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Telling us what we already know

By Mirko Bagaric
Posted Thursday, 13 April 2006

The Cole Inquiry investigating AWB’s sham dealings with Saddam’s regime is itself in danger of turning into a scandal. The inquiry’s terms of reference are confined to ascertaining whether AWB or its officers broke the law by paying $290 million in kickbacks to the Saddam Hussein Regime.

Anyone listening to evidence given during the first week of the inquiry (some three months ago) by then AWB chief Andrew Lindberg could have little doubt that AWB knew that it was paying unlawful kickbacks to off load its wheat to Iraq. This is what the inquiry will report - the evidence has all been one-sided. Yet, taxpayers are going to pay millions more dollars to lawyers who are lapping it up in what is turning into the mother-of-all lawyer picnics, as the lawyers continue to question increasingly irrelevant witnesses.

The circus reaches new heights of irrelevance with the Prime Minister now scheduled to hit the witness stand, hot on the back of appearances by the Foreign Minister Alexander Downer and Deputy Minister Mark Vaile. As expected, Mr Downer and Mr Vale denied knowledge of the kickbacks. The Prime Minister will of course do the same.

While some commentators will continue to allege that the government was remiss in not acting on warnings of the scandal that had been provided to departmental staff members, none of this has any relevance to whether AWB acted unlawfully - it is not as if ministerial knowledge is a defence to bribery or related offences.

Thus it is time to wrap up the inquiry and for the obvious findings to be handed down: AWB paid unlawful kickbacks to Saddam’s regime. The lawyers have had enough fun - time to pack up the picnic chairs.

Moreover, no one even in Australia, apart from some sections of the media, much cares about the scandal. A recent survey shows that while 70 per cent of people think the Government knew about the kickbacks, 55 per cent of voters say this hasn’t changed their opinion of the government. During this period the Howard Government’s ratings have increased one point, while the Labor party has fallen by two points.

So why, despite the saturation media coverage given to the AWB inquiry, has the story gained so little traction in Australia?

The AWB saga has got a lot of good ingredients, namely big business, an evil dictator and the stench of corruption. So what’s missing? The problem is that nothing is missing. There is no intrigue factor.

Of course entering into a billion dollar deal with a tyrannical third world regime was going to have its glitches. Most brutal dictators didn’t top the class in Business Ethics 101 and are prone to drive a hard bargain, even if means breaking the occasional United Nations mandate. It is no surprise to anyone that a government that invades its neighbour and summarily murders thousands of its own citizens might be prone to some “sharp” business practices.

And as for AWB agreeing to pay the alleged kickbacks to Saddam’s regime, no surprise there either. AWB was just following the golden rule in business, so eloquently stated by Nobel Prize winning economist Milton Friedman: “The social responsibility of business is to maximise profits.”

While this statement was made nearly 40 years ago, we all know that corporate behaviour has not moved beyond that mantra. The bottom line in business is still the profit line. Business has not taken a single step up the moral mountain. It can be no other way.

One of the irrefutable rules of logic and human behaviour is that you only get out of something what you put in. Until corporate middle and heavyweights are required to undertake ethics training they will continue to unremittingly pursue the bottom profit line at the expense of nearly every ideal. Many of them know about little else.

To the extent that business leaders think they know something of ethics, most subscribe to the fallacy of “When in Rome, do as the Romans”. In the third world bribery is standard business practice. It’s not as bad as it sounds. In the West we call it networking.

While networking is more subtle than bribery it has the same market distorting effects. Contracts should be awarded to the company that is trumps on price and quality, not the one that has the biggest entertaining budget or thickest brown paper bag.

Given that AWB executives were almost certainly imbued in a western networking culture and were not trained that moral norms are in fact objective universal truths as opposed to culturally relevant expedients, they were hardly likely to be offended at the prospect of handing over a few kickbacks.

Hence, in the end the whole AWB saga really is just stock-in-trade global business practice. The public knows this. That’s why we don’t care. It’s a message that the Cole Inquiry should heed. The only constructive thing that can be done is to wrap up the inquiry and stop badgering irrelevant witnesses who have far more important things to do.

The matter does not even register on the social relevance radar. It is inappropriate three senior government ministers were required to waste their time and appear at the inquiry - there is no issue of national interest at stake.

The money saved by curtailing the inquiry should be used fund compulsory ethics training for corporate leaders. Now that is something that the community could get excited about.

Mirko Bagaric, BA LLB(Hons) LLM PhD (Monash), is a Croatian born Australian based author and lawyer who writes on law and moral and political philosophy. He is dean of law at Swinburne University and author of Australian Human Rights Law.

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