Issue 2, 2006 | Phillip Senior

Political Lessons from the AWB Affair

The so-called 'wheat for weapons' scandal has understandably been the subject of considerable debate in the media and amongst commentators and pundits. Most of that attention has focussed on the role the government played in any wrongdoing on behalf of AWB, specifically, whether they knew AWB was paying kickbacks to the Iraqi regime in violation of the UN sanctions regime, or in the alternative, should they have known. This article will consider whether the weight of evidence suggests that the government should be held accountable under the doctrine of ministerial responsibility. However, this article will also argue that the strategies adopted by the two major political parties in dealing with the scandal, and the success or otherwise of those strategies provide interesting insights that extend beyond this affair. Despite a mountain of evidence suggesting that one or both of the Minister for Foreign Affairs Alexander Downer and the Minister for Trade Mark Vaile failed to take reasonable steps to verify the accuracy of allegations of AWB impropriety, the government has continued to insist that it did nothing wrong. It is also patently clear that Prime Minister Howard has no intention of asking either minister for their resignation. The government’s position has arguably been made easier by the Labor party’s ill-conceived strategy in pursuing them. The Labor strategy began in a whirlwind of hyperbole that talked of corruption and government impropriety, and led the media to focus on the existence or otherwise of a smoking gun, unwittingly making anything less seem acceptable.

The doctrine of ministerial responsibility has always been a central tenet of our system of responsible government, but its application and operation have changed significantly, particularly in the modern era. The effect of those changes has been to water down the strictness of the doctrine from its original form. Prime Minister Howard has had a significant role in shaping the modern development of the doctrine, both through the ministerial code of conduct he outlined in his first term as Prime Minister, and through the support or otherwise he has given to the positions of ministers facing questions of ministerial responsibility. Prime Minister Howard is clearly of the view that a narrower definition of ministerial responsibility is appropriate. The Ministerial Code of Conduct developed and articulated by Howard himself, in discussing ministerial responsibility, states:

"Where they neither knew, nor should have known about matters of departmental administration which come under scrutiny it is not unreasonable to expect that the secretary of some other senior officer will take the responsibility"1

In essence, according to the government’s own code of ministerial conduct responsibility lies with ministers when they knew or should have known about particular events within the purview of their department’s administration. In assessing the government’s role in the AWB scandal, it may be that a higher standard is arguably appropriate, but there can be little argument that the government must at least be held to its own self proclaimed standards.

It is not in dispute that the AWB paid illegal kickbacks to the regime of Saddam Hussein in violation of the rules of the oil-for-food regime, in particular through the payment of fees to the Jordanian trucking company Alia, a front for the Iraqi regime. The question that has been the subject of greatest discussion in political circles is the extent to which the government had knowledge of these payments or should have had knowledge of these payments and intervened.

The government, and in particular Prime Minister Howard, and Alexander Downer and Mark Vaile as Ministers for Foreign Affairs and Trade respectively, have always maintained that the government did not know that AWB was paying these illegal kickbacks. Indeed this may well be so, but in light of the multiple warnings from a variety of sources, and the myriad of cables that were sent to their respective departments and offices, the question that arises is how this is possible? Why did the government not vigorously pursue an investigation to assess the veracity of these warnings and allegations against AWB? The government’s defence in this regard has two main pillars. Firstly, that many of the cables and so-called warnings did not actually come to their attention, and that this was unsurprising given their low level sources and nature. Secondly, that to the extent that they were aware of allegations that AWB was paying kickbacks, they made inquiries of AWB, and were assured that these allegations were baseless. The pathetic ‘did you do it’ investigative technique adopted by the government unsurprisingly produced nothing more than repeated AWB assurances that everything was above board. But how was it reasonable for the government to rely on these assurances rather than making more serious investigative inquiries to satisfy itself that the allegations were without foundation. The government’s rationale consists of two elements: firstly, AWB was a reputable company; and secondly the allegations were believed to be coming from US and Canadian sources who had a vested interest in undermining AWB given their competing wheat trade interests. Whilst the first of elements does not even warrant consideration, the second is arguably relevant. However, surely prudence still requires that a semblance of an investigation occurs, and this standard is not met by asking AWB executives.

Application of the Howard ministerial responsibility doctrine implies that the ministers should be held responsible if they actually believed the substance of the warnings, should reasonably have believed the substance of the warnings, or should reasonably have investigated the warnings, which in turn would have lead to them discovering the veracity of the warnings. Similarly, in respect of the warnings they claim not to have been aware of, the key question is whether they should reasonably have been expected to be aware of these, and in turn to have believed them or at least investigated them. Given the volume of warnings that the government did receive that the oil-for-food program was being rorted with kickbacks, given AWB’s position as the number one supplier under that program, and given the numerous allegations specifically relating to AWB that the government was aware of, it is very difficult to conclude that it was reasonable for the government to not only disbelieve these allegations, but to choose essentially not to investigate them. It would certainly appear that the inaction of Minsters Vaile and Downer failed the doctrine of ministerial responsibility Howard established in 1996, and they should face the consequences.

However, the most troubling part of the government’s behaviour arguably lies not in their demonstrated incompetence and indifference, but rather in their efforts to stifle the investigative process and to continue to deny any wrongdoing, whether it take the form of actual knowledge, or alternatively a recognition that they should have done more. On the one hand the government has created a Royal Commission to provide the appearance of transparency whilst crippling it with restrictive terms of reference, it has denied the Senate Estimates Committee the right to question departmental officials, and have been obstinate in dealing with Shadow Minister for Public Accountability Kelvin Thomson’s efforts to obtain documents relating to the AWB affair through the Freedom of Information process. On the other the government has maintained throughout the process that it has done nothing wrong, and the level and nature of inquiries it pursued were reasonable in the circumstances. If the government had nothing to hide, how can the resistance above be explained? However, any interested onlooker knows this is a farcical position for the government to maintain given the significant volume of evidence of warnings that made their way in one form or another to the federal bureaucracy. Why then does the government continue to hold fast to this position? What is to be gained from denying what is self evident? The reason has to do with the dichotomy between those who are avid interested political observers, and the mainstream voting public of Australia. The Howard government doubtless gambled that the former group would follow the story in detail, and make up their own minds in any event. By contrast, the majority of the electorate are generally disengaged from politics this far from elections, and are unlikely to follow the intricate details of the unfolding story in the news, so are far less likely to clearly perceive the government to be guilty of wrongdoing or incompetence. Accordingly, it becomes vital not to admit fault, but to continue to hold the line and hope that the consistently repeated mantra permeates through. This is exactly what the government has done.

Determining how effective this strategy has been is a complicated affair. However, a number of data points can be drawn upon. The published polls suggest that if the government has been hurt by the AWB affair, the effect has been a small one. There has not been a significant fall in the government’s support that one could possibly attribute to the impact of the scandal.  However, obviously disentangling the multitude of influences on the level of support for a party evidenced in published polls is incredibly difficult. A barometer that the parties themselves consider a more reliable indicator of the traction an issue is having in the electorate is the volume of constituent enquiries or comments. Political insiders have suggested that judging by this measure, the affair does not appear to be a significant vote winner for Labor. This ostensibly provides an endorsement for the government’s strategy.

Of course, the failure of the AWB issue to ‘bite’ could be either because the majority of the electorate have not formed the view that the government did anything wrong, or alternatively that in any event they do not consider the issue to be important enough to change their vote intention. A Nielsen poll in late April found that of those who are aware of the AWB affair, 72% do not believe the government’s story, but rather believe that the government was aware that AWB was paying kickbacks. This is a one-off poll and its reliability should be treated with caution, but if this is broadly representative of the wider electorate, it suggests the government’s strategy has ultimately not been able to counter the weight of evidence, and that any failure of the affair to ‘bite’ is not due to people failing to perceive the government’s behaviour as unacceptable. However, the success or otherwise of the government’s strategy is less concerning than the fact that they identified it as an appropriate and viable strategy to deploy. When party politics lead to the first instincts of government’s being to ‘put up the shutters’, stonewall, unleash the spin machine and see what they can get away with, rather than come clean with the Australian public, we should be concerned. In this particular case the media’s dogged pursuit of the truth in the AWB affair, and its exhaustive reporting of the issue appear to have won the argument and convinced the public. However, whilst this serves to remind us that when its forces are appropriately marshalled the media can be a vital and effective agent in holding the government to account, we must be cognisant of the fact that most instances of government impropriety will not have the unique mix of circumstances that made AWB so attractive to journalists. The prospect that money paid illegally by an Australian company to the Iraqi regime was used to arm Iraqis that Australian soldiers went to war with; the hypocrisy of a government bolstering the argument for ousting Saddam with the fact that the oil-for-food sanctions regime was not working, whilst being asleep at the wheel whilst an Australian company did arguably more to undermine that regime than any other; these were too delicious for journalists to ignore. However, the media’s focus will not always be so relentless, nor will it be so effective, so there is cause to be concerned when a government’s strategy is to deny everything and hope for the best.

The second troubling aspect of the government’s response to the AWB debacle is that despite the absolute bungling of the affair by their departments, and their own roles in allowing that situation to develop, neither Mark Vaile nor Alexander Downer will be asked by Howard to resign. Why is this so? The performances of both men, though more particularly Vaile, at the Cole Inquiry suggested a level of breathtaking incompetence. However, notwithstanding the appropriateness of such a move, in his time in parliament has seen enough to know that the right political course is to fight on. Howard has witnessed the dying days of three governments first hand and is well aware that ministerial resignations feed into perceptions about government decline. He also is aware that the voices calling for the ministers heads will not be appeased by the resignations, and the government will get no credit for acceding to these demands. Instead, those same voices will use those resignations as evidence of government impropriety. Given this, there is little to be gained from forcing ministers to resign. Moreover, a ministerial resignation is exactly the kind of visible marker that penetrates through to the broader electorate in a way that the nuances of the ongoing scandal simply do not. The mere fact that the ministers were called before the Cole Inquiry raised the profile and public awareness of the issue, and crucially brought TV cameras and coverage to the fore in what had previously been a press driven process. It may be that this was the point at which the public’s opinion began to turn against the government’s version of events. The resignation of Vaile or Downer would clearly symbolise government wrongdoing in a highly visible way. Moreover, in the case of Vaile, a forced resignation would also give Howard troubles with his junior Coalition partner, the Nationals. For all these reasons it is politically advantageous to allow the ministers to keep their jobs even though they have been demonstrated to have acted incompetently in the affair. Howard knows this, so Vaile and Downer are safe. However, when political considerations outweigh questions of competence and good governance in decisions regarding the future of ministers, we should all be concerned.

Whilst the government’s handling of the AWB affair should give all of us concerns about the interaction of politics and governance, the opposition’s inability to fully capitalise on the affair should provide valuable lessons for an opposition confronted with a government scandal in the future. It is an old adage in life that the way to impress is to under-promise and over-deliver. The ALP would have been well served to be mindful of this in prosecuting their case against the Coalition over the government’s role in the AWB scandal. However, an increasingly frustrated and embittered ALP simply could not restrain itself when faced with the prospect of political blood that the AWB affair ostensibly offered. Kim Beazley called the ‘wheat for weapons’ scandal the worst corruption he had seen in his career in Australian Federal Politics. Beazley promised that the ALP would undertake the most aggressive parliamentary assault on the government in 10 years. These hyperbolic pronouncements were not one-off instances of rhetorical overreach, rather they were repeated consistently. Given this, it was perhaps inevitable that the ALP would ultimately over-promise and under-deliver.

The ALP’s misguided over-exuberance has produced several results that appear to have lessened the negative impact of the AWB scandal on the government. Firstly, by initially framing the debate so strongly in terms of corruption, and government knowledge and complicity, the ALP unwittingly made the proof of such knowing complicity the measure of success, or of government wrongdoing. The evidence for this is that the overwhelming focus of analysis of the government’s role in the AWB affair has been the existence or otherwise of a ‘smoking gun’.

It seems Labor realised its error relatively early in the process, and began to try to reframe the debate in terms of the government’s reckless negligence in investigating alleged corruption. However, the media had its frame of reference, the ‘smoking gun’. Perhaps the Labor party is not entirely to blame for that, and the media must shoulder some of the blame, but in an era where media advisers and strategists play a greater role in politics than ever before, Labor should have anticipated the media’s likely reactions, and set expectations accordingly.

The effect of the framing has been profound. There can surely be little dispute that the evidence that has been uncovered both within and outside the auspices of the Cole Royal Commission have shown a breathtaking level of government incompetence and reckless indifference. The evidence that has been uncovered offers a damning indictment of the government that should concern every citizen. Yet as discussed previously, if the polls are to be believed the government appears to be emerging relatively unscathed. Why? Labor suggested the government knew of AWB’s flagrant abuses of the oil-for-food program, and on this charge the government’s guilt remains unproven. The existence of the Nielsen poll cited earlier notwithstanding, it is unclear that middle Australiahas judged the government guilty as charged. However, even if they have, Labor should thank its lucky stars that the weight of evidence now points so strongly to that conclusion. By making the government’s actual knowledge of kickbacks the key issue, the incompetence that has been amply demonstrated and is patently unacceptable, in effect became acceptable because it is not corruption. Perhaps this explains why the issue has taken so long to really resonate with the Australian people. Certainly the media’s treatment of the government was far less blood thirsty than one might expect given the level of incompetence evidenced, and this is due to raised expectations. If the public really does now believe that the government did know of the kickbacks, then Labor has caught a break, because as bizarre as it sounds, incompetence would have seemed an excusable offence. Labor would have been better off pursuing a simple strategy that focussed on ridiculing the government over its clear incompetence. The mileage made by the Coalition from Peter Costello’s ruthless ridicule of Ros Kelly over the Sports Rorts debacle suggests that such a strategy is a winner.   

The ALP’s tactics have also lessened the potential impact of the scandal on the government by allowing the media to periodically make them the story, diverting valuable column inches and airtime from the government’s evident failings. The media’s proclivity to focus on the political not the substantive is well documented; coupled with a long standing tendency to torment Oppositions in disarray, perhaps this was inevitable. Certainly the signs emerged very early. Labor used almost the entire first week of Question Time to vigorously pursue the government over the AWB scandal, and in doing so uncovered some embarrassing evidence suggesting the government was asleep at the wheel. However, to listen to certain journalists the week was almost a win for the Coalition. The following extract from ABC’s Insiders on Sunday that week was typical:

Cassidy: “after devoting every question to the subject in Parliament this week, you came up empty”
Cassidy: “you promised the most aggressive investigation in 10 years. At the end of the week, the Prime Minister was niggling you and saying not a skerrick of evidence in implicating the government”

Beazley pressed on, insisting that responsibility lay with the government as the scandal took place on their watch, but Cassidy would not be deterred.

Cassidy: “Why does responsibility lie with the Government? You haven’t established they knew anything?”
Beazley: “We have established reckless negligence. I mean that is obvious”.

Confronted by this reality, Cassidy chose not to agree, but to change tack, misleadingly.

Cassidy: “That’s a long way from corruption. You were alleging corruption only a week ago?”

This exchange, whilst occurring early in Labor’s pursuit of the government, encapsulates the dynamic that has persisted ever since, and highlights the problem the ALP created for itself by over-reaching. The media’s focus was not on what government failings the ALP had uncovered, but on what wrongdoings they had not. Given this, establishing traction against the government has been very challenging. Ultimately, the public may have turned on the government over its role in the AWB scandal, but if it has done so, it is despite some tactical blunders from the Labor party that future oppositions would do well to recognise.

The fallout of the AWB affair has offered several lessons about the operation of scandals in modern politics. That Mark Vaile and Alexander Downer will both keep their jobs suggests that the doctrine of ministerial responsibility is not worth the paper it is written on, or in the alternative has simply been shredded. Party politics and the political implications of ministerial resignations mean that government’s will choose to try and ‘ride out the storm’ rather than respond appropriately to ministerial failings. This has profound implications for the quality of governance Australians can expect. Moreover, the government’s relentlessly disciplined strategy of continued denial of any government wrongdoing, and its continued declarations that ministers acted entirely appropriately in all the circumstances, should concern all of us, and make us question how we can seriously believe what governments tell us in affairs like this. It demonstrates that governments are aware of the widespread indifference or apathy towards politics, and are willing to exploit this disengagement to their advantage. Finally, the AWB affair has demonstrated the importance of oppositions carefully framing the debate so as not to set expectations too high, inadvertently making it easier for the government to escape from true accountability, and allowing the media to make their own efforts or failings in pursuit of the government the story.

  1. Guide to Key Elements of Ministerial Responsibility. December 1998, section 6, p13