May 2nd 2009

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Articles from this issue:

CANBERRA OBSERVED: Labor's 'people overboard' fiasco

EDITORIAL: Human rights consultation hijacked?

TRADE: Government pushes China free trade agreement

FIJI: Australia and NZ silent as China bankrolls military junta

NATIONAL AFFAIRS: From Baghdad to Beijing: Labor's dodgy dealings

TRADE UNIONS: WA unions host Cuban ambassador... Why?

ILLICIT DRUGS: Australia's $10 billion industry - organised crime

GLOBAL WAR ON TERROR: A desperate fight to the death

THAILAND: Land of smiles descends into turmoil

PRE-SCHOOL: Conscripting our toddlers for political activism

OPINION: Legislative assault on freedom of conscience

POLITICAL IDEAS: Crisis of credibility that has shaken the world

AS THE WORLD TURNS: Productive investment vs. financial speculation / Free speech curtailed for the sake of pluralism

Human rights hearings (letter)

Australia to import food? (letter)

Telstra (letter)

ETS to cost billions (letter)

CINEMA: Katyn - Sombre depiction of unpunished WW2 crime

BOOKS: REFUGEES AND REBELS: Indonesian Exiles in Wartime Australia, by Jan Lingard

BOOKS: GIRLS LIKE YOU: Four Young Girls, Six Brothers and a Cultural Timebomb, by Paul Sheehan

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From Baghdad to Beijing: Labor's dodgy dealings

by Joseph Poprzeczny

News Weekly, May 2, 2009
From the time of the Whitlam Government till today, some senior Labor politicians and party officials have been prepared to conduct business dealings with some of the most unsavoury, not to say murderous, regimes in the world. Joseph Poprzeczny reports.

Labor's besieged Defence Minister Joel Fitzgibbon and his two secret China trips, bankrolled by Madame Helen Liu, fit snuggly into a seldom-noted Labor tradition that's best described as cosying up to authoritarian regimes.

Members of three of the last four Labor governments - Gough Whitlam's (1972-75); Bob Hawke's (1983-91); and now Kevin Rudd's (2007-) - have had links with such regimes.

The Rudd Government, however, has taken this proclivity to a new level by hosting secret visits to Australia, first, by China's top enforcer, Security Minister, Zhou Yongkang, late last year (see "Beijing's butcher is granted Australian visa", News Weekly, November 22, 2008), followed by China's Minister for Propaganda, Media and Ideology, Li Changchun, last month.

That's as if, say, British Prime Minister Neville Chamberlain had, on the eve of World War II, secretly invited to London Nazi Germany's head of Police, Reichsfuhrer-SS Heinrich Himmler, followed soon after by Propaganda Minister, Josef Goebbels.

Coalition's pretensions

The fact that Opposition leader, Malcolm Turnbull, also met Li Changchun further de-authorises the Coalition's pretensions to being a suitable alternative government.

Labor's taste for clandestinity in international relations first surfaced during 1974-75 when Labor's then Minerals and Energy Minister, Rex Connor, had quietly hired London-based Pakistani commodities trader Tirath Khemlani to raise AUD$4 billion.

This money was ostensibly to fund a trunk pipeline network linking Western Australia's North-West Shelf gas reserves to Sydney and Melbourne and to develop the Northern Territory's huge uranium deposits.

Labor opted to avoid Wall Street intermediaries since it believed that Arab financiers, flush with their windfall of petro-dollars from the 1973 Arab oil embargo price hike, could provide money to Australia at lower interest rates.

Connor worked doggedly from December 1974 until May 1975, trying to clinch the huge loan, by using his office telex to ensure direct contact with Khemlani.

Then, for reasons never explained, Prime Minister Gough Whitlam changed tack by contacting some still unidentified American bankers for finance. These bankers stipulated that, for the Australian government to qualify for such a loan, it should forthwith cease all loan-raising activities from other financial intermediaries.

Whitlam apparently told Connor to break-off dealing with Khemlani. However, in defiance of the government's change of policy, Connor maintained the contact. For this he was eventually sacked.

Connor denied he had continued attempting to raise the funds; but Khemlani subsequently refuted this claim by releasing telexes that showed the two were still in ongoing contact.

Labor's initial reliance upon an unknown small-time Third World commodity dealer; contradictions over whether Labor was seeking as much as AUD$8 billion or "only" AUD$4 billion (in January 1975, the figure was slashed to AUD$2 billion); differences and mounting concern within Cabinet; subsequent media leaks about the purpose of such huge borrowings - all these things seriously discredited Labor.

The then Liberal-led Opposition dubbed Labor's conduct of what became known as the Loans Affair as "reprehensible circumstances", thereby laying the basis for the removal of the Whitlam Government.

With Labor's credibility shattered after so short a time in office, the Opposition parties were increasingly emboldened and, in 1975, used their numbers in the Senate to block the government's Supply bills.

When Gough Whitlam refused to call an election to renew his government's mandate, the Governor-General Sir John Kerr (who, ironically, had been appointed by Whitlam), used his reserve powers to withdraw Labor's governing commission.

The Dismissal, as this historic episode became known, initially sparked a massive public uproar, especially among Labor backers, academics and sections of the media.

For a month, Australia's capital cities hosted huge protest rallies during which Whitlam repeatedly called upon his "fellow Australians" to "maintain the rage" at his vice-regal dismissal.

But all this was to no avail, for Whitlam was trounced by Liberal leader, Malcolm Fraser, at the December 13, 1975 poll, and at a further poll in 1977.

But the petro-dollars were not the only funds Whitlam sought from Arab quarters.

It was revealed that, only five days after the November 11, 1975 Dismissal, Whitlam was personally involved in seeking to raise US$500,000 from the Iraqi Ba'athist Government (soon to be headed by Saddam Hussein) to help bankroll Labor's 1975 bid for re-election.

Whitlam, along with ALP national secretary, David Combe, and far-left Senate candidate, Bill Hartley (nicknamed "Baghdad Bill'), had been secretly soliciting money from one of the most repressive regimes in the world.

Melbourne Age senior columnist Tony Parkinson later wrote: "The Ba'athist regime in Iraq at that time was a paid-up member of the Socialist International.

"Three years earlier, Saddam Hussein had gone to Moscow on behalf of Iraq to sign a Treaty of Friendship with the Soviet Union. Iraq was an ally, and sponsor, of Third World revolutionaries, including Yasser Arafat and Daniel Ortega.

"As vice-president, Saddam had taken charge of Iraq's security and intelligence apparatus. Using the massive surge in revenues from the 1973 oil price shock, he was arming his nation to the teeth with Soviet tanks, MiG fighter jets and Scud missiles, and he was having his troops tutored in Soviet battlefield doctrine. ...

"The saga became truly surreal three days before the December 13 election, when Whitlam trusted his reputation to the far-right anti-Zionist, Henri Fischer, who acted as intermediary at a meeting with two Iraqi diplomats at a Sydney hotel to finalise their understanding." (Tony Parkinson, "Shame, Whitlam, shame", The Age, November 15, 2005).

Whitlam underwent a torrid in-camera grilling by senior Labor officials, the details of which have never been revealed.

Parkinson quoted Bob Hawke, who wrote scathingly in his autobiography, The Hawke Memoirs: "Hartley, in his fanaticism, obviously saw the enmeshment of the ALP with Iraq through this proposed transaction as highly desirable. But that Whitlam, who was aware of the abhorrent nature of this regime, should acquiesce appalled me beyond measure."

Parkinson remarked: "Ultimately, though, it fell to Hawke, as ALP president, to extricate the party from the mess. He brokered a deal in the national executive to save Whitlam from departing public life in disgrace. Hartley would be threatened with expulsion, while Whitlam and Combe would be severely reprimanded.

"Hawke would later call this 'the saddest meeting of my whole career in the ALP'."

Combe, however, was to re-surface during the Hawke years as a Canberra lobbyist and featured in what became known as the Combe-Ivanov Affair that, strangely, led to a royal commission into Australia's intelligence community.

In 1982, Combe and his wife had made a trip to the Soviet Union, before which they met and made the acquaintance of the first secretary at the Soviet embassy in Canberra, Valery Ivanov.

Soon after the Hawke Government was elected in March 1983, ASIO approached the new Prime Minister to warn him that Combe, still closely aligned with the ALP, may have been cultivated by Ivanov, who, it turned out, was an officer of the Soviet spy agency, the KGB.

The Hawke Government expelled Ivanov from Australia and forbade government ministers from dealing with Combe as a lobbyist. Senior minister Mick Young - like Combe, a South Australian - breached Cabinet confidentiality by privately tipping off a journalist that a Soviet diplomat was on the verge of expulsion. Young was stood down from Cabinet, but five months later was re-appointed Special Minister of State.

The government established the Hope Royal Commission into Australia's security and intelligence services, which, although it confirmed that Combe had indeed been targeted by the Soviets, nevertheless cleared him of suspicion of spying. Soon afterwards, Combe was dispatched to Canada and later Hong Kong as a senior trade commissioner.

Notwithstanding such prompt rewards for Combe and Young, the affair rattled Labor for some time.

The successor Keating Labor Government certainly wasn't burdened by similar scandals. Interestingly, Paul Keating had been promoted into Whitlam's last ministry because of the vacancy created by Rex Connor's sacking.

Under Kevin Rudd, the revelation of the Fitzgibbon-Madame Liu relationship has resulted neither in the sacking of Defence Minister Fitzgibbon, like Connor or Young, nor in his being ostracised, like Combe.

All that Fitzgibbon has endured is a rebuke from Prime Minister Rudd for failing to declare on his parliamentary statement of pecuniary interests that he'd accepted two Chinese trips from Madame Liu in 2002 and 2005, not for having taken such trips.

A recent special report in the Melbourne Age has revealed a further twist in the saga. Nine years ago, Madame Liu's NSW property development firm, Wincopy, reportedly donated a hefty $20,000 to Mr Fitzgibbon's Hunter electorate campaign fund.

Evidence, published in The Age, has recently come to light that the second-biggest shareholder in Ms Liu's firm was Ausboc, and that "the ultimate holding company for Ausboc was the Bank of China, which at that time was wholly owned and controlled by the Chinese Government in Beijing". ("Minister's new China link", The Age, April 9, 2009).

There is one major and significant difference distinguishing the recent Fitzgibbon-Madame Liu Affair from the earlier Khemlani Loans Affair, Iraqi Ba'athist Party Loans Affair and Combe-Ivanov Affair, and that is the moral dilemma in which the Prime Minister finds himself.

Chinese interests

Kevin Rudd, like his beleaguered Defence Minister, has himself been recipient of several Chinese-bankrolled trips, with one of these undertaken for Chinese interests to visit and report on Sudan.

As a result, Rudd has been in no position to wag an admonishing finger at Fitzgibbon.

Precisely where the Fitzgibbon-Madame Liu matter may have ended is simply too early to speculate.

However, it is disturbing how readily some senior Labor politicians and party officials - Whitlam, Hartley, Combe, Fitzgibbon and Rudd - have been prepared to conduct the closest business dealings with some of the most unsavoury, not to say murderous, regimes in the world.

- Joseph Poprzeczny is a Perth-based historian and freelance writer.


Tony Parkinson, "Shame, Whitlam, shame", The Age (Melbourne), November 15, 2005.

Richard Baker, Philip Dorling and Nick McKenzie, "Minister's new China link", The Age (Melbourne), April 9, 2009.

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