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BHPBilliton accused of knowingly breaching UN sanctions

Published by MAC on 2006-02-02

BHPBilliton accused of knowingly breaching UN sanctions

2nd February 2006

The world's biggest mining company is mired in accusations that it knowingly and corruptly breached UN sanctions against Sadam Hussain's regime.

Inquiry told BHP knew payment plan breached Iraq sanctions

THE Australian government told BHP that a plan to recover a multi-million dollar debt from Iraq would breach UN sanctions, according to evidence given to the Cole Commisison of Inquiry into the Iraq wheat kickbacks scandal.

BHP funded a 20,000 tonne shipment of wheat to Iraq in 1996, allegedly in a bid to win petroleum exploration rights in the country once UN sanctions against dictator Saddam Hussein's government were lifted.

The company then set in train a complex debt recovery process using its Iraq joint venture partner, Gibraltar-registered Tigris Petroleum, and Australian wheat exporter AWB. This process has become a major focus of the Cole Inquiry, which is investigating $300 million in kickbacks paid by AWB to Saddam Hussein's regime.

BHP wanted to set up a deferred payment plan to get the $US8 million debt back from Iraq, the inquiry was told.

But the Department of Foreign Affairs and Trade (DFAT) told the company that the arrangement would be illegal under sanctions in force against the country since the Gulf War.

After BHP handed responsibility for the debt to Tigris Petroleum, Tigris hired AWB to help recover the money for a $US500,000 fee.

AWB inflated two wheat contracts under the UN's oil-for-food program to recover the BHP-Tigris debt. These contracts never revealed the true arrangement for retrieving the money.

Commissioner Terence Cole has described those contracts as "a sham".

BHP had first proposed that the wheat be provided on a deferred payment plan, but it had been advised by DFAT that this would breach the UN sanctions, commission senior counsel John Agius said.

Agius suggested that DFAT's original rejection of the deferred payments resulted in the actual debt recovery process being deliberately hidden from the authorities.

"AWB could not inform DFAT and the UN that that debt was being paid out of these two (wheat) contracts without disclosing that the actions in 1995/1996 had themselves been outside the sanctions," Agius told the inquiry.

AWB sales chief Michael Long agreed that the the UN and DFAT were never told about the Tigris deal.

But he said he believed it was proper for BHP to hand responsibility for the debt to Tigris on the authority of the head of BHP's petroleum division, Philip Aitken.

"I believed that BHP, being the company that it is, wouldn't assign those proceeds lightly," Long said.

BHP Billiton says food-for-oil review can't be rushed


1st February 2006

BHP Billiton says it will take "some time" to properly review all the available facts on its financing of a grain shipment to Iraq in 1996.

BHPB chief executive officer Chip Goodyear "This is an extensive process and it will take some time to properly review all the available information, including any evidence provided to the Commission throughout its public hearing," CEO Chip Goodyear said today.

"The shipment took place more than 10 years ago and many of the people involved have since left the company. We are committing significant resources towards establishing the facts – this involves reviewing documentation from within and outside of Australia. We have and will continue to assist the Commission."

The company is currently undertaking an internal review of issues that arose following references made to BHP in the Commission of Inquiry into the UN Oil-For-Food Program.

Goodyear said the company's internal review would be thorough and its conclusions would be provided publicly as appropriate, given the matters before the Commission.

"The matters raised in relation to BHP in the Royal Commission are of real concern to us," he said.

"Our Guide to Business Conduct, established in 1997, outlines our commitment to the highest standards of ethical conduct. We take that commitment very seriously and understand it is fundamental to our long-term business success."

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