EFIC

February 13th, 2006

The AWB wheat deals with Iraq also involved the Export Finance Insurance Corporation (EFIC) which, as the name implies, insures exporters like AWB when they sell goods on credit. I actually did some work on this fifteen years ago, and concluded that the operations of EFIC were likely to lead to cross-subsidisation of bad customers by good ones. Even then, Iraq was at the top of the list of bad customers. As Ken Davidson points out (via VVB), the involvement of EFIC in the deals also implies high-level involvement by government departments like Treasury and Finance that have so far not been mentioned.

Meanwhile, as the hearings roll on, it’s clear that the government knew nothing about the bribery in exactly the same way as Bill Clinton did not have sexual relations with that woman, Miss Lewinsky. Indeed, looking at the things they didn’t know, it’s testimony to their organisational ability that they could manage to know exactly what they needed not to know, without ever being told.

Categories: Economics - General, Oz Politics Tags:
  1. pre-dawn leftist
    February 13th, 2006 at 22:37 | #1

    John, you’ve captured it in one. Its amazing how this Government is able to regularly, simply not be present, when embarrasing stuff is happening. Whats even more amazing is that we continue to let them get away with it.

    A couple of years ago, a “reliable source” in the Defence Department (civilian) told me that one of the secrets to getting ahead in that Department now is knowing what the Minister wants to know about, and wants to not know about, without having to be told. This was shortly after the kids overboard and SIEV-X inquiry.

    I’m Military myself, and at my level we aren’t directly affected by this yet (not in Canberra, never see the Minister or his lackeys) but I suspect this mentality is not just confined to Defence.

  2. Mike Hart
    February 14th, 2006 at 17:37 | #2

    ‘Indeed Minister”.

    Plausible deniability has become an art form with new Millenium administrations everywhere.

  3. stephen
    February 16th, 2006 at 15:41 | #3

    efic has come back to me after I first raised this noting they hadn’t insured food for oil sales – which thinking it through does of course make sense, because the payments were made out the funds that had been sequestered from the oil sales, not from the government of Iraq direct. but more generally, there’s been involvement in the past, certainly when john was doing work on this. it is notable that this is evidence of the close links between govt. and AWB, regardless of the particular sales involved

  4. Derick Cullen
    February 18th, 2006 at 13:56 | #4

    I’ll add a “me too” to the who-should-have-known-what-and-when-should-they-have-known-it comments re Iraq and AWB. In terms of government accountability its just a re-run of the children overboard, Lewinsky, Watergate…

    What I really wanted to comment on is EFIC. This organisation has to be a prime example of business welfare and agrarian socialism. Their role is to insure international trade deals. If claims are made by Oz exporters because Egypt or Iraq can’t/won’t pay, or can’t pay soon enough, EFIC pays the exporter.

    Why won’t private sector insurers take this business on? Apart from the fact that premiums would be too high, a public sector insurer has one big advantage. When the write-off of uncollectable claims against Egypt or Iraq or wherever has to be made, it can be re-labelled as Australian Aid to the 3rd world, thus killing at least two birds with the one budget hit.

    Is this a good or bad thing? I guess it depends on whether you come at the problem from the point of view of a practical conservative or a principled socialist. EFIC has survived a number of changes of government…

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