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AWB Overboard

January 18th, 2006

I’ve always thought that the Oil-For-Food scandal and the parallel scandal (promoted mainly on the left of the blogosphere) about corruption in Iraq’s postwar reconstruction were overblown. Under the circumstances, corruption was inevitable in both cases.If you supported feeding Iraqi children or attempting to repair the damage caused by the war, you had to expect, as part of the overhead, that those with power in Iraq would seek to skim money off the top, and that they would find willing accomplices in this task. Having said all that, corruption shouldn’t be passively accepted. It’s a crime and, wherever they can be caught, those guilty of it should be punished.

By far the biggest fish to be caught in the net so far is Australia’s monopoly wheat exporter, AWB, which was, until 1999, the government-owned Australian Wheat Board. It has become evident that AWB paid hundreds of millions of dollars to Saddam’s regime, and it has now been stated in evidence that the deals in question were discussed with Australia’s foreign minister, Alexander Downer.

Based on past experience, particularly the Children Overboard case, we can be pretty confident of the following

* Both Downer and Howard knew that the AWB was paying kickbacks to the Iraqi regime

* This information was transmitted in a way that preserves deniability, so no conclusive proof will emerge

* No government minister will resign

* Endless hair-splitting defences of the government’s actions in this matter will emerge from those who have previously made a loud noise about Oil for Food.

On the point of resignation, I’d note that the information that had come out before today, showing the AWB up to its neck in corruption, would have been enough, under any previous government to require ministerial resignations, on the basis of the doctrine of ministerial responsibility. But that doctrine is now obsolete in Australia. If anything short of a criminal conviction is considered sufficient to justify an enforced resignation under present conditions, I’m not aware of it.

“Gandhi” has a bit more

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  1. Mike
    January 18th, 2006 at 09:35 | #1

    Also noted that the AWB (current incarnation) sought to bring on their AGM early prior to the current inquiry, major agenda item, increases in Director and Management salaries (Source AFR). Cute! Guess you need the extra remuneration to allow for being caught at doing something illegal. Hope the wheat growers of australia are pleased with services rendered

    Not diffcult to have such a jaundiced view of the integrity of present day politicians to agree that after much huffing and puffing, no one will be held accountable, no one will resign, and life on the good ship lollypop will continue.

  2. January 18th, 2006 at 10:06 | #2

    I was wondering if John (or any other reader) had a view about the monopoly status that AWB has for all wheat exports out of Australia. The Iraq oil-for-food kickback scandal may seem unrelated, but part of me wonders if this apparent corruption is part and parcel of a culture that can develop in a monopolist situation.

    Even though I’m generally not keen on monopoly arrangments, I’ve always supported the so-called single desk arrangement, as I assumed this gave the best price for farmers (and was told this by farmers too I might add), but this incident has made me wonder – both about whether the ‘best price’ argument is true, as well as whether there are other costs from the monopoly arrangement.

    Wilson Tuckey has lately called for an end to the arrangement. I don’t normally take my views on economics (or anything else) from Wilson Tuckey, but his seat does cover the heart of the wheat belt in WA, so if nothing else I presume he is reflecting the views of some of his constituents.

  3. Terje Petersen
    January 18th, 2006 at 10:28 | #3

    I think that enforced monopolies generally kill innovation. Unenforced monopolies have to respond to innovation or else lose their monopoly status. We have seen the latter with the likes of Microsoft.

    I have no problem with wheat farmers forming a sellers cartel, however for legislation to enforce such a situation seems daft to me. Cartels are reasonable in certain circumstances, however proping them up with laws and government backed institutions compromises freedom, innovation and efficiency.

    Ironically if the AWB is stripped of its special status then farmers who do form a sellers cartel through their own innovation and co-opeartion will probably be operating illegally.

    It seems that when it comes to cartels we either ban them or else protect them with special laws.

  4. jquiggin
    January 18th, 2006 at 10:35 | #4

    I’ve always been dubious about the claims made in support of the AWB monopoly, most of which seem to assume that, without the AWB, wheat would just rot in the silos for want of buyers. However, I’ve never regarded it as a high-priority issue.

    Now I suspect it’s a moot point. AWB is unlikely to recover from this scandal (given that the government is obviously keen that AWB should wear all the blame), and it’s hard to see a replacement being set up.

  5. Terje Petersen
    January 18th, 2006 at 10:44 | #5


    If the AWB is shut down or loses its special status then how would you feel about a group of farmers forming their own new cartel? Should it be permited? Should cartels in general be permitted?


  6. Uncle Milton
    January 18th, 2006 at 10:49 | #6

    I thought the purpose of the AWB was to exercise market power on world wheat markets, in so doing securing higher prices for Australian wheat farmers than they would get if they sold their product as individuals.

    It is doubtless true that the government will try to pin all the blame for this scandal on the AWB, but the AWB executives are experienced players in the political game. I’d be surprised if they don’t take the view that if they are going down, they are going to take as many ministers down with them as they can. I’d be equally surprised if they haven’t stored away the necessary evidence that will assist them with this objective.

  7. ab
    January 18th, 2006 at 10:59 | #7


    Generally cartels are bad for the reasons already stated. From a policy perspective we should be worried about cartels only to the extent that they detracts from the welfare of Australians. So, for example, a cartel consisting of manufacturers of a product consumed primarily in Australia would distort the market for that product to the detriment of consumers (ie. by artificially raising prices and thereby preventing capital being more productively employed elsewhere, ie. there would be a reduction in overall allocative efficiency). Conversely, if the product is primarily exported, then from an Australian perspective we should not be worried that the cartel can fix prices or limit output (for this reason, the Trade Practices Act does not prohibit anti-competitive arrangements where the arrangements relate exclusively to exports).

    I would think that, were it not for the wheat-specific single-desk legislation, the formation by wheat farmers of a sellers’ cartel would be prohibited by the TPA to the extent that it related to domestic sales. This is as it should be.

  8. conrad
    January 18th, 2006 at 11:13 | #8

    I don’t see anyway out of paying bribes in countries like Iraq either — I presume its culturally appropriate and expected, as it is in many countries.

    Given that many Australian companies do business in countries just as bad for bribe taking (like China) and don’t get caught (excluding QUT), I think therefore the problem was that the AWB was incompetent in finding a way of indemnifying itself against knowing the bribe was paid.

  9. Terje Petersen
    January 18th, 2006 at 11:20 | #9

    Bribes may be culturally expected but I can’t see how they are ever appropriate. Its like saying that crime is culturally appropriate in Mafia territory.

  10. January 18th, 2006 at 11:40 | #10

    Andrew, I can’t remember the issues but Tuckey’s call coincided with a famers’ cooperative from WA being denied an export licence by AWB veto. It was reported in the Fin.

  11. Terje Petersen
    January 18th, 2006 at 12:09 | #11

    The news that Mark refers to is reported here:-




    In the meantime, CBH’s second application to the Wheat Export Authority to supply WA wheat to its Interflour mills in Indonesia, Malaysia and Vietnam was recently vetoed by AWB International for the second time, with CBH chief executive Imre Mencshelyi hitting out against the WEA.

    Western Australian growers showed strong support for the CBH initial proposal, through their commitment of 100,000 tonnes to the Interflour Premium Pool within nine hours of the Pool’s opening, according to the coop.

    “AWB continues to question the licence application and why the 100,000 tonnes could not be sourced through the National Pool. The answer is very simple. A direct relationship between growers and their flour mills in Asia creates an extra $10 per tonne of value by maximising efficiencies and removing AWB’s redundant marketing costs usually applied to a transaction that is already assured by the CBH Group’s investment in Interflour.

    “This application offered significant financial benefit and we are currently looking at a range of further options to ensure that Western Australian growers do not miss out.”

  12. StephenL
    January 18th, 2006 at 12:21 | #12

    There’s a difference between accepting that some corruption will occur in certain circumstances, and being ok with the scale of corruption that has gone on.

    If the figures tossed around for the scale of Halliburton’s take are true (and I’m not in a position to say if they are) they constitute an arguement against the war, while I accept that much smaller amounts of graft would not make for a political arguement.

    And Uncle Milton – I hope you’re right, but your conclusion relies on these guys being smarter than Downer and Howard. Not that hard in the first case, but less likely in the second.

  13. Gaby
    January 18th, 2006 at 12:44 | #13

    You gotta laugh!

    I remember that there was outrage because Iraq wasn’t going to take some of our wheat just prior to us commencing to bomb them! And this clamour was from Howard, Downer et al too.

    So not only did we willingly pay bribes, but we positively insisted on doing so!

    IAFOW: it’s a funny old world.

    By the way, I thought endemic corruption was one of the factor adduced as inhibiting economic growth in less developed countries. Aren’t we then abetting this inequality to our own advantage?

  14. rog
    January 18th, 2006 at 13:00 | #14

    Notwithstanding the Wheat Marketing Act how AWB missed the ACCC whilst Telstra was forced to share its market is a mystery (to me).

    There appears to be no reason why the marketing of grain cannot be opened up to competition.

  15. Dave Ricardo
    January 18th, 2006 at 13:07 | #15

    “how AWB missed the ACCC whilst Telstra was forced to share its market is a mystery (to me).”

    This mystery is easily solved.

    The National Party did it.

  16. conrad
    January 18th, 2006 at 13:40 | #16

    “Bribes may be culturally expected but I can’t see how they are ever appropriate. Its like saying that crime is culturally appropriate in Mafia territory. ”

    I think they are appropriate in some circumstances, like getting food to the needy. In the longer term, establishing foreign entities in some of the more authoritarian countries may also force them to pay more heed to the suggestions of other countries. Would, say, the movement toward a more decent political situation in China have progressed as far as it has if they had not let all the foreign entities in ?

    In addition, if I give money to a third party, who then does the culturally expected bribing out of my knowledge (which I believe is how many foreign companies get around the liability for bribery problems in China), is that a bribe ?

  17. derrida derider
    January 18th, 2006 at 13:46 | #17

    “no one will be held accountable, no one will resign” – Mike

    How can you say such a thing, Mike! This is such a big scandal that I’m sure that at least two or three lower-level employees will lose their job or even go to jail. But all those above them – from ministers down – had of course nothing to do with it, were inexplicably left ignorant by their subordinates, can’t be expected to read every Minute given to them for signature, are suffering from understandable lapses of memory about past details, etc.

  18. January 18th, 2006 at 15:07 | #18

    Of course the culpability goes far higher than the AWB & perhaps the ozzi govt.

    All aspects of contracts & transactions under the oil for food programme had to be inspected and approved by the UN.

    The UN found nothing wrong with the AWB contracts.

  19. jquiggin
    January 18th, 2006 at 15:16 | #19

    Steve, if you read the reports you’ll find that the AWB was very concerned in case the UN found out what was going on. They were equally concerned to make sure that DFAT and the Oz government were kept informed.

  20. Paul Kelly
    January 18th, 2006 at 15:34 | #20

    We live near and trade with a region, in most of whose countries you can’t do business unless you pay somebody or other. It’s just the way it is, and savvy Aussie businesses understand this. So the AWB, being street-wise padres, probably didn’t bat an eyelid. If they didn’t pay they mightn’t have gotten the sales.

    If no Australian businesses paid kickbacks, our exports would be in poorer shape.

  21. January 18th, 2006 at 16:02 | #21

    JQ: Stupidity does not of course let the UN off the hook, they had the responsibility to ensure all was above board, nobody else was responsible for the oil-for-food programme, the UN is squarely in the frame.

    Paul Kelly: If the AWB had not paid the “trucking fees” the wheat sales to Iraq would not have happened. Wheat exporting is an extremely competitive business, and if Australia did not want the sales, plenty of others would have gleefully taken over a customer who had historically belonged to Australia.

    Andrew Bartlett: If farmers told you the Wheat Board ensured the best price for farmers, then they must have been old enough to remember the days before the Wheat Board existed (more than 60 years ago), and they would have been referring to “stability” in pricing, rather than “best possible” price.

    The Wheat Board has always been very arbitrary about which wheat it will accept, has always charged extremely high fees, for “freight” and has had the power to refuse permission for a domestic sale (usually to a feedlot) in which the farmer would have recieved a higher price and the purchaser a lower price than the respective prices which they had to pay/recieve via the wheat board. Payments to farmers have taken up to 9 years, as wheat was usually sold on terms, especially to Iraq, USSR and others.

    The Wheat Board brought farmers all the downside of a centrally planned and regulated system, whilst still having act (on a man to man personal risk basis) as financier to some very big governments. Did these governments always pay up? No.

    The Wheat Board did bring some hope to farmers, who otherwise would be having to (as an unsubsidised full fee paying individual) find their customers on a world market by competing against the US, Canadian and European Governments, and subsidy muscle such as those governments use make competition almost impossible.

  22. Paul Kelly
    January 18th, 2006 at 16:13 | #22

    Steve, um, that’s what I said you goose.

  23. January 18th, 2006 at 16:21 | #23

    Paul Kelly: *honk*honk* be careful to not incur my wrath. A goose bite is no joke, better to call me a less aggressive animal name. Besides, was only muddying your concise and sharp point by expanding it.

  24. Harry Clarke
    January 18th, 2006 at 16:23 | #24

    I agree with Uncle Milton. The case for an AWB monopoly is the standard argument for an optimal export tax on an export where Australia has monopoly power. There are surplus losses to Australian consumers but these are less than the gains to growers.

    This answers the question why it is treated differently from a domestic monopoly which imposes net deadweight losses on residents.

    I suspect the monopoly power is not great so the premium Australian growers get will not be large. But it would generate enough power to pull the sort of shady deals the AWB apparently has been pulling. Individual growers and small scale selling organisations can’t do this.

  25. Harry Clarke
    January 18th, 2006 at 16:27 | #25

    By the way John, the ‘AWB Overboard’ caption deserves some sort of award for witty headlining.

  26. January 18th, 2006 at 16:33 | #26

    Yes Harry, JQ is suddenly revealing an almost Tim Blaire-esque skill for sub-editing! (Has anybody that pair together? AHA!)

  27. rog
    January 18th, 2006 at 17:22 | #27

    It is unfair to solely blame the Nationals with the AWB, it was formed in the late ’40′s and further refined in response to the McColl enquiry in the mid ’80′s after the collapse of rural commodity prices.

    It is obvious some system of audit needs to take place, however the issue of enducements may restrict negotiations. Perhaps now is the time to open the system up.

  28. Ian Gould
    January 18th, 2006 at 17:47 | #28

    * Endless hair-splitting defences of the government’s actions in this matter will emerge from those who have previously made a loud noise about Oil for Food.

    Don’t forget the outcry from people who previously shrugged of the corruption as an invevitable part of middle eastern culture.

  29. Tony Healy
    January 18th, 2006 at 18:01 | #29

    Regarding questions about the role of single desk marketing for farmers, the explanations by Uncle Milton and Harry Clarke are correct. The role of AWB and the monopoly was to force aggressive foreign negotiators to negotiate through equally savvy Australian negotiators, instead of being able to pick off individual farmers and push the prices down.

    Andrew and JQ, you should be aware that there’s been a spirited campaign over the past few years by foreign buyers and by middleman agents here in Australia to break down the selling cartel.

    It is precisely the same mechanism as we’ve seen in the IR changes. Powerful owners of capital want to bargain down the power of producers (workers), and are aided by greedy middleman agencies.

    In the wheat communities, this campaign has won selected support, usually from farmers with high quality grain. Those farmers can get higher returns at the moment. However it seems clear that as soon as the market is broken up, the buyers will play farmers off against each and drive the farm price way down.

    Also, farmers with average or low quality grain would lose heavily under the new arrangements. The quality of grain varies each year, and depends on the soil, the pattern of rain and partly on the farmer’s management. The AWB grades the grain and sells it an organised fashion for different usages. In a completely deregulated market, some of that grain would indeed never be sold.

    The AWB also provided financial reliability to farmers, being trusted as much as a bank. This is quite important given that a farmer is trusting the organisation with deliveries up to a few hundred thousand dollars. Farmers spend weeks harvesting and driving their loads to silos at nearby rail heads, and then must trust that a cheque for their annual work will arrive in the mail.

  30. Ian Gould
    January 18th, 2006 at 19:16 | #30


    Could it be argued that AWB’s market knowledge and relationship with farmers reduces a lot of the information and transaction risks a third party financier would factor into the lending cost?

    EG a bank has to consider the possibility the information they receive on the likely return for the crop is inaccurate and has toconsider the possibility of a default by the grain handler engaged by the farmer.

  31. Andrew Reynolds
    January 18th, 2006 at 19:31 | #31

    So, Tony, what you are saying is that the current system subsidies the lower quality production at the expense of the high quality and also that farmers are too silly to band together of their own accord to get the price that the market will bear?
    Sounds to me like you have made a convincing case for its abolition.

  32. Mick Muscat
    January 18th, 2006 at 19:47 | #32

    Some here, seem willing to accept that it is OK for business to allow some corruption, as when we deal with some countries, it is in their culture that corruption is part of doing business. Without some corruption we would not sell anything???
    However, our government should not ever, be involved in same. Even to appease our farmers.

  33. SJ
    January 18th, 2006 at 19:53 | #33

    Andrew Reynolds Says:

    Sounds to me like you have made a convincing case for its abolition.

    So, Tony, what you are saying is that… farmers are too silly to band together of their own accord to get the price that the market will bear?

    Jeez this libertarian crap gets tiresome. You appear to be advocating that the AWB be abolished, and be replaced by, wait for it… exactly the same thing.

    What a major victory that would be for the libertarian cause. Yawn.

  34. Seeker
    January 18th, 2006 at 20:32 | #34

    A goose bite is no joke, says Steve at the pub.

    Very true, especially if they are nesting or have young, when they are utterly fearless. I speak from painful personal experience. I have kept geese in the past and they are better watch dogs than dogs, it is impossible to sneak unnoticed past a gaggle of geese. But they are lovely graceful animals, and make good pets when properly domesticated. If anyone is thinking of getting some be warned, they need a fair bit of space, a decent sized pond (especially if you want them to breed), and live for a long time, much longer than dogs or cats.

    Sorry for going off topic. Normal service will now be resumed. :)

  35. Tony Healy
    January 18th, 2006 at 20:53 | #35

    Ian Gould, yes, that makes sense. The way the AWB has operated has meant more efficient financing of huge amounts for farmers, and the trust placed in the AWB by farmers has reduced a lot of transaction costs all round.

    Andrew Reynolds, the point is that yields and quality vary randomly each year for farmers, so that the few farmers delighted to receive a high return this year from deregulated buyers would be disadvantaged from the system in the long run. Firstly, prices in general would fall, even for top quality grain. Secondly, on the years when their grain is poor, they would suffer even more.

    Also, it’s not so much that good grain subsidises lower quality at the moment, but that the whole system benefits from orderly marketing. For example, some grain goes to flour, some to malt, and some to animal feed.

    Your question about farmers being too silly to band together doesn’t really make sense, because that’s what the AWB is. It’s actually quite like a union, although farmers and the National Party don’t see it that way.

    I’m happy to provide a bit of information, but I have to point out there are experts in agricultural economics floating around. I’m not one.

  36. Harry Clarke
    January 18th, 2006 at 21:06 | #36

    SJ is right. The case for establishing an AWB is based on the idea that a competitive farm sector can bring increased advantage to Australia if it does ‘band together’ and act as a monopolist. That is what the AWB does. If it acts as a monopolist it can extract the optimal rents payable to Australia. It can alternatively charge the competitive price but levy a tax which brings the international price up to the monopoly level. Same thing. So you are proposing what you set out to attack.

    Pushing for free markets everywhere irrespective of public goods, externalities and, in the case of traded goods such as wheat and air services where Australia has monopoly power, is almost as dumb as the socialists who want the state to run everything.

    The AWB isn’t an angel and seems to have broken the law. If so it should be punished. But in terms of accessing efficiency gains they are good for us Aussies. That’s why we have them.

  37. MarkL
    January 18th, 2006 at 21:25 | #37

    Amazing stuff. The largest act of known corruption in modern history, in which Claudia Rosetti has demonstrated that the Secretary General of the United Nations was on the take, where the President of France was on the take, the PM of Canada was on the take, the President of Russia was on the take, and ‘it is overblown’ and ‘the largest fish caught is the AWB’.

    This is a scandal the left as been near-frantic to avoid for YEARS, because the linkages show the UN to be rotten to the core with corruption, and the favourites of a National Socialist dictator to be socialist European governments and darlings of the left like the vile toady to fascists, George Galloway.

    How long have you been following this? Five minutes? Do you even know that the entire UN side of this was run out of Annans own office, at his personal order? Have you been following Annan’s transparent effort to cover it all up?

    And now that it might potentially touch someone – anyone – other than a socialist, UN internationalist or socialist fellow traveller, you are all over it.

    John, your polemical nature is showing.


  38. jquiggin
    January 18th, 2006 at 22:38 | #38

    MarkL perhaps you’d like to refer to the points in the Volcker report where these claims are substantiated. I didn’t notice them, and neither did the Washington Post.

  39. Michael H
    January 18th, 2006 at 22:50 | #39

    I’m not sure about OFF being the ‘largest ever’ act of corruption. My reading of the ‘Reconsruction’ of Iraq suggests that OFF is a minnow in comparison, if the comparison is purely in dollar terms.

    Even if the view was restricted to just the UNs activities, surely the Iraqi sanctions regime was one of the gravest indictments of the UN. This was a failure measured in lives lost rather than cash skimmed.

    The scandal was that OFF was introduced as a very partial and always insufficient answer to the suffering of ordinary Iraqis under UN sanctions.

  40. Brian Bahnisch
    January 18th, 2006 at 23:02 | #40

    I haven’t been following the wheat marketing story closely, but I recall hearing on Radio National years ago that WA farmers were unhappy with AWB and wanted to set up their own organisation. WA produce a lot of Australia’s wheat (50% or more?) and I suspect AWB is an ‘Eastern states’ show and doesn’t meet their needs as they see them.

    I believe that Canada and a few other countries also have single-desk arrangements. In the WTO the elimination of single-desk selling has been sought by the US and EU for ages. The US reckons it is a hidden government subsidy.

    I couldn’t ever understand the rationale for privatising AWB. A government-owed corporatised entity, yes, or a farmer-owned co-operative. Now that it is privatised I think there would be sense in allowing one or two other corporates in on the game. I think the AWB operates on some kind of government licence, so it would be easy to call tenders, which they probably do now, on the basis of letting in some competition.

    On corruption, my only point is that when people complain about corrupt third-world governments there is almost always a first-world connection. First-world governments have not been diligent in stamping it out. I think the UN has a convention on it now which, I understand, none of the G8 have signed up to.

  41. January 19th, 2006 at 00:42 | #41

    Western Australian farmers sell their wheat to CBH, which is then forced to get AWB to sell all of it that wants exported.

    Not only are they not allowed to sell it to overseas buyers, they aren’t even allowed to move their own wheat to their own flour mills in other countries.

    In the latest episode, AWB rejected CBH’s proposal to move wheat to SE Asia, even though they wouldn’t even be encroaching on AWB’s business by doing so.

    But there are rumblings from the west. While drought has played havoc with east coast crops, WA grain growers have reliably produced big yields: this year they will bring in half the national crop. This year, WA’s grower-owned Co-operative Bulk Handling, or CBH, in partnership with the Salim Group, acquired five flour mills in Indonesia and Malaysia, and a grain terminal and flour mill in Vietnam.

    In the second week of December, CBH applied to export 100,000 tonnes of wheat to its flour mills.

    Their offer to WA wheatgrowers — at $10 a tonne over the AWB pool price — was filled within nine hours.

    CBH chief executive Imre Mencshelyi says the $10/tonne is a conservative estimate of the savings he says could be made by local efficiencies, quality premium and WA’s proximity to the mills.

    “If we can give a premium back to our West Australian graingrowers for their investment, and also make a profit in the manufacturing of flour, and the distribution of flour up in that region, they get a double banger,” Mencshelyi says.

    But AWB International (AWB’s export subsidiary) knocked it back.


    But you’re right, I don’t see how this monopoly situation could possibly hurt farmers.

  42. January 19th, 2006 at 00:42 | #42

    *Bites Knuckle*

  43. Andrew Reynolds
    January 19th, 2006 at 01:05 | #43

    SJ, Harry Clarke and the rest – there is a big difference. It is this – I know this is a big step for those who believe that every thing that should not be compulsory should be banned, but wait for it – freedom.
    A big step, guys, but perhaps you should try it some time. If a farmer decides to sell independently, great. If they want to sell to (for want of another name) a co-op, they can.
    Big intuitive leap, guys, but try it some time.
    If a farmer cannot make sufficient a profit from his or her farm, perhaps they should not be farming. Find another farmer or return the land to the bush if it cannot be farmed – it makes good sense environmentally, too.
    It is what happens in all normal businesses. For some reason the National Party has managed to convince many on the left (and many on the right) that they deserve more support than and different regulations from businesses. It is silly.

  44. Harry Clarke
    January 19th, 2006 at 01:31 | #44

    Andrew, You still don’t get it.

    A monopoly maximises benefits to producers. Consumers lose but firm benefits are maximised and the issue with wheat is that most purchasers are not Australians. One of the problems with forming an AWB that prices above marginal cost to maximise the national advantage is that individual producers have to restrict their output. Individual producers then have incentives to produce a bit more and sell beyond monopoly production. Giving ‘free choice’ on whether a farmer sells to the AWB undermines its potential to extract monopoly rents from foreign customers. Moreover without the requirement to sell to the AWB a producer has incentives to sell outside it even though all producers are best off selling within it. As the standard prisoners dilemma, shows all then lose in the sense that the collective surplus accruing to growers falls if they fail to act cooperatively to realise the monopoly output.

    Again the benefits to Australian producers might not be great, there could be X-inefficiencies, some losses to Aussie consumers, losses to the world economy as a whole and so on but, ignoring these issues (and neither you nor anyone else has raised them) ‘freedom of choice’ will disadvantage all Australians. And that is what this nationalistic argument is about — benefits to Australia.

  45. rog
    January 19th, 2006 at 05:47 | #45

    I still dont see how you could determine that a monopoly would provide the best possible service to the producer – are there any other parallels?

  46. Terje Petersen
    January 19th, 2006 at 06:24 | #46


    A voluntary monopoly on the part of producers may maximises benefits to producers. An enforced monopoly imposed on producers may in fact benefit the monopoly organisation, the buyers or it may benefit the producers as you suggest. With no exit mechanism in a compulsory arrangement then producers have little means to register their discontent.

    The same is true of trade unions that are compulsory. Over time they may come to represent interests rather than those of their members. Members can become merely a “means” rather than the “ends” of the organisation.

    OPEC is a cartel between nations. However each nation has an option to leave the cartel. As such the cartel continues to perform in the interests of the members.

    AWB should probably continue to operate as a producers co-op. However membership should be optional.


  47. January 19th, 2006 at 09:34 | #47

    This scandal dwarfs practically every other example of misgovernment by the Federal Government that we have endured in recent years, as grave, unprecedented and unforgivable as many of these have been.

    As Kevin Rudd pointed out this morning, when interviewed on Radio National, our country has effectively been giving money to the Saddam Hussein regime which must have increased its capacity to buy weapons which have then been used against our own troops during their participation in the subsequent illegal invasion of that country.

    If Gough’s Government had ever been implicated in such a scandal, I don’t see how it could have lasted for more than 5 more minutes in office.

    Why aren’t we all demanding this Government’s immediate resignation?

  48. Hal9000
    January 19th, 2006 at 09:46 | #48

    I must say the elephant in the room seems yet again to be escaping attention. The international wheat market is entirely corrupted by the US (the world’s largest producer) subsidising production and dumping product on the international market. Australian producers are in fact amazingly efficient – US producers aren’t slouches either and Australia has to sell at the artificially depressed world price. Most of the larger international buyers also operate buyers’ cartels and import monopolies – eg in the current context pre-invasion Iraq. Given that the market is already corrupted, it makes perfect sense for Australia to have a producers’ monopoly. And a monopoly is a monopoly – so the arguments about what one WA business can or can’t do is redundant and a bit silly. Arguing the theoretical merits of level playing fields don’t make much sense when the field of play is more suited to rock climbing.

  49. stephen bartos
    January 19th, 2006 at 10:41 | #49

    Harry, Uncle M, do you really think australian wheat constitutes a monopoly? – it is a small fraction of the total amount of wheat traded in the world annually. There’s a highly competitive market in wheat, and we are not the world’s biggest player by any means; there’s both other government marketers and also much larger private companies selling wheat (eg Cargills). There’s no empirical evidence that I’ve seen (as opposed to assertion) of australian producers gaining monopoly rents through the so-called “single desk” policy in markets where it sells without the benefit of other government interventions. There is an edge in some markets for specialised wheats (particularly hard wheats) that derives from the quality and reliability of the australian product, but that’s due to the efforts of the wheatgrowers, not the AWB.

    However the picture gets confused when you consider the middle east markets because one of the underpinnnings of Australia’s wheat sales there is what is known as national interest cover provided by EFIC which allows the AWB to sell to buyers on generous credit terms. that is, the governnment is subsidising sales into the region via insurance arrangements: a slightly less transparent form of subsidy, but a subsidy all the same. The cover makes australian wheat more “competitive” in appearance, but in reality it is the australian taxpayer who is picking up the risk. To put it another way – the only markets where there is any evidence of Australia gaining a premium through an AWB monopoly is those in which the customers don’t actually pay up (slight exaggeration – sometimes they do pay – but there is a much higher risk). When the AWB was in government hands there was an extremely close relationship among all the players – DFAT, EFIC, AWB and others – which makes it impossible to believe that the government was not intimately involved in the dealings which are the subject of the current inquiry

    rog, the reason why the ACCC does not intervene is that the policy is established by legislation; without that, yes of course, if any company such as the AWB were attempting to force all growers to operate through only it and forcing other buyers out of the market it would be completely illegal.

    andrew, the links between AWB’s status as the monopsonist purchaser of australian wheat and the possibility of corrruption have already been drawn in some of the media reports; and without the government backing it receives, via its legislated protections, arguably there would be a different culture in the AWB: but against this you have to note that there have been some very dubious actions by private grain companies in various markets, and by other private corporations (halliburton comes to mind) in Iraq. On the broader question of whether the AWB should maintain its single desk status, there’s not much evidence that it brings benefits to australian growers beyond what they could achieve via forming grower cooperatives for themselves. some australian wheatgrowers remember that in pre-AWB days there were unscrupulous buyers who exploited information gaps about prices and conned unwary farmers – but there’s less likelihood of that today. Worth noting another parallel here. It used to be thought that grain storage and handling had to be government controlled and/or tightly regulated (this makes a big difference to prices – good wheat goes bad quickly if stored incorrectly). there were fears about what disasters might happen when these arrangements were undone in the mid 1980s following a royal commission inquiry, but inn fact deregulation of grain storage, handling and transport appears to have been a good thing for the industry.

  50. Katz
    January 19th, 2006 at 10:42 | #50

    The rural socialist ghost of Black Jack McEwen hovers over the monopoly arrangements of the Wheat Export Authority.

    And a quick Google reveals many National Party apologies for this restriction of trade based on the pragmatic calculation that the end to the monopoly would spell an end to a cartel that maximises returns to wheat growers.

    I guess this is the same argument that used to support the practice of closed shops in work places. Single-member electorates give disproportionate power to economic interests based on a monoculture like wheat farming.

    Hal9000′s point about the corrupt nature of international wheat marketing is well taken.

    Why should Australian wheat farmers be the only major exporters of that commodity to expose themselves to the consequences of the restrictive practices of others?

    The only answer to that question is that it hasn’t stopped Australian governments since the Hawke government from doing just that to much of Australian industry.

    Seems that the realpolitik consequences of single-member electorates is the independent variable in the unique ability of Australian wheat exporters to retain their government-mandated monopoly.

  51. January 19th, 2006 at 10:50 | #51

    “so the arguments about what one WA business can or can’t do is redundant and a bit silly”

    It’s comments like these that show why we voted to secede from the commonwealth. Still not a bad idea really.

  52. Dogz
    January 19th, 2006 at 10:57 | #52

    Why aren’t we all demanding this Government’s immediate resignation?

    Because the alternative is unthinkable……

  53. January 19th, 2006 at 11:06 | #53

    Interesting common issue with those large agricultural bodies to do with niche markets.

    They end up having a huge influence on the national research effort, and direct it towards broadbrush mass sales solutions to the economic problem. The Wool Board has been a fairly open scandal in this respect, attempting to kill promising lines of research. I think the whole “Cool Wool” thing has been fairly well articulated in public – CSIRO scientists had to hide the research, and pay for it with bits and pieces of money from other projects.

    The West Australians, in particular, have been building their Asian wheat market. Huge quantities of udon noodles, for instance, come from WA. It is done by precisely tuning the protein content for specific products, and beating the Americans into markets which are fine for us, but too small for them.

    The CBH- AWB tension makes a horrible kind of sense. It is not just efficiencies and proximities to mills; the kind of product and market is different too.

    I don’t like the argument that “this is how you do business in corrupt countries so stop fretting and make some money”. It is true in some areas – weapons, for instance. But here both the US and the Canadians stayed out of the market because it was corrupt and illegal. If we had said no too, then perhaps the whole thing could have been prevented.

    Instead, we undermined their moral stance, and made the corruption possible. For that, we will get what we deserve, I am afraid to say. We made money out of crime; the fact that the Baathists did not pocket the money privately but used it to sustain their regime makes it even worse.

  54. Paul Kelly from News Ltd
    January 19th, 2006 at 11:29 | #54

    Yobbo: take WA … please! Secede, begone, ariverderci, a million fewer hillbillies and yahoos for us to feel embarrassed about. Actually, could you take Queensland with you?

  55. Ugly Dave
    January 19th, 2006 at 12:18 | #55

    Why aren’t we all demanding this Government’s immediate resignation?

    Because the alternative is unthinkable……

    Yebbut you’d think that some of the Liberal backbenchers with integrity would have the bottle to be tapping a few shoulders by now.

    Oh wait… there aren’t any.

  56. Hal9000
    January 19th, 2006 at 13:00 | #56

    I’m glad we’re all focused on the evil wheat trade and not the entirely benign arms business, where backhanders are, um, de rigeur and profits are orders of magnitude bigger. Still, with Peter Reith calling the shots for Australia’s Tenix we can be certain of honesty and transparency in our nation’s dealings with the machinery of death. But to return to OFF, wasn’t the biggest deal the official US/UK blind eye being turned to smuggling the black sticky stuff – just “one operation involved 14 tankers engaged by a Jordanian entity to load at least 7m barrels of oil for a total of no less than $150m (€113m) of illegal profits” source http://www.globalpolicy.org/security/sanction/iraq1/oilforfood/2005/0113hypocrisy.htm

  57. January 19th, 2006 at 13:03 | #57

    Paul Kelly: Hehe, we will gleefully secede. The repulic of Westqueenslandia will rule supreme. (Of course, we won’t be taking brisbane with us, or the gold coast).

    (Benefit to the freshly truncated australia: Ozzi rules will finally be an international game)

  58. Hal9000
    January 19th, 2006 at 13:14 | #58

    Oh, and one other thought. The US signed Iraq up to wheat contracts with the US when the US openly ran the place (prop. Paul Bremer) in 2003 (see today’s Crikey.com.au). Bribery it seems is to be held as worse than coercion at gunpoint – provided the bribery doesn’t involve any major US business interests. Good to see trade and foreign policy being kept so separate as a matter of pinciple (see John Howard/Alexander Downer passim) And good to see Australia getting full value for its cooperation with the Coalition of the Willing from our great and powerful friends. The one cheery outcome from the AWB OFF imbroglio will be watching young Alexander auditioning for the role of contortionist as he attempts to redefine black as white and do a Stalin on the historical record.

  59. January 19th, 2006 at 13:28 | #59

    Dogz wrote :

    Because the alternative is unthinkable……

    If it were actually true that the opposition could possibly be even half as duplicitous and deceitful as this Governent, then what does that tell you about the health of our democracy?

    Does this concern you?

    In any case, what has the Labor Party ever done which is remotely comparable to effectively helping to arm the same regime that the Government was to since maintain is a threat to world peace, and then using that pretext to participate in an illegal, bloody and destructive invasion?

  60. Andrew Reynolds
    January 19th, 2006 at 13:30 | #60

    WA voted to secede in 1932 – the vote was ignored by the rest of you. We would be first cab off the rank in any new push and the passing of the Westminster Act made UK involvement impossible.
    James, I am not demanding this government’s immediate resignation because, as yet, there is no evidence that the government has done anything wrong. There is an increasing case that Downer may have to resign on a ministerial responsibility basis – I think Rudd is correct to push for evidence in this area – but to say the whole government should go now is to (IMHO) misunderstand the nature of a parliamentary system and the requirement for actual evidence.

  61. Katz
    January 19th, 2006 at 13:54 | #61

    “If Gough’s Government had ever been implicated in such a scandal, I don’t see how it could have lasted for more than 5 more minutes in office.

    “Why aren’t we all demanding this Government’s immediate resignation? ”

    But Governor General Sir John Kerr used his reserve powers to dismiss the Whitlam government on the grounds that the Governor General had the consititutional duty to commission a government that could guarantee supply.

    On the other hand, Australia’s current GG Major-General Michael Jeffery would not have any grounds to dismiss the Howard Government. As an ex-SAS officer, Jeffery may nevertheless be distressed that the AWB kickbacks have funded the bullets and bombs aimed at the troops of the COW. What he may or may not do is simply a matter for his own conscience.

    However, under Section 75 of the Australian Constitution the High Court of Australia has original jurisdiction:

    “In all matters: (i) arising under any treaty…”

    An action may be taken in the High Court against the appropriate ministers of the Federal Government in relation to alleged breaches of Australia’s treaty obligations.

    A question arises as to who the High Court might regard as a competent complainant in any action against the Federal Government in regard to the treaty obligations of Australia,

    Nevertheless, Australia is a signatory to the United Nations Charter and several other treaties relating to the jurisdiction of the United Nations….

    The Federal Government may well have a case to answer in relation to its conniving in breaking the trade sanctions against the Saddam regime in Iraq applied by the United Nations.

    In the end, the Governor General is required to decide whether the Federal Government has acted properly in relation to adverse judicial finding, and then act appropriately in accord with his reserve powers.

  62. what the
    January 19th, 2006 at 13:59 | #62

    In the vein of ProfJQ’s ‘AWB overboard’, I see the cover of The Land today is “AWB over a barrel” :)

    Hal9000: agreed, the global wheat trade is one of the toughest and more corrupt but that tough arena includes the lobbying activities of the Canadian Wheat Board which, along with the USA, has been lobbying to dissolve this single desk for an eternity. That is why the canadians first notified the UN about certain suspicious AWB acitivites (maybe back in 2002, i think?), not presumably because of any sense of altruism over the iraqi people but market share, market share.

    However, it will be interesting to see the collateral damage over the next few days….Do the ALP support a single-desk idea? Are they willing to drag it down for the sake of the head of a minister? Would farmers be better off in th elong run bargaining individually at long distances and at great cost with foreign markets against the mighty US and Canadians? What is arms-length oversight versus government interference when it comes to divulging the squinty print to politicians? Why did DFAT okay in writing the firm in question? Is bringing transparency and sound ethical corporate governance (of which AWB is not an example) to corrupt markets like the middle east just another example of western imperialism? :)

    No wonder the USA thought UN sanctions in Iraq weren’t working, they bloody well weren’t.

  63. Andrew Reynolds
    January 19th, 2006 at 14:37 | #63

    Oops, mis-ordered my comment. It should have read:
    “WA voted to secede in 1932 – the vote was ignored by the rest of you and the passing of the Westminster Act made UK involvement impossible. We would be first cab off the rank in any new push.”
    As a side note – remember we have the SAS when they not in Iraq or Afghanistan. I am sure CBH would love to be out from under AWB.

  64. January 19th, 2006 at 14:49 | #64

    Umm Andrew, after the referendum on seceding, didn’t the WA govt apply to the UK to become a colony again (thus leaving Australia)?

  65. Steve Edwards
    January 19th, 2006 at 14:52 | #65

    ” Yobbo: take WA … please! Secede, begone, ariverderci, a million fewer hillbillies and yahoos for us to feel embarrassed about. Actually, could you take Queensland with you? ”

    Closer to two million, actually, and the sentiments are mutual. There is nothing at all for WA in the Federation except the joy of cross-subsidising Tasmanians.

  66. Sean
    January 19th, 2006 at 15:18 | #66

    Andrew, the fact that the Commonwelath’s most hardened killers are located in your rebellious capital may not be for your secessionist benefit.

    [Joke. It's so that only Sandgroping nudists see them at work.]

    On the wider point, if small business remained loyal after the Manildra tax-system-as-protection-racket episode, I don’t know what it’d take. Groping Wayne Pierce’s daughter?

  67. January 19th, 2006 at 15:19 | #67

    Steve Edwards: Ditto for Queenslanders. As a bonus, when we secede we can expect all the freeloaders to scarper for Vic or NSW. (Whooppee)

  68. Tony Healy
    January 19th, 2006 at 15:21 | #68

    Andrew Reynolds, you’re certainly correct that Western Australia’s CBH would love to escape the restrictions of the AWB.

    They are in joint ventures with the Indonesian Salim Group, a grain buyer, to operate flour mills, presenting significant conflicts of interest. They are in effect a grain buyer rather than a grain seller and, unlike the AWB, will work to reduce the prices paid to WA farmers as soon as they can get the AWB destroyed.

    Yobbo, how is CBH regarded over there?

  69. Paul Kelly from News Ltd
    January 19th, 2006 at 15:56 | #69

    Mate, I have nothing against WA-persons. I reckon they’re good people, most of them, but the few bad apples spoil it for everyone. I prefer the rural ones, the urbanised ones are caught between a rock and a hard place, trying to live like the rest of us but they can’t really do it because of who they are. It’s not their fault, it’s the government’s for giving them handouts all these years. They can’t handle alcohol, but that’s not really their fault either.

    The average IQ of sand-gropers is shown to be about 10 points below the Australian average, but I think they should be able to live in WA, proudly, in their native state, without do-gooders imposing their politically correct mores onto them.

  70. Katz
    January 19th, 2006 at 16:03 | #70

    Western Australian secession … How amusing!

    Back in 1933 67% of WA voters supported secession. That’s a democratic triumph in anyone’s language.

    So how come we Eastern Staters don’t need a visa to go and join the Sandgropers in a quokka massacre on Rotto?

    Easy. The great and the good who led the WA Dominion League stuffed up.

    “The Secession Delegation which went to London with such high hopes and great fanfare in 1935 returned to Western Australia within two years in complete failure. After months of lobbying British governments in order to have their petition received by the British Parliament, the delegation could only have the matter referred to a joint committee of the Houses of Commons and Lords. After much delay they rejected the petition on the grounds that the British Parliament could not act without the Australian Federal Parliament’s approval.”

    You see Sandgropers weren’t interested in independence. What they wanted was an alternative umbilical cord to the one that had nourished them from the Eastern States.

    Sensibly, the British Government didn’t want Sandgropers climbing back into the Imperial womb.

    So Sandgropers quietly reattached the Australian umbilical cord and clambered back into the Commonwealth womb instead.

    We await the day when Sandgropers grow up sufficiently to commit some act of adolescent rebellion.

  71. Paul Kelly from News Ltd
    January 19th, 2006 at 16:34 | #71

    Any state that produces Peter Walsh, Graeme Campbell and … John Stone has reason to be a little ashamed and chippy. These are what passes for thoughtul people over there. God help the place!

  72. Dave Ricardo
    January 19th, 2006 at 16:41 | #72

    WA secession requires a change to the constitution, which means a national referendum passed by a majority of voters in a majority of states.

    This is a big ask.

    Tell you what, sandgropers. I’ll vote yes in a referendum if the rest of Australia gets to keep all the mineral resources north and east of Perth.


  73. Andrew Reynolds
    January 19th, 2006 at 16:56 | #73

    Not quite right. The secessionist government at the time campaigned so hard on the referendum they forgot to campaign for government. The end result was that the government responsible for pushing it through was the party that had kept quiet about it, but opposed it. The team sent was not backed up and, in the end, the Statute of Westminster was invoked to kill the proposal, even though Australia had not actually incorporated it into Australian law.
    The whole reason for the secession push was the restrictive trade policies pushed by the east, in clear contravention of WA interests. The net wealth transfer involved not only reduced overall wealth in Australia but affected WA more than the other States due to our strong primary industry focus.
    A quick read of “Steadfast Knight” by Hal Colebatch should clear it up, if you really want to know more about it.
    That would not be the first blatant theft from WA by the Eastern States.

  74. Ernestine Gross
    January 19th, 2006 at 17:04 | #74

    What is “CBH”

  75. Dave Ricardo
    January 19th, 2006 at 17:04 | #75

    OK, Andrew, twist my arm. I’ll throw in Tasmania and the non-wine parts of South Australia.

  76. Paul Kelly from News Ltd
    January 19th, 2006 at 17:09 | #76

    The trouble with sandgropers is that they think the mineral-fueled wealth is actually due to their sweat, tears and creativity. I’d vote yes in the referendum.

  77. January 19th, 2006 at 17:23 | #77

    Paul Kelly: You don’t explain what is wrong with those 3 citizens.

    However WA has much to explain over inflicting an unmitigated disaster such as Carmen Lawrence onto the rest of Australia.

  78. Katz
    January 19th, 2006 at 17:27 | #78

    “The secessionist government at the time campaigned so hard on the referendum they forgot to campaign for government.”

    Whose fault was that?

    “The team sent was not backed up and, in the end, the Statute of Westminster was invoked to kill the proposal, even though Australia had not actually incorporated it into Australian law.”

    1. A 67% majority on the question of secession well might have been massaged into a democratic movement in favour of outright independence. But that was clearly too scary for the Sandgropers.

    2. The fact that invocation of irrelevant law was sufficient to deflate the WA secessionist movement suggests that its leadership was inadequate to the task that had been thrust on them by history.

  79. MarkL
    January 19th, 2006 at 19:06 | #79

    “MarkL perhaps you’d like to refer to the points in the Volcker report where these claims are substantiated. I didn’t notice them, and neither did the Washington Post.�

    Sigh. Such an authoritative and unbiased single source. John, you play the wide-eyed ingénue very poorly, and I know you know better, so throw it in.
    The Volcker Report was delayed by Annan until the appropriate document destruction in his own office was complete. Were this an action by Howard’s staff, you would not accept it. Why do you accept this? To whit:
    The most significant finding in the Second Interim Report (March 2005) is that Iqbal Riza, Kofi Annan’s chief of staff, authorized the shredding of thousands of U.N. documents between April and December 2004. Among these documents were the entire U.N. Chef de Cabinet chronological files for 1997, 1998, and 1999—many of which related to the Oil-for-Food Program.
    Riza approved this destruction just 10 days after he had personally written to the heads of nine U.N.-related agencies that administered the Oil-for-Food Program in Northern Iraq, requesting that they “take all necessary steps to collect, preserve and secure all files, records and documents…relating to the Oil-for-Food Programme.� The destruction continued for more than seven months after the Secretary-General’s June 1, 2004, order to U.N. staff members “not to destroy or remove any documents related to the Oil-for-Food programme that are in their possession or under their control, and to not instruct or allow anyone else to destroy or remove such documents.�
    Significantly, Kofi Annan announced the retirement of Mr. Riza on January 15, 2005—the same day that Riza notified the Volcker Committee that he had destroyed the documents. Riza was immediately replaced by Mark Malloch Brown, Administrator of the U.N. Development Programme.”

    At the United Nations, the senior administrator under Kofi Annan has willfully and deliberately shredded documents that pertained to the greatest rip off in history and Annan lets him retire the same day that he notified Volcker of the document’s destruction. The records were so voluminous that it took seven months to shred them all and Annan professes he knows nothing about it… The responsibility stopped with Annan and for this if nothing else he should be forced to resign

    If you believe Annan’s statements on this matter alone, I have a wondrous deal for you concerning this funny-shaped bridge in Sydney, yours for a mere $10K. Cash and used small bills, please.

    The US GAO estimates that Hussein earned US$10 billion from smuggling (US$5.7Bn) and kickbacks (US$4.4Bn). These figures make this the largest fraudulent activity in history so far as I know. The idea that Annan knew nothing about it can only believed by the credulous, or the near-terminally biased.

    See Claudia Rossett’s work on the matter.


  80. jquiggin
    January 19th, 2006 at 19:36 | #80

    MarkL, everyone knew that Saddam was skimming money, some from OFF but most from smuggling (which had nothing to do with the UN).

    I took this into account in my estimates of the cost of reconstruction back in May 2003 2003.

    The US Administration knew it as did the Australian government. And pretty clearly, the Australian government knew that this extended to wheat deals undertaken by its own export monopoly.

    I’m still waiting for any credible source (not a freelance journalist who writes for Fox News) for your claims about the PM of Canada etc. Please point to primary sources.

  81. Terje Petersen
    January 19th, 2006 at 20:05 | #81

    Ernestine Gross asks “what is CBH”?

    The following should help:-



    Who We Are

    The Western Australian based CBH Group stores, handles and markets grain. The WA harvest averages ten million tonnes annually, of which 95 per cent is exported, and represents up to 40 per cent of the nation’s average annual production. The CBH Group is a leading grains industry organisation, marketing grain to over 20 export destinations and with a total storage capacity in excess of 19 million tonnes.

    CBH is committed to maximising returns to its growers. CBH is controlled by over 6,500 grower-shareholders, who plant and harvest grain grown across some 320,000 square kilometres that comprise the Western Australian grainbelt.

    In 2004, the CBH Group established a joint venture company, Pacific Agrifoods, with partners The Salim Group, to invest in the Asian value chain and to grow value for the Western Australian grains industry.

    Through Pacific Agrifoods, the CBH Group holds a stake in 5 flour mills in Indonesia and Malaysia and a grain terminal and flour mill in Vietnam.

    The combined annual turnover of the CBH Group of Companies is more than $900 million with net assets of $900 million and 850 full-time staff as at 1 September 2005.

    Corporate Governance

    A Board consisting of nine grower-elected Directors, who have wide experience in agriculture, and three Board-appointed Directors, with specialist expertise, steers the CBH Group.

  82. MarkL
    January 19th, 2006 at 20:23 | #82

    Interesting point, John.
    Regrettably, it would appear that Iqbal Riza and various others have shredded their data and that people have used the usual money laundering techniques to shield themselves. I cannot BELIEVE that they did not keep me personally informed with signed hardcopies, either, presentation to your good self on a silver platter for the use of.

    I must speak to Chretien and his cohorts about this unforgivable oversight on their part.

    But I can point to a primary source for you, the approximately two million documents seized from Iraqi Ba’athist and government archives and as yet untranslated. In addition, the financial records of the Chretien clan’s TotalFinElf holdings will doubtless have an interesting tale to tell, as will Chirac’s dealings as far back as when he was flogging French nuclear equipment to Hussein when he was their ‘Minister for things French, Nuclear, and for Sale to any Bidder at all’.

    If I think of anyone else to whom the gentlemen in question have provided signed hardcopies of their nefarious doings various, rest assured that you will be the first one I inform.

    All wry humour aside, you know as well as I do that the pattern of business transactions and political decisions (and other things) points to these charming chaps being dirty. Asking me to provide court-of-law proof is a nice rhetorical flourish, of course, but means little beyond perhaps scoring a point or two in a game of words.

    But I can certainly ‘point you to primary’ sources, as requested, and have done so. I will forbear to request from you primary sources proving the opposite conclusion.


  83. jquiggin
    January 19th, 2006 at 22:08 | #83

    “But I can point to a primary source for you, the approximately two million documents seized from Iraqi Ba’athist and government archives and as yet untranslated. ” (Emphasis added)

    You’re joking, right?

  84. Michael H
    January 19th, 2006 at 23:22 | #84


    MarkL has you by the short and curlies.

    It obvious that the allegedly shredded documents bore out the claims in great detail. The only thing standing in the way of incontestably proving this to be the case is the lack of evidence, but this is a mere trifle as it’s known exactly what the shredded documents contained, notwithstanding the inability to examine them. I’m sure the 2 million untranslated Iraqi documents will eventually become available for our edification.

  85. January 20th, 2006 at 03:01 | #85

    Ummm, why would the UN shred documents. Clearly if the UN had nothing to HIDE, those documents would have exonerated the UN.

    Clearly the UN is *guilty*guilty*guilty* I am trying to think of JUST ONE THING the UN has done FOR humanity within my lifetime… just one…!!

  86. jquiggin
    January 20th, 2006 at 05:58 | #86

    Steve, given your willingness to convict “the UN” on the basis of unsupported claims about document shredding by an anonymous blog commenter, I assume you are convinced of the involvement of Howard and Downer on the basis of the publicly reported evidence.

  87. rog
    January 20th, 2006 at 07:01 | #87

    Publicly reported evidence shows that the Government had no knowledge of the transactions http://www.news.com.au/story/0,10117,17868461-421,00.html

  88. rog
    January 20th, 2006 at 07:07 | #88

    Notwithstanding John’s confidence in the unproven Alan Fels calls for the AWB monoply to be broken up; “time has come to close down the Australian Wheat Board as an export monopoly. It’s a relic of a bygone age.”


  89. Hal9000
    January 20th, 2006 at 09:05 | #89

    “I am trying to think of JUST ONE THING the UN has done FOR humanity within my lifetime… just one”

    Eradication of smallpox.

  90. Michael H.
    January 20th, 2006 at 09:15 | #90


    Must have been someone else who did that……It couldn’t have been the evil UN.

  91. Michael H.
    January 20th, 2006 at 09:28 | #91

    rog says,
    “Publicly reported evidence shows that the Government had no knowledge of the transactions”.

    That isn’t quite what the article says. The strory qoutes AWB documents as explicitly stating that it would tell the government about the extra payments, but not until the ‘appropriate time’, suggesting, but not confirming, that such a time might be after the Iraq war.

    I think I read an anonymous blogger somewhere reporting that it was a known fact that the AWB shredded all the relevant documents that would prove Alexander Downer not only knew about the practice, but was a personal beneficiary of the OFF scandal. Damn shredders!
    Hopefully the several million untranslated Iraqi documents will shed some light on this too.

  92. jquiggin
    January 20th, 2006 at 09:34 | #92

    Also, Rog, the article only refers to one particularly dubious transaction just before the war. The implied background is that AWB was in regular contact with DFAT and government about these deals. But of course, nothing will ever be proved, as I said at the outset.

  93. January 20th, 2006 at 09:34 | #93

    “Steve, given your willingness to convict “the UNâ€? on the basis of unsupported claims about document shredding by an anonymous blog commenter”–jquiggin

    MarkL’s claims are supported by Paul Volcker.

    Second Interim Report

    Now what about your claims and an apology to MarkL?.

  94. jquiggin
    January 20th, 2006 at 09:46 | #94

    OK, I misread that comment. I withdraw the suggestion that the claim about Riza and shredding was unsourced. To restate my point to Steve “If you’re willing to convict the UN on the basis that some embarrassing files were shredded by one of Annan’s offsiders, I assume you;re willing to do the same for Howard and Downer on the basis of 100+ “I don’t knows” from the head of their export monopoly.

  95. Katz
    January 20th, 2006 at 10:11 | #95

    The semantical hairline crack that MarkL Canberra crawls through to play the old game of bait and switch is his deliberate misconstruction of JQ’s phrase “By far the biggest fish to be caught in the net so far…”.

    Disingenuously, MarkL Canberra asserts that Secretary General of the United Nations, President of France, the PM, the President of Russia are “bigger fish”. And in the big world of affairs, indeed they are “bigger fish” than the AWB.

    But it is clear from the context that JQ intends “biggest fish” to mean that the AWB were the largest suppliers of graft money to the Saddam regime.

    So Australia’s own AWB in this instance stood tall and outclassed some truly heavy-weight crooks. Let’s hear it for the Little Aussie Battler!

    And that’s why Howard apologists on this blog and elsewhere are finger-pointing in every direction except in the direction that Australian citizens can do something positive to punish the guilty. That is, in Australian political forums, in Australian courts of law and in Australian penitentiary facilities.

  96. rog
    January 20th, 2006 at 10:39 | #96

    Katz no one has denied that the AWB paid bribes. A few have said that the Govt knew about and condoned these activities yet are unable to support these allegations with evidence.

    Perhaps if there was an enquiry it would be found that the AWB have paid bribes for decades; that’s the way business is done in many countries.

    At this point what is reasonably clear is that the bribes were paid to shift Australian wheat and there seems to have been no personal gain, unlike the UN personnel who have profited from receiving bribes.

  97. January 20th, 2006 at 10:42 | #97


    At this time its $US2 million of an estimated $10 Billion and above scandal. Inexcusable but not the “largest suppliers of graft money” so far.

  98. Katz
    January 20th, 2006 at 10:55 | #98

    1. Gary,

    “The Cole inquiry has also received thousands of previously confidential documents from the UN’s own inquiry into the oil-for-food program, headed by former US central banker Paul Volcker. The Volcker report said AWB was the biggest single provider of kickbacks to Saddam’s regime.”

    I believe the figure quoted by Volcker is about $300m.

    2. Rog,

    I’ll leave it for St Peter at the Pearly Gates to decide whether or not graft for private gain is worse than graft as a betrayal of the public trust.

  99. Ian Gould
    January 20th, 2006 at 11:48 | #99

    “I am trying to think of JUST ONE THING the UN has done FOR humanity within my lifetime… just one…!!”

    Ended the Cambodian civil war; kept the Turkish and Greek cypriots from killing each other for the past 30 years; monitored the India-Pakistan cease-fire line; stopped the war between Eritrea and Ethiopia.

    Want me to go on?

  100. January 20th, 2006 at 13:09 | #100

    Thanks Katz.

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