.


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