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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

`