The Oil-for-Food Programme, established by the United Nations in 1995 (under UN Security Council Resolution 986) and terminated in late 2003, was intended to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humanitarian needs for ordinary Iraqi citizens without allowing Iraq to rebuild its military.
The programme was introduced by United States President Bill Clinton's administration in 1995, as a response to arguments that ordinary Iraqi citizens were inordinately affected by the international economic sanctions aimed at the demilitarisation of Saddam Hussein's Iraq, imposed in the wake of the first Gulf War. The sanctions were discontinued on November 21, 2003 after the U.S. invasion of Iraq, and the humanitarian functions turned over to the Coalition Provisional Authority.
As the programme ended, there were revelations of corruption involving the funds.
The Oil-for-Food Programme was instituted to relieve the extended suffering of civilians as the result of the comprehensive sanctions on Iraq from the UN, following Iraq's invasion of Kuwait in August 1990.
A report by UN investigator Paul Volcker, released in October 2005, found that the Australian Wheat Board, later AWB Limited, was the biggest single source of kickbacks. In exchange for trouble-free disembarkation of wheat purchased under the Oil-for-Food Programme, the Australian Wheat Board paid 'trucking charges' totalling $AU300 million to Alia.
Alia is a real Jordanian trucking company, but one with no role in the distribution of Australian wheat in Iraq. Alia kept a small percentage of 'charges', and passed the remainder to Saddam's government. The AWB was fully compensated for the charges by increases in the price paid; the payments were approved by the Australian Department of Foreign Affairs and Trade. T
he Australian Government commissioned judge Terence Cole to further investigate whether Australian companies had indeed paid kickbacks to the Saddam regime. The Cole Inquiry commenced in December 2005 and is expected to hand down its findings in late 2006. The Cole Inquiry has received testimony from senior Australian Government officials, including Prime Minister John Howard, Deputy Prime Minister Mark Vaile, Foreign Minister Alexander Downer and various officials from the Department of Foreign Affairs and Trade. During the course of the inquiry numerous AWB officials have resigned, including Managing Director Andrew Lindberg.