About the time most Americans were carving their Thanksgiving turkey, Australia’s virtual wheat export monopoly, AWB Ltd, was being carved up like a Christmas turkey for U.S. wheat growers.
On Nov. 24, AWB, the successor of the Australian Wheat Board, which held veto power over every grain of wheat exported from Down Under, was sliced into tiny pieces by the 2,065-page Cole Commission report. The report was the result of government inquiry into AWB’s sleazy, $220 million bribery scheme to get Aussie wheat into Saddam Hussein’s Iraq during the United Nation’s Food for Oil Program.
The report also recommended that 11 former AWB executives, including AWB’s former chairman Trevor Flugge, be investigated for possible criminal activity in the years-long deception that locked U.S. wheat out of Iraq from 1999 to 2003.
Even more remarkable than what the investigation found was what it didn’t find: Despite AWB’s deep economic ties to the Australian government and its equally tight political connections to Deputy Prime Minister Mark Vaile, Commissioner Terence Cole "found no material that is in any way suggestive of illegal activity by the Commonwealth or any of its offices."
The free pass brought howls of disbelief from the countryside. Several AWB bigwigs, after all, had testified under oath that most of the bribe-dripping contracts to sell wheat in Iraq had been approved by the government.
After being told the Cole report completely exonerated the Aussie government, a former high-ranking official at the Department of Foreign Affairs and Trade, Jill Courtney, told a national newspaper there that "it’s inconceivable people did not know something was wrong."
Australian Prime Minister John Howard, who also testified, seized the findings to wash his hands of what is being called the nation’s biggest political scandal ever.
Howard’s Nov. 28 public hand-washing included an unexpected colonic: In early December, he announced, the Australian government will decide if AWB should be stripped of its government-sanctioned "single desk" export authority.
Wow. What the U.S. and European Union couldn’t do in decades of tough negotiations AWB did with its own money-grubbing hands. The AWB foresaw that end months ago. Damning testimony by its own officials not only proved the exporter massively corrupt, it also numbered AWB’s days.
So, on Nov. 29, AWB chairman,Brendan Stewart replied to Howard by detailing a reform plan that would "de-merge" AWB; split it into two companies, one a farmer-owned "single-desk" export manager, the other a "purely commercial agri-business manager."
The plan may be too little too late. Other ideas of breaking AWB’s many wheat export roles — marketing, transportation, credit, insurance — into pieces, then selling or licensing the pieces to outsiders, are actively afoot.
Indeed, some of the world’s giant grain merchants like Cargill and Dreyfus have spent years digging toeholds in Australia waiting for this moment. Now that it has arrived, many Aussie grain analysts see the Big Boys moving in big time.
Whatever happens, however, any substantive change to the AWB’s export role must pass the muster of the Australian government. Since Parliament granted AWB its single-desk exporter status, only Parliament can revoke or reconfigure the chokehold.
Most AWB watchers consider that a small hurdle. Some even believe the Howard administration so eager to remove itself from the AWB spotlight that it will push Parliament to turn AWB’s exporter status upside down by Christmas.
The AWB has a few other foreign-cooked crows on its menu.
Incoming Senate ag committee chairman Tom Harkin has long questioned how AWB’s actions in Iraq affected U.S. wheat growers. Aussie officials now fear they will be hauled before the Committee to explain.
Also, the main American wheat lobby, U.S. Wheat Associates, likely will resubmit its $1 billion anti-racketeering lawsuit against the AWB now that the Cole Report has plainly painted the exporter a crook.