AWB oil-for-wheat scandal
| Location | Iraq |
|---|---|
| Also known as | AWB scandal |
| Cause | Payment of kickbacks to the regime of Saddam Hussein in contravention of the UN Oil-for-Food Humanitarian Program |
| Participants | AWB Limited |
| Outcome | AWB Limited has undergone a major restructuring, losing its monopoly supply of Australia wheat exports, and appointing an entirely new management. Its profitability has suffered. |
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The AWB oil-for-wheat scandal (also known just as the AWB scandal) refers to the payment of kickbacks to the regime of Saddam Hussein in contravention of the United Nations Oil-for-Food Humanitarian Program. AWB Limited is a major grain marketing organisation based in Australia. For much of the 20th and early 21st century, it was an Australian Government entity operating a single desk regime over Australian wheat, meaning it alone could export Australian wheat, which it paid a single price for. In the mid-2000s, it was found to have been, through middlemen, paying kickbacks to the regime of Saddam Hussein, in exchange for lucrative wheat contracts. This was in direct contradiction of United Nations Sanctions, and of Australian law.
AWB delivered 90% of the Iraqi wheat market, before its practices were questioned in 2005. United Nations investigator Paul Volcker found that the Australian Wheat Board, and later AWB Limited, were not the only, but certainly the largest source of kickbacks to the Iraqi regime. The Australian Government also launched a Royal Commission, which recommended that criminal proceedings commence against 12 people. Ultimately, criminal charges were dropped by the Australian Federal Police. Several Australian civil cases were however successful. Since the payments were discovered, AWB Limited has undergone a major restructuring, losing its monopoly supply of Australia wheat exports, and appointing an entirely new management. However, its profitability continues to suffer.
Although AWB and by extension the Australian Government were not the only entities to be implicated in the Oil-for-Food scandal, the event earned a place in Australian political consciousness.
The Australian Wheat Board was a statutory authority established in 1939. AWB Limited was the company that resulted from its privatisation in 1999. The kick-backs scandal engulfed both bodies. The Australian Wheat Board and AWB Limited enjoyed a monopoly over the sale of Australian wheat exports. It achieved this through the use of a monopsony (single buyer) regime within Australia, where wheat growers were only able to sell on their wheat to a single desk. This was intended to prevent farmers under-cutting each other on price, and thus assure the highest price for Australian wheat. The AWB had sold wheat to Iraq since 1948, and was the single largest supplier of humanitarian goods to the nation during the Oil-for-Food Program.
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