AWB paid nearly A$300 million in transport fees to a Jordanian trucking company, Alia, which a report by the United Nations later found were bribes to the former leader’s cronies.
Foreign Minister Alexander Downer's office has confirmed that the ambassador at the time, Michael Thawley, met a US Senator in late 2004 to head off an inquiry.
The Sydney Morning Herald reports that Mr Thawley met Senator Norm Coleman in September 2004 and “argued strongly” against a planned Senate sub committee inquiry into the AWB.
A statement from Mr Downer's office said the Australian government had been very concerned that AWB would be treated unfairly and had no reason to believe it was not behaving properly.
"The government was very concerned that because of the strong
campaign by American wheat interests, the US Senate committee would be used by those interests to damage Australia's wheat interests with Iraq," the statement said.
Mr Downer has also confirmed that the talks did take place but he has told the ABC that such a meeting was not unusual and part of normal diplomacy.
“What Mr Thawley wanted to do was make sure that if there was to be an inquiry into all of this, the focus would be on the United Nations inquiry and that the [UN] Volker inquiry, and of-course that inquiry was if you like, an impartial inquiry.”
Mr Downer insists the AWB did not have anything to hide and he insists that Mr Thawley’s involvement was “entirely appropriate and right.”
But the opposition says the lobbying by Mr Thawley is part of a cover up by the government.
Labor leader, Kim Beazley has reiterated the opposition’s call for the inquiry’s terms of reference to be widened.
“If John Howard weren’t scared about what th Royal Commission found he would be perfectly prepared to have the behaviour of his government and his ministers analysed,” said Mr Beazley.
The planned investigation into allegations AWB might have inflated the wheat price to cover bribes to Iraq followed information including a report from the US Defence Contract Audit Agency.
The information prompted the Senate committee to begin negotiations with AWB's US lawyers for access to internal company documents.
But AWB lawyers reportedly argued, in a series of meetings with Senate staffers in 2004, that the committee had no jurisdiction to investigate AWB.
In at least one of the meetings AWB executives were present and
emphatically denied the company had knowingly paid kickbacks, the Herald reported.
The probe was ultimately dropped, reportedly due to the fierce resistance from the wheat exporter, and following Mr Thawley's meeting with Senator Coleman.