bhp involved in kick backs scandal to iraq...cole enquiry...

bhp involved in kick backs scandal to iraq...cole enquiry reveals
how many people are involved in this thing!?

Jail warning did not deter BHP's Iraq oil deal

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Marian Wilkinson
September 21, 2006
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BHP executives were warned by the US Government that they could face seven years' jail for trying to negotiate a huge oil deal with Saddam Hussein in breach of UN sanctions, a Department of Foreign Affairs report has revealed.

The report, with scores of fresh documents released by Cole inquiry into the UN oil-for-food scandal, shows the Howard Government made significant efforts to help BHP Billiton secure rights to the massive Halfayah oilfield in Iraq. This help came before and after the toppling of Saddam, despite opposition from the US and Britain.

In June 1996, just months after John Howard became Prime Minister, the department agreed to send an Australian diplomat in Jordan, Bill Richardson, and an Austrade official on a BHP mission to Baghdad.

They met Iraq's then trade minister, Mohammed Medhi Salah, who urged them to find a way around the UN sanctions to allow BHP to finance wheat sales to Iraq. In exchange, BHP believed the aid would give it access to Halfayah, one of the richest undeveloped oilfields in Iraq.

But during the discussion Mr Davidson Kelly, then a BHP executive, told the Iraqis that BHP "had recently received from the UK Government notification that they risked seven years' imprisonment for their contacts with Iraq".

The Foreign Affairs Department report, however, notes that, in fact, it was the US State Department that made those comments.

As part of the deal, BHP also attempted to employ the son of a senior Iraqi oil ministry official. In a BHP internal memo, Mr Davidson Kelly said the Iraqi official rejected to the idea.

Foreign affairs officials remained concerned about the BHP deal because of the UN sanctions and pressure from the US.

By 2000, BHP decided it was too difficult, and Mr Davidson Kelly left BHP and set up a new company, Tigris Petroleum, which took over BHP's interests in Iraq.

The Cole inquiry has uncovered an arrangement between Tigris Petroleum, AWB and the Iraqis to siphon off $US8 million from the UN oil-for-food account.

The payment, hidden in inflated wheat contracts, was allegedly to repay a 1996 wheat shipment from BHP to Iraq during their lobbying for the oil deal.

The new documents also reveal that when Mr Davidson Kelly took over BHP's interests in Iraq he promised Saddam's oil ministry he could help rehabilitate a key oilfield in breach of UN sanctions.

But in a letter to the Iraqis, Mr Davidson Kelly insisted the Iraqis first needed to repay the $US8 million BHP debt by fraudulently inflating their wheat contracts with AWB.

Immediately after the Iraq war began, BHP Billiton and Tigris signed a deal to become joint-venture partners in the Halfayah field with Shell Oil.

In a memo outlining their plans for postwar Iraq, BHP Petroleum executives suggested "exerting influence" on members of the US-led coalition in Iraq, including Australia, through one of its executives who was a leading member of the Liberal Party, Tom Harley.

More details on the Tigris deal are expected to be released next week as a result of the Federal Court on Monday having ordered AWB to hand another 350 documents to the Cole inquiry.

http://www.smh.com.au/news/national/jail-warning-did-not-deter-bhps-iraq-oil-deal/2006/09/20/1158431784452.html