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AWB probe hears conflicting claims

By Samantha Broun for CNN

• Angry U.S wants envoy's answers

• Envoy 'lobbied to end wheat probe'

• Howard rejects link to wheat scam

• Oil inquiry hears of wheat deal

• AWB 'knew about Iraq kickbacks'

FACT BOX

. The Howard government set up what is known as the Cole inquiry in November 2005 to investigate possible breaches of Australian law, in response to the findings of the Volcker report on the U.N. oil-for-food program.

. The inquiry is headed by Terence Cole, a former Judge of Appeal of the New South Wales Supreme Court.

. The three companies under investigation are Australia's monopoly wheat exporter AWB; Kingaroy company Alkaloids of Australia; and Melbourne manufacturer Rhine Ruhr.

. The AWB was controlled by the Australian government up until its privatization and listing on the stock exchange in July 1999.

. The Cole inquiry is looking into the alleged payment by AWB of about $220 million in kickbacks to Saddam's regime, at a time strict U.N. sanctions were in place, to secure about $1.725 billion in wheat contracts. The contracts were paid under the humanitarian oil-for-food program.

. Evidence put to the inquiry suggests some AWB executives knew payments would breach U.N. sanctions.

. AWB shares have fallen more than 20 percent since the inquiry began.

Sources: Cole Inquiry; ASX

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SYDNEY, Australia (CNN) -- The Australian inquiry investigating illegal wheat trading with Iraq has heard that public servants investigated a sham trucking company connected to Saddam Hussein five years ago.

But Australia's Foreign Affairs Department (DFAT) maintains it did not know about trucking company Alia's involvement in the scandal until after the United Nations' Volcker Inquiry first investigated the company in 2004.

Alia, owned in part by the former Saddam Hussein government, said Monday that it did not move a single grain of Australian wheat, despite receiving millions of dollars in transport fees.

AWB manager of rural services, Charles Stott, in a written statement to the Cole Inquiry, Tuesday, said DFAT assistant secretary Jane Drake-Brokman "told me that DFAT had looked into Alia" according to a report in The Australian newspaper.

Stott also says in his statement that Drake-Brockman wrote to him on November 2, 2000, granting DFAT's approval to go ahead with the trucking arrangements with Alia.

Australia's Minister for Foreign Affairs, Alexander Downer, told media Tuesday that Stott's statement had been "very firmly contradicted by the Department of Foreign Affairs and Trade".

Downer denied that he had mislead parliament over when the government first knew of wheat exporter AWB's reported kickbacks to Iraq.

DFAT has also rejected allegations made in Stott's statement, saying the department "never approved of AWB's use of Alia".

The department said it had no documentary evidence or record of the use of Alia in the context of the Jane Drake-Brockman letter.

Envoy answers

In other developments, U.S. senator Norm Coleman has met Australia's ambassador to the U.S., Dennis Richardson, in Washington to smooth out U.S. concerns about the wheat controversy.

Coleman, last week, called for the former Australian envoy, Michael Thawley, and Richardson to answer questions over Thawley's request for the U.S. Senate to drop its 2004 probe into the oil-for-food trade with Iraq.

Richardson said that he had defended Thawley in the meeting, describing the former ambassador as "honorable".

Richardson also said Coleman had accepted the assurances he had provided about Thawley's representations being made in good faith.

"Coleman acknowledged the inquiry under way in Australia investigating the AWB bribes scandal, headed by retired judge Terence Cole, was transparent," Richardson said according to AP.

Coleman said he was confident the Australian authorities were "taking a close look at what happened."

Senator Coleman last week called into question the independence of the current Australian inquiry.

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