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Viewing cable 06WELLINGTON218, NEW ZEALAND'S RESPONSE TO IIC FINDINGS

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Reference ID Created Released Classification Origin
06WELLINGTON218 2006-03-21 04:19 2011-04-28 00:00 UNCLASSIFIED Embassy Wellington
VZCZCXYZ0002
RR RUEHWEB

DE RUEHWL #0218 0800419
ZNR UUUUU ZZH
R 210419Z MAR 06
FM AMEMBASSY WELLINGTON
TO SECSTATE WASHDC 2547
UNCLAS WELLINGTON 000218 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR IO/PSC/LIZ PARKER AND EAP/ANP/DAN RICCI 
 
E.O. 12958: N/A 
TAGS: PREL KFIN PGOV NZ
SUBJECT: NEW ZEALAND'S RESPONSE TO IIC FINDINGS 
 
REF: STATE 40595 
 
1. The New Zealand government has investigated two companies named 
in the Independent Inquiry Committee's interim report released 
October 27, 2005, on allegations of illegal fund transfers to Iraq. 
The government investigation found no evidence of such transfers by 
the two companies.  In addition, the New Zealand government 
investigated the dairy cooperative Fonterra, which had a Vietnamese 
trading partner that was named in the IIC report.  The government 
also cleared Fonterra of involvement in illicit payments to Iraq. 
The New Zealand government so far has taken no action against 
individuals or companies as a result of the IIC's findings. 
 
2. The Independent Inquiry Committee (IIC) in its October 27 report 
identified two New Zealand companies -- Ecroyd Beekeeping Supplies 
Limited and JB Sales International Limited -- as having supplied 
products under contracts that allegedly involved illicit fund 
transfers to the Saddam Hussein regime.  The report also identified 
Vietnam Dairy Products Company as paying considerable kickbacks to 
the regime.  The company purchased whole milk powder from the New 
Zealand dairy cooperative Fonterra, repackaged the product in 
Vietnam and then sold it to Iraq. 
 
3. A check of files by the New Zealand Ministry of Foreign Affairs 
and Trade (MFAT) found that Ecroyd and JB Sales sought and received 
the proper approvals and exemptions required under the UN sanctions 
regime and New Zealand law to export to Iraq, according to a 
November 4 statement by Foreign Minister Peters.  Caroline Bilkey, 
deputy director of MFAT's Legal Division, told post March 15 that 
the government investigation found no evidence of illegal kickbacks 
by the two companies. 
 
4. Ecroyd told MFAT officials in 2002 that it had been asked to pay 
an additional 10 percent tax in Iraq.  After consulting with the 
United Nations, MFAT told the company that such payment was illegal 
and that it should refuse to pay it.  Ecroyd subsequently reported 
that an agent in Jordan said it no longer needed to pay the tax. 
 
5. Bilkey said that at some point Fonterra became aware that its 
product was being repackaged in Vietnam and sent to Iraq.  MFAT then 
sought and obtained an exemption from the Foreign Minister for 
indirect exports of whole milk powder to Iraq.  The government 
investigation found no evidence that Fonterra was involved in or had 
knowledge of illicit payments to the Iraqi regime.  Bilkey noted 
that the IIC report mentioned only the Vietnamese company, and not 
Fonterra. 
 
6. New Zealand is seeking additional information from the IIC to 
establish whether there are grounds to prosecute either of the two 
companies under New Zealand's anti-bribery laws.  To do so, the New 
Zealand government would need evidence that the companies had 
knowledge and intention regarding the payment of bribes under the 
Oil for Food Program.  The New Zealand Police have requested that 
the IIC share the information it has on these cases, and the IIC is 
expected to hold a telephone conference with the police soon. 
 
MCCORMICK