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Henry Thornton - SMERSH: A discussion of economic, social and political issues The Hissink File - 6 February 2006 Date 06/02/2006
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"The alleged kickbacks payments in Australian wheat sales to Iraq issue is hardly surprising but what does surprise is the rank hypocrisy of the critics."
By Louis Hissink Email / Print

The alleged kickbacks payments in Australian wheat sales to Iraq issue is hardly surprising but what does surprise is the rank hypocrisy of the critics.  BHP Billiton in particular is in a dilemma with the publicity concerning its oil exploration lease application, where a kickback had to be paid in order to get the oil-rights granted.

I am not going to wade into this debate from a moral standpoint that kick backs are bad or good, but instead point to some home truths.

It is a given mineral exploration in countries not run on the Westminster system that in order to get a mining lease granted by government bribes are necessary. In BHPbilliton’s case, a payment to Saddam for their oil rights, in addition to the usual government fees. Fact of life. No kickback, no license.  It is a fact of life in societies that don’t recognise private property rights.

That it violated UN sanctions is neither here nor there – the UN is one of the most corrupt organisations on the planet, and its supporters should carefully consider their political posturing when supporting such an organisation.

Does it occur in Australia? The payment of kickbacks to ensure mining leases is granted? It most certainly does and it is called Native Title.

Prior to Native Title mining companies simply applied to the respective state government paid their fees and in due course a mining tenement was granted with onerous conditions. If a mine was subsequently discovered and put into operation, the mining company then had to pay a royalty to the state, in addition to the various taxes, state and federal.

This system worked well because the state governments acted on behalf of all Australians in their state; not some sections. The mining industry boomed.

Then we had Native Title. I am not going to bother with the details as that has been adequately done in the past but the nuts and bolts today is that before any mining lease (or mineral tenement) is granted, the applicant must jump through the Native Title hoops and obstacles.  This invariably involves “surveys” in which large amounts of money are doshed out to the representatives of “communities”, invariably unemployable white lawyers, anthropologists and social workers.

The representatives of the Aboriginals will insist on an onerous agreement, payment of fees and other additional royalties, before the mining tenement is granted, provided no previous deal has been agreed to.

The mining companies have no option but to pay up.

This is not too much of a problem with the likes of BHPbilliton or Rio Tinto which have enormous resources to deal with these, what are effectively, kickbacks, but it is an enormous cost imposition for the minnows of the industry.

One can see why this system was created – Commonwealth policy was then to have autonomous Aboriginal homelands in which mining companies were considered as an independent source of revenue, in addition to the government handouts to those homeland communities. It was, in effect an extra tax impost. So should Saddam's kickback be reviewed. After all the AWB and BHPBilliton were dealing with a sovereign government and the rules were explicit.

But this does not detract from the fact that payment of upfront fees (kickbacks) to land councils and other individuals before a mineral license is granted.  In essence this procedure is no different than the protocols elsewhere in the Middle East, Asia or South America.

Yet when mining companies do it out of Australia it is called bribery.

It is this hypocrisy that concerns.

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