Tuesday, January 31, 2006
Revelations already shine a spotlight on the roles of Prime Minister Howard, and ministers Downer and Vaile in the long running culture of corruption in the AWB.
The inquiry into Australian involvement in the UN's oil-for-food scandal heard that wheat deals with Pakistan in the late 1990s, when the wheat board was still under Howard government control, included $US12million in payments to an "agent".
The Australian Newspaper (Monday, January 30, 2006)
...As the Cole inquiry unfolding in Sydney over the past few weeks has revealed the AWB paid $2 million to finally get that off the docks and agreed, on that visit alone, to a further $8 million in kickbacks to be hidden in future contracts. The Government insists it had no idea the AWB was paying kickbacks to the Iraqi Government and at the time, their efforts were lauded.
...As the sabre-rattling and diplomatic stand-off continued, the Australian Wheat Board chief Andrew Lindburgh and two other senior AWB executives were in Baghdad face-to-face with the regime trying to salvage one of this country's most valuable trade deals. We now know their mission, in their own words, was to insulate the AWB's relationship with Iraq from national politics. In retaliation for Australia's rhetorical attacks on Iraq, the regime had torn up the AWB's contract. Four wheat shipments sat unloaded in the port of Umm Qasr. MICHAEL BRISSENDEN: ABC.com.au
Saturday, January 28, 2006
Kisrwani marched into a Melbourne newspaper this week and claimed he had been approached, in 2002, by a businessman with links to Saddam Hussein's regime to use his political influence in Australia to assist in getting wheat to Iraq.
Kisrwani says he received the wheat request from a Jordanian businessman and subsequently approached a federal MP for assistance. He won’t say which MP or even name the businessman.
What is curious is just why this character, previously subject to corruption inquiries (see below), would even come forward. If he has evidence it implicates him, if not he is exposing himself for no good reason, unless it is some form of payback to the Liberal Party who spurned him after the ‘cash for visa’ allegations in 2003.
Never an immigration agent, Kisrwani had a 50% success rate of gaining ministerial intervention in doubtful immigration cases. In Australian immigration rules it is a bit like petitioning the governor for a stay of execution.
As well as being, then Immigration Minister Ruddock’s friend, Kisrwani was also a lavish donor to the governing Liberal Party.
Despite the curious mix of ingredients a toothless parliamentary inquiry founded from lack of cooperation. Like the current US scandal there is an issue of proving cash exchanges led to provable links to action.
Perhaps it is some form of tradition Lebanese form of payback, but it is difficult to see how the non-revelations, even if they were flushed out, would have any really difficult implications for anyone. Kisrwani says of the un-named MPs: “They tell me the wheat board is independent of government." If you try playing connect the dots on this one you find they are not all on the same page.
Friday, January 27, 2006
The audit, released on Wednesday by the US Special Inspector-General for Iraq Reconstruction, describes a country in the months after the overthrow of Saddam Hussein awash with US dollars and a "wild west" atmosphere where even multi-million-dollar contracts were paid for in cash.
With a remarkable understanding of
problems, Australian Wheat Board CEO Andrew Lindberg and General Manager,
In 2003 they presented Iraqi, post war, interim Minister for Trade Dr Ali Allawi and Iraqi interim Deputy Minister for Planning Mr Faik Rasool with two skid steer loaders.
The Australian Wheat Board (AWB) is currently subject to an Inquiry for undermining the UN Oil for Food Program and funneling nearly $300 million into Saddam’s coffers.
Thursday, January 26, 2006
Given our current knowledge of the US lobbying trade, it would be surprising if Wheat Associates were not moving in to grab Australia’s share of the wheat market.
To be sure, there is a growing case of trade abuse by AWB. However, before they take the high ground, the US Wheat Associates might find that they have their own moral questions to answer in this scandal.
It is well documented that US Wheat Associates brought this issue to the attention of the bush administration in 2003.
According to a recent report:
As the U.S. and war-coalition partner Australia were putting boots on the ground in Iraq in 2003, U.S. Trade Representative Robert Zoellick and Australian Trade Minister Mark Vaile were putting together a bilateral free-trade deal between the nations. Alan Guebert is the owner of Ag Comm in Delavan, Ill.U.S. Wheat Associates complained, there was a diplomatic flurry, then we have this trade deal that Alan Guebert is so stirred up over. By the US perspective there is only one lot of bad guys, the Australians.
Two wrongs don’t make a right! But both wrongs should be investigated fully and dealt with. The Cole Inquiry will deal with the Australian end more than adequately.
Who is going to look at the conduct of a US administration which knew about, condoned, then rewarded the breaking of UN sanctions?
Wednesday, January 25, 2006
Before we have a bit of fun with the lobbyists, there is a timely warning from Ron Paul Republican Congressman from Texas
SEARCHING FOR A NEW DIRECTION
Dealing with lobbying scandals while ignoring the scandal of unconstitutional runaway government will solve nothing. If people truly believe that reform is the solution, through regulating lobbyists and increasing congressional reporting requirements, the real problem will be ignored and never identified. This reform only makes things worse.
- Of the states, California lays claim to the lions share of ‘lobby’ money spending; $212 million in 2004.
- Texas comes in second at around $160 million.
- New York tally is around $140 million
- Minnesota was the only other state to reach the $50-million mark.
Most of the 1,000 lobbyists working the state capital traffic in more than information.
Of the $250 million that, by conservative estimates, is contributed to California state campaigns during a gubernatorial election cycle, the bulk comes from corporations, professional associations, unions and other interest groups that employ lobbyists in the state. The most highly paid hired guns in Sacramento have two silver bullets: access to vast amounts of campaign cash and connections to people — such as the governor or Assembly speaker — who are even more powerful than the legislator being lobbied.
In Capitol parlance, that's often called ‘strategic services’ (rather than lobbying)
spending by the Washington lobbying industry topped $2 billion in 2004.
There are about 37,000 registered lobbyists in the District.
Washington firms providing "lobbying, political consulting, or public relations consulting," earned about $900 million (the D.C. economy as a whole brought in $76 billion that year).
Recent polling shows that 81 percent of Americans believe the current lobbying scandal to be "business as usual" in Washington
Many states are well ahead of Washington in putting lobbying related anti corruption laws in place. These are often designed to eliminate privately financed junkets, require the disclosure of spending on lobbying, ban gift-giving by private interests and curb the hiring of lawmakers' relatives as an under-the-table kickback scheme.
- 37 states require some detailed information on each lobbyist's expenses, while the federal government does not.
- 24 states have independent ethics commissions, some including members of the public or retired judges, to investigate and enforce lobbying rules.
- Congress writes and enforces its own code of conduct.
- Lobbyists and their allied interests spent nearly $1 billion in 2004 in the 42 states that required detailed reporting, according to figures compiled by the Center for Public Integrity.
- In most capitals, lobbyists outnumber lawmakers by an average of five to one.
- Albany leads the nation, with 3,842 registered lobbyists, or 18 for every elected legislator.
- Colorado, Florida, Illinois and Ohio, there are at least 10 lobbyists for each lawmaker.
- Only two states, Maine and New Hampshire, have more elected officials than lobbyists.
Georgia lawmakers have begun operating under new ethics guidelines signed into law last year by Gov. Sonny Perdue.
In Florida, there are new laws banning gifts from lobbyists and requiring extensive reports on lobbyists' spending, rules the Legislature enacted after revelations that three lawmakers flew to a golf outing on a corporate jet owned by a company seeking slot machine licenses.
Last year Florida enacted one of the strictest set of lobbying rules in the country, including an outright ban on gifts and travel from lobbyists or their employers and a new system of reporting lobbying expenditures.
Howard's attempted cover-up of the government’s role in the scandal threatened to deliver another corruption whitewash.
Now issues concerning the Department of Foreign Affairs and Trade (DFAT), Foreign Minister Alexander Downer and Deputy PM and Trade Minister, Mark Vaile are so intertwined with the affairs of AWB and their Iraqi trade, details just keep dribbling out.
The Australian newspaper (Ex-official to face wheat probe) has now revealed that a former DFAT assistant secretary, Jane Drake-Brockman, will be giving evidence to the Cole Inquiry.
Drake-Brockman became a focus with a damning revelation that in 1999 and 2000 AWB wrote to seek DFAT's permission to pay "trucking fees" to the Jordanian trucking company Alia, which turned out to be a front for Saddam.
In a letter dated October 30, 2000, AWB said engaging the services of Alia would "eloquently solve our problems" in Iraq, but wanted to "ensure DFAT is comfortable with AWB proceeding".
Foreign Minister Alexander Downer has said DFAT officials are not implicated in the scandal.
The AWB official, Rex Lister, who handled the most sensitive discussions with the Federal Government over Iraqi wheat contracts has since died, leaving the inquiry into the UN oil-for-food scandal with access to his meticulous notes but unable to examine him on those dealings.
In new testimony a company executive has admitted that AWB not only provided inflated invoices to the UN to cover Saddam’s kickbacks, but in the end defrauded the Australian government and the World Food Program.
When UN staffs were withdrawn from Baghdad on the eve of war, the oil-for-food program was suspended, and the AWB was left wondering who would pay for the wheat already at sea, plus the contracts for one million tonnes of wheat still outstanding.
The company asked for a meeting with Department of Foreign Affairs and Trade officials.
On March 21, 2003, just one day after the first US-led strike on Iraq, Mr Downer said the Howard Government would buy the 100,000 tonnes of wheat stranded at sea. AusAID directed the stranded ships away from the Iraqi port of Umm Qasr towards a port near Kuwait City, and another near Aqaba in Jordan.
The problem now facing the Howard government is their blind acceptance of AWB activities. Prior to Volker’s revelations the ‘privatised’ monopoly wheat trader was considered sacrosanct in Australian agricultural circles.
In their haste to take over payment of the price inflated AWB shipments, the government was, at the very least, aware that the contracts had been approved by the Department of Foreign Affairs and Trade (DFAT).
It is bad enough that, in taking over the contracts, Australia was in effect paying kickbacks directly to a regime whom they were at war with, but it seems they were also repaying an Iraqi debt to another big corporation, BHP.
That DFAT blindly went along with this scheme, aware that the price was well above existing market rates, suggests that they, like AWB executives, had painted themselves into a corner. By the time war was engaged the deceit was too advanced to undo.
At the outset the Cole Inquiry, hobbled with restrictive terms of reference and lack of existing Federal laws on foreign bribery, was unlikely to result in prosecutions.
However, solid investigation and tenacious examination of witnesses has changed the game dramatically.
AWB executives will now be facing potential prosecution on fraud and corruption on Australian soil, of the Australian people. DFAT, neatly insulated from the inquiry, will now face real pressure to show how they gave approvals to these obvious deceits.
Hats off to Commissioner Cole, senior counsel Agius and the inquiry team. Again we point out that investigation of corrupt activities must not be controlled and determined by the political establishment.
Tuesday, January 24, 2006
How much can your congressman levy for a bribe?
The courts or lawyers at least, are incredibly coy about revealing the dollar value of political bribes. Of course not all bribes are straight cash; gifts, travel and other subsidies come into the difficulty equation.
The recent, celebrated case of Rep. Duke Cunningham who resigned in November after pleading guilty to corruption charges, sheds a bit of light on the issue. CNN.com reported that Cunningham received more than $2 million in bribes. A government statement said Cunningham received at least $2.4 million in bribes “and will forfeit his $2.5 million mansion and about $1.8 million in cash, antiques, furnishings and other valuables.”
In a fresh case, a Louisiana congressman demanded bribes in exchange for his help in promoting a pair of business deals in Africa, according to court documents filed. That allegation surfaced with a guilty plea by one of the congressman's former staffers.
Brett Pfeffer, 37, a former legislative director to Rep. William Jefferson, D-La., pleaded guilty to aiding and abetting bribery of a public official and conspiracy.
According to Pfeffer the congressmen demanded 5% to 7% of the newly formed African companies in exchange for his help promoting the $45 million deal to African government officials and others. He wanted a member of his family put on the payroll, receiving between $2,500 and $5,000 a month.
Add to these publicized episodes the general, run of the mill election donations, part of which seems to find their way into politicians pockets. Senators McCain, Feingold, and Cochran have their way this could increase substantially, with individual contribution ceilings rising from $5,000 to $10,000, raising limits to $30,000.
That would seem to rate your average or garden variety congressman at around the $2 million mark. We can expect to see some kind of definitive figure soon for the more influential lawmakers. Perhaps, with Abramoff and Co spilling their collective guts we might really start to see some amazing ‘individual’ figures.
All self serving of course, and doing nothing to address the real issues of political corruption. Meantime lobbyists, good and bad, are caught in the middle.
So what is lobbying all about, and what are the pros and cons of the game.
Paul Miller, the president of the American League of Lobbyists says most Americans are represented by lobbyists.
"Lobbying is a constitutionally protected activity because the opposite of lobbying is to treat public officials as demigods," said Mickey Edwards, a former House member from Oklahoma, who directs an Aspen Institute program in public leadership. Article
If Miller is right, and there are no real grounds to doubt him, the assertion carries some real questions about democratic representation. Not just the US, but most governments subject to the flirtations of lobbyists.
They might be community or business associations or, as we are seeing in Washington, purpose designed brokers like Abramoff’s little businesses. The interesting thing is that very few people in the community would know a lobbyist if they fell over one.
We don’t, in any country, vote for lobbyists, at least not the wider community. They represent ‘sectional’ or special interests. The Abramoff Indian Casinos business is a good example:
You might be happy to see casinos developed, or you might be vigorously opposed.
Abramoff was not really concerned about community views, accept in the way theyt could manipulate lawmakers. But his group was lobbying for specific ownership interests. To assist his clients Abramoff used anti-casino interests to block development which hindered those of his clients.
In this way he was duping anti-casino sentiments to provide a ‘justification’ to lawmakers to halt opposing developments. But they were just the justifications, the next phase, allegedly, was to pay off legislators to do a backflip and support his casino proposals.
What occurs often, in the lobbyist scenario, is an undermining of wider democracy interests for more narrow sectional interests. I disagree with Mickey Edwards (above). By depending on lobbyists our legislators (in any country) are, at the very least, abrogating their responsibilities to the voters.
Reliance on lobbyists is a repudiation of democratic principles most would vehemently claim to support. There will always be lobbyists in any system. The real question is how much influence should they really have?
Lawmakers are the ones who are elected to govern. They are well paid, as a rule they have excellent provision of support staff and the weight of the established public services to assist in their deliberations. Elected representatives must take up in full the responsibilities for which they were selected, to govern on our behalf, not on behalf of sectional interests.
The word is borrowed from the medieval Latin lobia, which meant 'a covered way', and is related to the English word lodge. The word developed a more specific sense in the seventeenth century, when it was used to refer to one of the anterooms of the House of Commons; in one of these anterooms, the public could meet with the members of Parliament and talk with them.
The British middleman, (Davies Jr.) set up schemes to pay kickbacks to Saddam Hussein's regime for over a dozen companies during the UN’s Oil for Fool Program. One such deal was for Australian company, Rhine Ruhr, which was bidding for engineering contracts with Iraq's oil ministry.
Davies' British company, Eastoft Hall Ltd, set up a spin off for the deals, Eastoft (Russia) Limited. On the Iraq end they dealt with a local middleman, Younis, of Emlood Electrical Mechanical Contracting Company.
Davies has refused to give evidence at the Australian inquiry into the Oil for Food scandal. However the paper trail seems damning for Davies and Rhine Ruhr.
That Davies is still operating in brokering murky, backroom deals, in post war Iraq, suggests that the culture of bribery and kickbacks is still alive and well in that marketplace.
Source: Cole Inquiry Transcript
Saturday, January 21, 2006
That is all very well; the corporation (AWB) has sole rights to export Australia’s $5 billion annual wheat harvest, so they probably had a few spare bucks kicking about.
Iraq's trade minister, Mohammed Mehdi Saleh , the Six of Hearts in America's pack of Most Wanted Iraqis playing cards, was given the job of soaking the UN through the wheat exporter.
I’m curious to know what was on Saddam’s shopping list and how he spent his $300 million on.
Our previous post, So, Who Knew? listed
Saddam's regime gained access to hundreds of millions of dollars, some of which went on palaces or Arabian racehorses for Saddam's son, Uday, or to the families of Palestinian suicide bombers, who blew up buses and restaurants in Israel.
Some also went on weapons, such as machine guns for the Iraqi National Guard, who would soon be shooting at Australian troops.”
But a few ponies, expendable suicide bombers and machine guns don’t tally up to $300 million. Or perhaps it does, depending on who Saddam was buying from. There is another jolly bunch on the Baghdad scene, the Al-Khawam brothers. On the face of it this bunch of camel traders would have been, as Shi’ites, Saddam’s enemies. But they were crooks too, and more capable than Saddam’s pack of cards.
In post war Iraq senior officials have accused the Al-Khawam brothers of a hand in a $1.5 billion sting on the Iraqi Ministry of Defence early this year.
Iraq ended up with a decrepit consignment of 27-year-old Russian military helicopters, right-hand-drive Pakistani trucks, inferior Polish armoured cars and outdated ammunition.
Picture: Sheik Hatam Al-Khawam SMH
Hundreds of millions of dollars - in boxes of US cash - were flown out of the country and similar amounts were wired to personal bank accounts in Beirut and Amman before any of the arms junk arrived in this chaotic country.
There has never been any suggestion that Al-Khawam Brothers Inc is a subsidiary of Halliburton. In fact it appears that these have a long history of dealing independently with and for Saddam’s regime.
No doubt they were an expensive habit for the mustachioed dictator; one calling for extraordinary money raising efforts. But we can be sure if the brothers were involved the military threat from the illicit cash would have been diminished drastically.
In the end he could well have simple [pissed the cash up against the wall on a few baubles, with a little help from his friends.
True, there has been no direct linkage to government involvement or knowledge, just an ever widening credibility gap.
Aid to the enemy The Australian…”The question yet to be answered is: did AWB hide the truth from the Howard Government? Both Foreign Minister Alexander Downer and Trade Minister Mark Vaile met AWB executives many times in the lead-up to the Iraq War, which began in March 2003.
AWB had to submit its Iraq contracts with the Department of Foreign Affairs and Trade for approval, and they had to be stamped by officials at Australia's mission to the UN in New York, before they would be approved by officials of the UN's oil-for-food program. DFAT officials in Canberra and New York were warned about allegations of corruption as far back as 2000 but conducted only cursory investigations.
Saddam's regime gained access to hundreds of millions of dollars, some of which went on palaces or Arabian racehorses for Saddam's son, Uday, or to the families of Palestinian suicide bombers, who blew up buses and restaurants in Israel. Some also went on weapons, such as machine guns for the Iraqi National Guard, who would soon be shooting at Australian troops. None of these obvious possibilities seemed to trouble AWB, however.”
SMH “…but as more documents emerge, it appears at the very least that Foreign Affairs Department officials should have been alert to AWB's determined attempts to funnel money to the Iraqi regime in violation of the sanctions. AWB worked hand in glove with departmental officials to win $2.3 billion in contracts under the program.
Under its UN obligations, Australia was bound to ensure AWB did not breach the UN sanctions for any reason - let alone keeping Iraq as a customer for Australian wheat. But under the department's nose, AWB became the biggest conduit for kickbacks to Saddam's regime in the lead-up to the Iraq War.
The key political question raised by the evidence is this: how could the Government not know what was going on? Despite warnings from the UN, Canada and the US, no departmental official detected the scandal that now threatens to shatter Australia's international reputation and damage its billion-dollar wheat trade. Did it turn a blind eye while AWB did whatever it took to hold onto its Iraq contracts as the Howard Government publicly railed against Saddam.”
That is the Australian end of the story, but this is an International saga. It was those warnings from the US and Canada in particular which reflect badly on the Howard Governments cries of innocence.
Canada actually canvassed the issue with the UN in 2002 when they were asked by Iraq to pay secret fees. The Canadian trade authorities knew what AWB was doing, but I doubt it came to the attention of then PM, Jean Chrétien. Relations between John Howard and Chrétien were always problematic and you would expect the latter to have a field day rubbing this scandal into Howard’s face.
The US is a different matter. In 2003, American lobby group US Wheat Associates made a formal complaint to secretary of state Colin Powell. We are told there was a flurry of diplomatic dispatches between the two countries, which went no where.
It is difficult to believe, given the close relationship between the two administrations, that there wasn’t some degree of secretary to minister communication.
US Wheat Associates should be demanding to know why their valid complaint was, in the end, ignored by both governments. But the vital point is, both governments where advised of the irregularities, if they were actually unaware prior to that time.
Of course the Bush administration and the Howard Government had bigger fish to fry, like a war with Iraq. Most likely, the trade cake had already been sliced and distributed under a previous deal. In the midst of serious saber rattling neither government would be inclined to open up details old trade undertakings, even when that trade was supplying weapons to the enemy.
Friday, January 20, 2006
In this case we now have ‘facilitation payments’ to describe bribes.
And what do you know? While bribes are obviously seen as unacceptable behaviour they suddenly become essential, acceptable business tools as facilitation payments.
And after all, facilitation payments are acceptable, aren't they? In general, they seem to be. Most Australian companies working overseas face this dilemma. For companies like BHP there are firm rules. The payments must be minor, they must be reported to management and be "culturally" appropriate.
Commonwealth law finds that a bribe is a payment to encourage an overseas official to do something illegal, while a facilitation payment is a modest payment to make something that would lawfully happen, happen faster.
AWB came close to sneaking under the bar with that one, despite the fact these were not ‘minor payments’, until another term ‘money laundering’ was introduced into the argument. We now, eagerly await the legal language which will transmute money laundering into a fair business practice.
Under commonwealth law, companies can claim a tax deduction for facilitation payments. Large public companies such as BHP Billiton have guidelines covering such payments.
We recently noted in Prosecutions unlikely that international law expert Don Rothwell doubted prosecutions would occur in this scandal, because there is no Commonwealth law in place. However, we now learn…
The OECD consulted leading anti-corruption lawyers and the Law Society of NSW and Law Council of Australia and was told that "nearly all acts amounting to facilitation payments under the Commonwealth Criminal Code are prohibited under most state criminal codes".
"Thus what amounts to a defence under the Commonwealth Criminal Code is prohibited under state law. Since state laws have an extraterritorial reach, the conflict does not just exist in respect of offences that take place in Australia," the OECD report says.
Time will tell, these slippery characters have ways of sneaking out from under. On the other hand, having failed to protect major corporations BHP Billiton and BP Petroleum from exposure for their roles in this corruption, AWB CEO Andrew Lindberg has destroyed his corporate future.
As to the Howard Government, who seem intent on defending corporate corruption as a necessary part of doing International trade, we expect life has just become a lot tougher on the word trade stage. They might be able to dodge bullets at home but there are still plenty of competitors out there gunning for them.
Thursday, January 19, 2006
Now let us turn our attention to the actual nuts and bolts of the commission of corrupt acts,
The methods are many and varied so we are concentrating on a specific example, the UN ‘Oil for Food’ scandal.
Charged with explaining how this specific set of practiced operates I found myself resorting to analogy to get the message across. That is to bring it down to a scale most potential crooks can comprehend.
Our example involves a school district (lets call it Middle East District), which has decided to direct a government grant to supplying ‘humanitarian’ lunchboxes to its school children.
While the District will foot the bill, individual schools arrange their own purchases.
Irak Elementary School has signed up for the program and has been in talks with LunchBoxes Unlimited, a privatized spin-off consultancy from the Education Department staff.
Faced with a large number of proposals for supply, Irak Elementary happily settled on dealing with LunchBoxes Unlimited because the ‘big’ company was well organised and helped make decisions easy for the school administration.
Just to be certain though, LunchBoxes Unlimited worked a sweetener into the deal. They would give the school $1 back in cash for every individual lunch ordered. They could do this, they explained, by adding $1 per lunch to the bill they sent Middle East School District, who in turn had no qualms because it was government money, after all.
In fact, LunchBoxes Unlimited could raise the bill even higher, so long as they kept things within reasonable limits.
The Middle East Times and Gazette caught wind of some funny business going on with the school lunches and did a bit of investigative journalism. Well, in fact, they rewrote a ‘letter to the editor’ in which a local sandwich shop owner complained about the ‘dirty dealings’ and unfair treatment under the school lunch supply saga.
Tom’s Sandwiches had put in a good bid to supply lunches and obviously missed out. Nosing around, Tom found out how LunchBoxes Unlimited had won the deal.
The government was impressed with the school lunch plan, it was a good political winner for them, and so they weren’t all that interested in looking at complaints in local papers from irate sandwich shop owners.
Although there was a moment of confusion when the Minister seemed confused and kept referring to Irak as an online storage system.
In fact everyone was a winner in this deal. The district put a great program in place was delighted with the positive community response. Members were all assured of being returned next election.
Irak Elementary was happy on two fronts: The kids were assured of one decent meal a day and the school was getting extra funding from the contract. There were murmurs about the school acquiring weapons of mass instruction with the money, but nothing has been proved.
The Middle East Times and Gazette was happy because readership increased during the fuss caused by Tom’s Sandwiches.
Oh, Tom wasn’t happy, but then no one much liked him anyway.
Now the story didn’t end there. No true corruption scandal is ever that simple. A school supply company, International Chalk comes into the picture here. International Chalk had supplied Irak Elementary wit a quantity of ‘all purpose’ chalk without going through the proper channels.
Their salespeople new it was risky supplying before the proper purchase authority was made by the District. But they had a surplus stock at the time so they took the risk.
In the event, the District rejected the purchase and refused payment. The school had allocated all its own funds, so they couldn’t pay either.
It so happened that someone from Chalk International knew someone at LunchBoxes Unlimited and a deal was made whereby the latter would recover the money for a commission.
So LunchBoxes Unlimited tacked another dollar onto every lunchbox sold and the District paid for the chalk without even knowing it. Again, everyone was happy with this arrangement. LunchBoxes Unlimited ended up making even more money.
Well for a while at least, until Irak Elementary started complaining that the sandwiches were contaminated with peanut oil. They screamed about health hazards and threatened to stop taking delivery of boxed lunches.
Irak brought in a team of experts, well mothers really, who backed up the contamination claim. Faced with losing the contract over these false allegations LunchBoxes Unlimited did the only honorable thing – they offered the school $1.25 per box sold.
We will be back with more Corruption Primer soon.
Senior Counsel assisting the inquiry, John Agius SC, obviously has other ideas about the execution of justice.
In opening remarks on the second day of the inquiry, Agius assured Commissioner Terence Cole that officials had been "investigating the Department of Foreign Affairs and Trade’s (DFAT) role since the inquiry was announced last November".
With AWB big guns as early witnesses to the inquiry already implicating the government Agius seems will have every opportunity to put the restrictive ‘terms of reference’ aside. The inquiry might not result in any prosecutions (see Another Corruption Whitewash ) but will shine a bright light on the corruption under Howard’s watch.
A timeline of the Oil for Food scandal suggests either incompetence or duplicity by Australian Government ministers and the Department of Foreign Affairs and Trade:
In 1996, Foreign Affairs Minister Alexander Downer welcomed the UN oil-for-food strategy and flagged Australia's desire to provide most of Iraq's wheat requirements.From 1997 to 2003, UN payments of more than $3 billion flowed into the AWB for exporting 6.8 million tonnes of wheat to Iraq. The Department of Foreign Affairs and Trade was responsible for monitoring AWB contracts to ensure they did not infringe UN sanctions against Iraq.
1999 or 2000 DFAT’s Robert Bowker, Australia's current ambassador to Egypt, satisfied himself that no corruption was taking place by telephoning AWB employees who denied there was anything untoward about their billion-dollar deals with Saddam.2000, PM Howard, Vaile, who was trade minister and Foreign Minister Alexander Downer received a copy of a cable from the Australian mission to the United Nations, in January of 2000, which contained a formal warning to the Australian government from the United Nations about what the wheat board was up to. (Volcker Report,Vol 3, Chapter 4, Page 74).The Howard Government sent a cable back to New York explicitly denying allegations concerning the AWB.
In January 2000, Canada raised concerns with the UN that the AWB was using Jordanian front companies to fund interests associated with the Iraqi regime.IN response to an inquiry from a separate contractor in July 2000, the UN office for legal affairs advised them not to deal with the Jordanian company, Alia, because it was funneling money to Saddam.
The UN then questioned an Australian government representative in New York who, after consultation with the AWB said the matter was untrue.
In Senate estimates hearings in November it was revealed DFAT approved a vague, written request from AWB in 2000 to begin dealing with unnamed Jordanian trucking companies.In late 2000, the AWB wrote to inform DFAT that it had contracted with a Jordanian company to truck wheat within Iraq. The AWB failed to mention the name of the company and Volcker raises the question of why Alia was not mentioned in this communication. DFAT responded with approval. What DFAT did not know was that AWB had actually been paying Alia for transport costs since December 1999.
2002 the Minister for Defence, Robert Hill, announced that Australia had taken command of the multinational force in the Persian Gulf under Captain Allan Du Toi. The task force was charged with preventing Saddam defying the United Nations-imposed economic blockage.In July 2002, Trade Minister Mark Vaile issued a press release stating he recognised the need to provide wheat to the Iraqi people, notwithstanding issues with the Iraqi government.
In August 2002, Vaile congratulated a successful AWB delegation to Baghdad, which secured even further wheat exports to Iraq, even as we were counting down to war.In 2003, American lobby group US Wheat Associates made a formal complaint to then US secretary of state Colin Powell that the big prices AWB was receiving for its wheat under oil-for-food was evidence the prices were being boosted by the inclusion of kickbacks.
These oil-for-food contracts, with suddenly inflated prices, were signed by AWB executives and stamped by Australian government officials before going to the UN.
Vaile spoke of our Government being vindicated in its faith that the AWB was successfully managing its commercial dealings with Iraq.
Wheat sale contract documents surfaced which showed a big hike in the prices received by AWB in the months before coalition forces invaded Iraq to topple Saddam's regime in early 2003.In June 2003, the MPs Craig Emerson and Senator Kerry O'Brien issued a press statement calling for the Government to investigate allegations that Australia's wheat sales helped support Saddam Hussein's regime. The Government ignored them.
Some background quotes on the Wheat Wars and AWB
Washington Wheat Commission
Numerous statements by Trade Minister Mark Vaile, before the UN investigation was established, seem to contradict AWB's claim of ignorance about inland transportation. Like when he told an interviewer: "But what has not been recognized, nor reported, is that not only does AWB supply the wheat and sell the wheat to the Iraqis through the UN Oil for Food Program but they also have the unloading and distribution network within Iraq." (Interview on "Sunday Sunrise" October 26, 2003)
Or when Mr. Vaile told U.S. reporters that "...AWB is actually established and invested in a lot of the logistical supply chain within Iraq as well." (Press conference transcript, April 29, 2003).
2005 John Howard said that he had always found the people in AWB to be "a very straight up and down group of people ... I can't, on my knowledge and understanding of the people involved, imagine for a moment that they would have knowingly been involved in anything improper". PM defends AWB over Saddam slush fund - National - smh.com.au
“…the US policy of using food aid as a market development tool also severely calls into question their credentials as a leader of agricultural trade reform.
In fact, with my colleague Trade Minister Mark Vaile, I have raised Australia's concerns over a recently announced three million tonne food aid program directly with US Agriculture Secretary Glickman.
I would like to add that we received tremendous support from Trevor Flugge on this issue.
Let me assure you the Government will not be shy when it comes to expressing our concerns to the US on the scale and implications of its policies.” 2000 Grains Week Speech Federal agricultural Minister Warren Truss
There has been a lot of uncertainty created by Iraq's threat last June to reduce wheat imports from Australia, and then the alleged offer of new contracts, publicised over the weekend.
Attempts by the Iraqi regime to manipulate public opinion in Australia – in this way, should be seen for what it is.
Australia has been a reliable and long-standing supplier of quality wheat to Iraq, including in times of political difference and actual military hostilities.
We recognise the need to ensure a reliable food supply to the Iraqi people, notwithstanding our differences with Saddam's regime.
We were disappointed by the Iraqi threats last year to reduce their wheat imports from Australia.
- Iraq had a bumper wheat harvest in 2001, estimated by the UN at around 2.1 million tonnes – compared to 600,000 tonnes of wheat in 2000, thus they could probably get away with buying less wheat than usual.
- AWB Ltd signed a new contract for wheat last June, under the UN's Oil-for-Food program.
- And, in December, AWB Ltd announced that it had secured further contracts.
THE Department of Foreign Affairs and Trade will hand over documents, emails, diplomatic cables and other records if it is asked to by the Cole inquiry investigating AWB's allegedly corrupt wheat deals with Iraq.
Meanwhile, ferreting back into the newspaper archives, we find this gem, just to add to any actual government to government communications.
In a letter to Secretary of State Colin Powell, farmer lobby US Wheat Associates alleged that prices won by AWB from
"Earlier OFF [Oil For Food] wheat contracts with prices inflated by millions of dollars per shipload have provided foundation to the rumours that some of the excess may have gone into accounts of Saddam Hussein's family," US Wheat Associates president Alan Tracy wrote in a letter to Mr Powell.
Wednesday, January 18, 2006
How does a multi billion dollar corporation flourish when directors and executives profess to:
- Extremely poor memory of vital corporate and financial events
- An expressed inability to read internal memos of extreme importance
- An expressed inability to follow up internal investigations of impropriety.
These are just some of the, apparent, confessions coming out of the ‘big guns’ at AWB Ltd, the Australian wheat exporter at the centre of the UNs ‘oil for food’ scandal.
As the representative from the Pastoralists & Graziers Association of Western Australia, Leon Bradley, puts it: "The only conclusions that you can draw is that they were either amazingly negligent or they were complicit in serious wrongdoing.” Wheat chief still chuffed despite the chafe
The difficulty our boys at AWB have is that their misdeeds have been openly discussed around the world for some years.
- US wheat growers took their complaints about AWB to then Secretary for State Powell in 2003.
- The Canadian Wheat Board flagged the issue to the UN even earlier, when they were asked to pay the same bribes to Iraq.
- Evidence before the Cole Inquiry is suggesting that the Australian Department of Foreign Affairs and Trade was briefed on the illicit payments.
What are they telling Justice Cole?
The AWB executives were in no doubt that the fees were kickbacks for Saddam, saying: "We believe the increase in trucking fee ... is a mechanism of extracting more dollars from the UN,” according to company memos available to the Inquiry.
AWB CEO Andrew Lindberg spent a day in the witness box.
Lindberg was shown a memo, which bore his signature, that showed the Iraqis wanted AWB to inflate the prices of at least one of the 41 UN wheat contracts so an old debt to a company called Tigris Petroleum could be paid. He could not remember seeing the document.
"I may have read it," he said. "I can't recall. I don't know."
Inquiry Senior Counsel Agius asked Lindberg to study an AWB report from February 2001 that openly discussed the "transport fees and the fact that the money was going not to Alia, but directly to Iraq".
"The trucking fee is now $US25," it said, adding: "We believe the increase in trucking fee and addition of the service charge is a mechanism of extracting more dollars from (the UN's oil-for-food account)."
Lindberg said he had never seen the report, which apparently was prepared for him.
Other documents noted that AWB was "mindful of the possible implications for AWB on a corporate governance basis" if they inflated the cost of the contracts, to deliver more money to Iraq. It suggested "a number of different methods of repayment of the debt in order to avoid a direct payment to a company with links to the Iraqi regime".
However, it was ultimately decided that the contract price should be inflated.
Shown these documents, Lindberg agreed that it "appears that an amount was added to future wheat contracts".
Commissioner Terence Cole interjected: "A hidden amount?" "I don't know," Lindberg said. "I assume you are correct, that it was added into the price." Asked what he did when it was revealed that the UN had been deceived, Mr Lindberg said: "Well, the oil-for-food program had ceased." The Australian
Former chief executive of AWB Murray Rogers, had difficulty remembering any such arrangements when he was questioned by Agius. The Senior Counsel put to Murray:
"I'm drawing your attention to these things to prompt your recollection as to whether you can recall if you were in the loop, as it were, when these things were being discussed by AWB employees back in October of 1999." Murray responded, "I keep saying it but I have racked my brains on these sorts of things and it is five-plus years ago and I have no recollection of these things."
Although Murray did recall one interesting tit bit: "I think this is about the period we had some dialogue with the Department of Foreign Affairs and Trade in Canberra to make sure things were correct." The ABC (Australia)
Rogers recalled the manager, Mark Emons, and other AWB people "went to Canberra to talk to DFAT, and that's about the only thing I can ever remember - I can remember", Rogers said.
On the third time around, Agius said: "You keep coming back to that, but I don't think I have asked you a single question about the Department of Foreign Affairs and Trade?"
“No", said Rogers, "but I think it was relevant because there was some discussion about these items and that's all I remember." SMH
I guess it’s a matter of ‘ask me no questions I’ll tell you no lies. But Inquiry Senior Counsel, John Agius is now like a dog with a bone, a bone he looks set to worry to death. Terms of reference don not seem to be a barrier to Agius any more than law is to these corporate crooks. We will follow up on that in the next post.
Tuesday, January 17, 2006
While having malfeasance exposed is not necessarily a prosecutable matter, it is often embarrassing for your political leaders.
To assist the busy executive, we are publishing the following guidelines for avoiding unwanted items of evidence.
Email has very specific uses, like checking if you need to pick up milk on the way home, or to invite the secretary down the hall for a quickie in the storeroom. It must never be used to discuss business matters. You know 90% of your dealings are dodgy, do not leave the details lying around on servers for nosy investigators to find.
Cell (mobile) phones
Like emails, these handy gadgets will bring you undone every time. Don’t worry about what the phone company told you, they will hand over all your records in a blink. You keep hearing about your colleagues coming undone because of phone evidence – Listen! Take heed.
You probably think this is a rather old fashioned, outmoded detection method. Think again. Many agencies are now retro-training a new investigative class called ‘forensic auditors’. These people can actually tell what you were eating when you scrawled those incriminating instructions on the paper napkin. Don’t commit anything to paper.
Now this is a difficult one for the average executive who doesn’t see themselves as your ordinary criminal. Any successful criminal will tell you that the fewer people involved the less chance of exposure. The really successful criminals don’t even divulge information to themselves!
We know this becomes difficult when dealing with nasty foreign regimes or local land developers, but beware of who knows what. If you allow others into your schemes, no matter how essential they seem, you are leaving yourself at risk of exposure.
Yes, that’s right! We all know that an enormous ego is a central element of success. The meek are hardly likely to climb over bleeding battered bodies to get to the top. Don’t let it go to your head. Most of all, don’t believe your own spin.
You are never beyond reach, and the higher you go the more likely someone with a good aim is gunning for you. So the rules are:
Don’t be cheap – if you expect someone to stay bought, pay them well in the first place.
Avoid people with nothing to lose. You might have trouble understanding the concept, but these people are dangerous.
Resist cheesy comments and inappropriate jokes. If it is really distasteful you can be sure it will be broadcast, with your name attached. Let’s face it, the only way to get away with really bad taste is to attribute it. Beware, if it is well known that you are a ‘bit of a wit’ then you will probably be attributed with every sick remark doing the rounds.
We understand just how difficult the ‘simple’ truth is, but there you go. Effective, undetected (or easily hidden) corruption can only be attained by adhering to the basic rules. Keep it clean, bore them to death and corporate and public sector crime can flourish freely.
Australia’s inquiry into the ‘Oil for Food’ (OFF) scandal finally got underway this week in Sydney. The Cole inquiry heard some damning allegations against the main culprit, AWB Ltd (formerly the Australian Wheat board), the Howard government and Department of Foreign Affairs and Trade.
On the scale of things Australian, this is big time. Simple souls that we are downunder, bribery is measured by receptacle size. That is, small unmarked envelopes, brown paper bags and old football socks.
From first day submissions this scandal is of the "very large suitcase" variety. So we are told at least from the evidence of an AWB employee, who joked in an email that they might need "a very large suitcase" to carry money in. (Cartoon from the Australian Newspaper)
Four weeks of frenzy for what?
The inquiry is to sit for the next four weeks, with the promise of serious and worrying facts spewing forth daily. It will sell newspapers and rivet fascinated viewers to their seats. But will it achieve anything?
Labor's (Opposition) Foreign Affairs spokesman Kevin Rudd says the inquiry is flawed because it will not examine whether the Government had any knowledge of illicit payments to Saddam Hussein's regime.
"John Howard, ever the politician, has made sure that the Commissioner can only investigate the Australian companies - mainly the Wheat Board, and their involvement in Saddam Hussein's regime," he said.
"And [he] forgets the fact or tries to avoid the fact in the terms of reference that he's given to Commissioner Cole, that the Australian government approved the Wheat Board's Operations in Iraq in the first place." Australian ABC
In setting up this judicial inquiry, the government excused themselves and public servants by scrutiny, casting the whole weight onto the companies involved.
We might hear of their involvement in international trade bribery and corruption, sort of like ‘friendly fire’, but no action can be taken as a result of revelations.
For other reasons those companies and officials will probably never be prosecuted for any wrongdoings.
Challis Professor of International Law at Sydney University, Don Rothwell, says under Australian law it was not made illegal to breach the relevant UN resolutions. But he still believes there are good reasons for this inquiry to go ahead.
“The Australian Government has a responsibility to implement international law, a responsibility to ensure that Australians are following international law when those Australians are operating within Australia.” Australian ABC
Giving Corruption the Nod
Australia’s political and corporate elites have a long history of avoiding penalty for their misdeeds. While ‘law and order’ tends to drive election campaigns, it is limited in scope to the bottom end of society.
So it not entirely surprising to find another big corporation, once actually known as the “Big Australian”, BHP implicated in this current scandal. BHP started life as a mining company and became a major world steel producer.
In the way of big business, focus has change and BHP has diversified. Senior council assisting the Cole inquiry John Agius QC has revealed that BHP “unaccountably decided in 1995 that it wanted to provide on credit $US5million worth of wheat to Iraq.”
Iraq could not trade for cash because sanctions were in place and the oil-for-food program had not yet begun. In a complicated deal, AWB agreed to provide the wheat in exchange for a letter of credit, or IOU, from Iraq.
The letter could be exchanged for cash or Iraqi oil, with interest, in five years, or as soon as the UN sanctions were lifted. AWB intended to sell its rights to the letter of credit back to BHP for $US5million.
Foreign bribes claimed off tax
Another report, in The Australian Newspaper, says “companies are claiming tax deductions on bribes paid to overseas officials in exchange for speedy licenses and permit approvals.”
The Organisation for Economic Co-operation and Development, in a review of the nation's enforcement of anti-bribery sanctions, has called on the Australian Government to ban tax deductions on "facilitation payments".
According to the report, the tax office had told OECD: "The Australian Tax Office’s (ATO's) current view is that the payment of foreign bribes is not a significant occurrence in Australia. Accordingly the claiming of tax deductions for such payments has not been identified as a risk worthy of specific targeting in the ATO's Compliance Program 2004-05."
The report added that the Government should also consider changing whistleblower legislation to ensure effective protections for public servants who "report suspicions of foreign bribery and consider introducing stronger whistleblower protections for private sector employees".
Apart from awareness-raising measures in the Department of Foreign Affairs and Trade, public servants were not instructed on how to detect bribes.
So there you have it; crooks in high places, sham inquiries, contempt for the law, truly blind justice, legalized corruption… And these are the institutions we are supposed to respect and admire.
Saturday, January 14, 2006
A bus crash in Egypt, last Wednesday, killed six and left 27 others seriously injured. This incident would have gone unnoticed except that some Australian police and paramedics were among the victims.
A report in the Sydney Morning Herald – Carnage on wheels worse than terrorism – makes a fascinating point:
The deaths of six Australian tourists in a bus crash is not a big story in Egypt.
Terrorist attacks on the Sinai tourist resorts of Taba and Sharm el Sheikh in October 2004 and August 2005 killed at least 100 people, many of them foreign visitors.
In 1997 Islamic fundamentalist gunmen murdered 57 mainly Western visitors at Luxor, an attack from which Egypt's vital tourist industry has struggled to redeem itself.
Terrorist attacks, for all their headline-grabbing horror, are a minor cause of death compared with the carnage on the roads, which claimed 6000 lives in 27,000 accidents in 2002, according to the Egyptian National Council for Road Safety's figures.
Over in Saudi Arabia at the scene of the Hajj in Mecca, a Red Crescent doctor at the scene, put the number of injured at 1000 in a stampede there. At least 345 people were killed.The stampede took place at the foot of the Jamarat Bridge in Mina, near Mecca, where hundreds of thousands had flocked to pelt stones at symbols of the devil to purge themselves of sin. Saudi Arabia.
Briton’s Guardian Unlimited reports: Some 3,000 people have died in incidents at the hajj in the last 20 years in stampedes, demonstrations, and fires at pilgrim camping areas and one person was killed when a bomb exploded near Mecca's Grand Mosque in 1989.
The worst incident in modern times was in 1990 when a stampede at a tunnel in Mecca killed 1,426 pilgrims, many of them Malaysians, Indonesian and Pakistanis. The pilgrims were killed in in an overcrowded pedestrian tunnel leading to the holy sites in Mecca, where pilgrims go through a series of rituals on the hajj and travel from all over the world to attend.
Previous disasters in recent years include:
February 1 2004 244 pilgrims killed and a similar number injured at al-Jamarat
March 5 2001 35 people killed in stampede at al-Jamarat
April 9 1998 Around 180 pilgrims trampled to death when panic erupted after several fell off an overpass at al-Jamarat
April 15 1997 Fires driven by high winds tear through a sprawling, overcrowded tent city at Mina, trapping and killing more than 340 pilgrims and injuring 1,500
May 23 1994 270 pilgrims, most of them Indonesian, killed at al-Jamarat
July 2 1990 1,426 pilgrims, many of them Malaysians, Indonesian and Pakistanis, killed in stampede in overcrowded pedestrian tunnel leading to holy sites in Mecca in the worst hajj tragedy of modern times
July 9 1989 Two bombs explode in Mecca, killing one pilgrim, and wounding 16 others. Saudi authorities blame Iranian-inspired terrorists and later behead 16 Kuwaiti Shia Muslims for bombings. Iran denied involvement.
July 31 1987 402 people, mostly Iranian pilgrims, killed and 649 wounded in Mecca when security forces clash with Iranians staging illegal anti-US demonstration.
There is, no doubt, some sound academic reasoning for, what might seem to us, a poor regard for human life.
The Sydney Morning Herald journalist reported:
A local Egyptian watched in fascination as an Australian media team took close-up photographs of the twisted metal and human debris, and paced out the distance from the wreck to the bend where the fatal skid developed.
"Did they really come all this way just because six people died in a bus crash?" he asked their translator. "Yes," she replied, "because Australian people care about their lives."
A ‘Google news’ search for Hajj threw a many non-stories along the lines of – No (insert country here) killed in Hajj Stampede.
Perhaps western strategists are missing a vital point in their assault terrorism. It is obviously not a case of comparing ‘apples with apples’. The enemy is not ordinary people of any race, most of who mourn their individual dead as we do.
Leaderships, whether of countries like the supposedly allied Saudi Arabia or even antagonist countries in the region; leaderships of ‘movements’ often no bigger than a handful a fanatics, simply do not count human life in the way we do.
That, for all the Bush bluster about ‘emboldening’ the enemy, is our real ‘Achilles’ heel.’ We will continue to care and in the process provide fanatics with their greatest weapon, our tears and fears. In the process, Governments of the ‘War on Terrorism’ coalition will continue to give their enemy success after success.
Friday, January 13, 2006
You can get a good scary picture of this Australian who has so much influence on US policy here.
Who is Rupert Murdoch? “He publishes 175 newspapers, including the New York Post and The Times of London. In the U.S., he owns the Twentieth Century Fox Studio, Fox Network, and 35 TV stations that reach more than 40% of the country...His cable channels include fast-growing Fox News, and 19 regional sports channels.” Center for American Progress
I was reminded of the fact when I stumbled on a recent report on Media Matters for America, Fox falsely labeled former Rep. Hayes as Democrat; ignored party reversal.
Unlike MMFA I wasn’t unduly concerned that Hayes had been misrepresented as a Democrat or even that former Rep. George Nethercutt (Republican) wasn’t given any party affiliation at all.
The attack should be focusing first and foremost of greedy and corrupt individuals. Party politics merely muddies the waters.
Given that the discussion was ‘whether the Democratic Party had the right "formula for success" in 2006’, it might have been fitting to include a Democrat in the group.
But endless discussion about party strategies does nothing to advance far more relevant policy issues. But let's not get too high flying. The Fox demographic wouldn't know 'hay from a horsses hoof' and that's the way Rupert likes it. 'Just nudge them in the right direction...'
What I did find offensive was that Fox News' Hannity & Colmes co-host Sean Hannity made more a fundamental, foxy mockery of journalistic ethics in several other ways:
First he chose two former reps who are both currently active lobbyists. ‘Republican’ lobbyists being expected to give a fair analysis of Democrat strategies is just a little hard to swallow. But then Fox viewers don’t seem to have much trouble swallowing anything.
But given that most honest people would claim to be piano players in brothels before admitting to being a lobbyist, you really have to wonder about this fine pair.
Second, Hannity led the interviewees to the extent that they were virtually superfluous.
“Thank you, guys, for being with us. You know, Jimmy, I look at the Democratic Party today. They got -- now this is all about Abramoff, even though a lot of Democrats took money either from him directly or related to the groups he was representing…”
Obviously Hannity didn't trust his 'lobbyist's' either, and was quick to make the points he might otherwise have relied on them to make. Can't say I blame him entirely, but the lack of journalistic ethics should be abhorred.
Good old Fox, good old Rupert! We should have been required to label Murdoch with an ‘ethical health’ warning - ingesting Murdoch infotainment may be injurious to your sanity - before we let him lose on the wider world. Too late now for that I guess, still take heed and hide your babies, Rupert is on the march.
Nothing is more destructive of democracy than a situation where the people lack confidence in those administrators and institutions that stand in a position of public trust.
No government can maintain its claim to legitimacy while there remains the cloud of suspicion and doubt that has hung over government in New South Wales. Nick Greiner Premier of NSW Australia 1988
These quotes are a background to then NSW (Australia) Premier Nick Greiner’s bold plan to deal with public corruption in that state. The commission was established with a very specific purpose which is to prevent corruption and enhance integrity in the public sector.
In the years leading up to the establishment of the ICAC, in 1988, corruption perceptions reached an alarming level, driven by a number of high profile cases:
* A Minister of the Crown jailed for bribery;
* An inquiry into a second, then a third, former Minister for alleged corruption;
* The former Chief Stipendiary Magistrate jailed for perverting the course of justice;
* A former Commissioner of Police in the courts on a criminal charge;
* The former Deputy Commissioner of Police charged with bribery;
*A series of investigations and court cases involving judicial figures including a High Court Judge;
* Dismissals, retirements and convictions of senior police officers, for offences involving corrupt conduct.
The independent commission was not established to be a tribunal of morals, but to enforce only those standards established or recognised by law. Jurisdiction extends to corrupt conduct which may constitute a criminal offence, a disciplinary offence or grounds for dismissal.
The commission’s jurisdiction covers all public officials
The term public official has been very widely defined to include members of Parliament, the Governor, judges, Ministers, all holders of public offices, and all employees of departments and authorities. Local government members and employees are also included. In short, the definition in the legislation has been framed to include everyone who is conceivably in a position of public trust. There are no exceptions and there are no exemptions.
In establishing an effective anti-corruption agency, Greiner’s promise was to:
* Embrace a whole range of areas all aimed at restoring the integrity and accountability of public administration.
* Reform practices and procedures for awarding government contracts;
* Reform and clarify the criminal law on corruption, graft and perverting the course of justice;
* Introduce a code of conduct for Ministers and to ministerial staff;
* Introduce freedom of information legislation;
* Strengthen financial accountability through reforms to the methods of public accounting;
* Sytematically review and reform public management in the State.
There is specific provision to allow the commission to refer to matters to other investigatory agencies to be dealt with. The commission will monitor those investigations and will retain only the most significant and serious allegations of corruption.
The commission also has a clear charter to play a constructive role in developing sound management practices and making public officials more aware of what it means to hold an office of public trust and more aware of the detrimental effects of corrupt practices.
There was an expectation its primary role would become more and more one of advising departments and authorities on strategies, practices and procedures to enhance administrative integrity. In preventing corruption in the long term, the educative and consultancy functions of the commission being far more important than investigatory functions.
Importantly, the Commission has the coercive powers of a Royal commission. The coercive powers of the commission are concentrated on the public sector. The commission, like the Ombudsman, will be able to override claims of privilege by public officials in obtaining documents and other things from private persons, where these may be relevant to the investigation.
The commissioner has the power to apply to a justice for a search warrant, or to issue a search warrant himself. The commission will have power to apply for warrants for listening devices under the Listening Devices Act.
The commission has the power to apply for an injunction from the Supreme Court in circumstances where conduct which is about to occur could cause irreparable harm. There is power to apply to the court for restraining orders under the Crimes (Confiscation of Profits) Act.
The commissioner or an assistant commissioner can also hold hearings in a similar way to a Royal commissioner, and with comparable powers. Hearings are to be held in public unless the commission is satisfied it is in the public interest that the hearing be held in private for reasons connected with the subject-matter of the investigation, or the nature of the evidence to be given. At the hearing the person presiding is to announce the general scope and purpose of the hearing. Persons who are substantially and directly interested in a hearing may be given leave to appear and to be represented by a specified legal practitioner.
The commission does not have power to conduct prosecutions for criminal offences or disciplinary offences, or to take action to dismiss public officials. Where the commission reaches the conclusion that corrupt conduct has occurred, it will forward its conclusion and evidence to the Director of Public Prosecutions, department head, a Minister or whoever is the appropriate person to consider action.
Thursday, January 12, 2006
The Independent Commission Against Corruption (ICAC) was established under the Independent Commission Against Corruption Act 1988. The ICAC Act can be found here.
“The establishment of an anti-corruption body in NSW responded to growing community concern about the integrity of public administration. This followed events that included the imprisonment of a Chief Magistrate and a Cabinet Minister, criminal trials of senior officials, and an enquiry into the police force, which led to the discharge in disgrace of a Deputy Commissioner of Police.” ICAC
Since its establishment ICAC has become a leading model for the fight against corruption. Part of their success in the field is a clear definition of corruption:
The ICAC deals with corruption as it is defined in the ICAC Act. Below is the extract from the ICAC Act - Section 8 - which provides a definition of corruption, public officials and public authorities in the ICAC Act.
Section 8 - General nature of corrupt conduct
(1) Corrupt conduct is:
a. any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the honest or impartial exercise of official functions by any public official, any group or body of public officials or any public authority, or
b. any conduct of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions, or
c. any conduct of a public official or former public official that constitutes or involves a breach of public trust, or
d. any conduct of a public official or former public official that involves the misuse of information or material that he or she has acquired in the course of his or her official functions, whether or not for his or her benefit or for the benefit of any other person.
(2) Corrupt conduct is also any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the exercise of official functions by any public official, any group or body of public officials or any public authority and which could involve any of the following matters:
a. official misconduct (including breach of trust, fraud in office, nonfeasance, misfeasance, malfeasance, oppression, extortion or imposition)
d. obtaining or offering secret commissions
g. perverting the course of justice
i. election bribery
j. election funding offences
k. election fraud
m. tax evasion,
n. revenue evasion
o. currency violations
p. illegal drug dealings
q. illegal gambling
r. obtaining financial benefit by vice engaged in by others
s. bankruptcy and company violations
t. harbouring criminals
v. treason or other offences against the Sovereign
w. homicide or violence
x. matters of the same or a similar nature to any listed above
y. any conspiracy or attempt in relation to any of the above.
(3) Conduct may amount to corrupt conduct under this section even though it occurred before the commencement of this subsection, and it does not matter that some or all of the effects or other ingredients necessary to establish such corrupt conduct occurred before that commencement and that any person or persons involved are no longer public officials.
(4) Conduct committed by or in relation to a person who was not or is not a public official may amount to corrupt conduct under this section with respect to the exercise of his or her official functions after becoming a public official.
(5) Conduct may amount to corrupt conduct under this section even though it occurred outside the State or outside
a.matters arising in the State or matters arising under the law of the State, or
b.matters arising outside the State or outside
(6) The specific mention of a kind of conduct in a provision of this section shall not be regarded as limiting the scope of any other provision of this section.
There is a good deal of excellent information available on the The Independent Commission Against Corruption website, which is a delight to navigate. If not, return as I will be looking at aspects of the ICAC Act.
Saturday, January 07, 2006
As a class, politicians have always been distrustful, if not outright contemptuous of the voter class. They might be right, but it is a dangerous practice to allow those feelings to show.
In the end politicians are merely reinforcing voter prejudice against the ‘political class’. Sure the average voter might see ‘their man’ as generally apart from the rest, perhaps even trustworthy. But that positive potential is offset by the ‘presidential’ campaign style which leads to an increasing voter schizophrenia; i.e. an unbalance across the voting landscape.
It is like trying to build one winning local team from often antagonistic players drawn from competing local teams. However, the fact remains that unbalance is one of the few weapons voters have, against the political class.
Yet the reality is, voter and politician are in fact, one in the same person. To be sure, there might be a barrier of money separating political hopefuls from other mortals, but there is nothing to suggest each would not take equal advantage of the opportunities of power.
The perks and temptations of office a reality and it should be a concern that many representatives confess to not understanding where the lines exist between fair and outright wrong.
The rational often presented in defence is often faulty:
“They did it too,” seems a particular favorite of the Republicans.
“The lobbyists are the problem,” is something we are hearing frequently.
These sound like childish schoolyard responses, not the considered responses of mature adults.
The first sounds more a back handed admission than a reasonable defense. If they did it too it does not lessen the actions of anyone, but all must be investigated and prosecuted equally.
This is not a ‘lobbyist scandal’, True the lobbyist might hold forth the temptation, but no congressmen has been obliged to accept corrupt cash. The lobbyists simply represent the latest conduit for corrupt money. There will always be some medium to channel these temptations. The sad reality is that some humans will always fail the ethics test if left to their own judgment.
Some will go into office looking for their ‘entitlements’, others will simply be too weak to resist the temptation. Still others will no doubt be conned into erring, with various degrees of difficulty.
All are, once again, simply representative of those humans who elect them to power. None of it, nothing of the above excuses these people vested with the authority to manage a country’s affairs from major ethical failures.
Time for Resolution
For a more healthy ‘political class’- ‘voter class’ relationship to emerge some fundamental changes in governance are needed.
Essentially, any area which suggests ‘putting the foxes in charge of the hen house’ must be removed from the sphere of political influence.
These include; electoral reforms, remuneration and entitlements and corruption investigation, prosecution and oversight.
The corruption issue appears to be perceived as the most publicly damaging. When our politicians have already shown a tendency to be self serving it is hardly efficacious to leave the creation of corruption mitigation tools in their hands.
Two years ago, Zbigniew Brzezinski, the former national security adviser to President Jimmy Carter, described Washington as "the most corrupt capital in the world". H
He said, "We have created a culture in which there's no distinction between what is illegal and what is unethical,"
For a group already know to be weak in the face of temptation it is difficult to perceive an anti corruption model which is not designed to make normally unethical activities at least legal.
Lawmakers must hand over the development of effective, standing anti-corruption agencies to outside, to appropriate non-legislative bodies. Whether the architects of new codes are academics, jurists or others trained in ethics and law is irrelevant, so long as they have no other vested interest beyond their rights as citizens.
Other countries have developed highly effective autonomous agencies with wide ranging powers to deal with public corruption There are extremely effective working models around the world which might not stop corruption, but certainly they minimize the problem.
Notable, the Independent Commission Against Crime and Corruption (ICAC) in NSW, Australia is a world leading model. ICAC operates on a clearly defined definition of corruption.
Ironically the state Premier, Nick Greiner, who shepherded the ICAC Act through parliament, was one of the agencies first victims. Although it should be pointed out that Greiner was never prosecuted for any wrongdoing, the fact shows a refreshing intent to establish an effective corruption fighting agency.
Among the ‘essential’ powers required by an agency is the ability to investigate claims against any area of public responsibility. No ‘office’ should be immune to or quarantined from scrutiny.
Laws countering corrupt practices should include provisions similar to sub-judice, which would effectively bar political comment or capital.
Such a provision serves to take corruption out of political play, and putting it firmly into the legal sphere where it rightly belongs.
The cost of another structure, an autonomous oversight layer of governance, is usually cited in opposition to establishing these agencies. The layer and the cost already exists in the form of ad hoc investigations and inquiries, in most jurisdictions.
Replacing the demand situation with standing agencies addresses a number of issues which create a barrier to any real resolution of run away corruption.
Without the constant need to reinvent the wheel, a standing agency is able to monitor the public sector, and respond quickly to complaints or allegations. Honest politicians and public sector workers greater protection when allegations are subject to proper enquiry rather than being used as political footballs.
Ongoing oversight, in reality, adds no real cost to the structure of government and offers tangible returns through providing a more focused and productive public sector. If the risk of exposure and prosecution is ever present, and likely, lawmakers and other public officers won’t be so easily tempted or distracted from their primary tasks.