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Issue # 1404      25 March 2009

AWB – still no answers

Three years ago, the Australian Wheat Board (AWB) was a political hot potato that had Howard government heavyweights stammering and stumbling. Paul Volcker, a former governor of the US Federal Reserve, revealed that the AWB had paid almost $300 million in kickbacks to officials of the government of Saddam Hussein to ensure grain export contracts under the UN’s oil-for-food program in the late 1990s. In response to public pressure Howard set up an inquiry under Justice Terence Cole. The government and its bureaucracy did its best to frustrate the probe but what did come out shocked the nation and destroyed the single desk export marketing body for Australian wheat growers.

All these years later, while several US corporations have paid hefty fines or compensation or packed some of their directors off to do jail time for similar violations, nobody from the AWB has been penalised. A piece written by David Marr for The Sydney Morning Herald (14.03.2009) leaves the reader wondering if anybody will ever be called to account for what was easily the biggest scamming of the humanitarian aid program to the people of Iraq.

Cole’s findings filled five volumes and 10,000 pages. They are part of the basis of a US$10 billion lawsuit in the US by the current government of Iraq against AWB for assisting Hussein. Widows whose husbands were murdered and tortured by Hussein are also pursuing the company.

In Australia, shareholders are suing for the resulting sharp loss in the value of their shares in the company. But as far as anybody having to face the music for the bogus payments paid to Jordanian trucking company Alia, a front for receiving kickbacks in return for lucrative Iraqi grain contracts, it’s nothing doing.

Cole’s inquiry did not have the power to find AWB and its top personnel guilty. Investigation of the glaring “irregularities” was left to the Australian Securities and Investments Commission (ASIC) and the Australian Federal Police (AFP). Marr’s Herald article details the fraught relations between the two bodies as they tried to wrestle the culprits within AWB to the ground. So far, the combined Oil for Food Task Force appears to have little to show for its efforts.

Late last year, ASIC had to pass up the chance to start civil proceedings over 22 of the 29 contracts in question – it was too late. The AWB managed to bog inquiries down with appeals to the Federal Court that ASIC was demanding too much information too soon.

It also insisted on having its own lawyers present at interviews of past and present directors to prevent material slipping out that should be protected by “legal professional privilege”. Cole himself had been frustrated by the tactics of the company and gave it a serve for “non cooperation, lack of frankness and resort to litigation to endeavour to keep from disclosure documents and material relevant to this inquiry.”

In December 2007, ASIC began civil proceedings against six former directors and executives of AWB for 72 breaches of the Corporations Act for entering into arrangements they knew to be violations of UN sanctions. Among the accused was Trevor Flugge, whose bare-chested image featured in the media at the height of the scandal. Snapped in a Baghdad hotel in 2003, a smiling Flugge was shown pointing a revolver at his photographer.

Late last year, the accused won a stay of proceedings in the Victorian Supreme Court on the grounds that criminal charges relating to the same matters were pending. No criminal charges have yet been laid and, as Marr points out, they are not inevitable. The current management of the AWB is continuing to be defensive about their damaging public relations inheritance:

“It is in the best interests of the company,” said company spokesperson Peter McBride, “to have legacy issues against former executives and directors expedited especially as they are extremely costly to the organisation. However the company will continue to legitimately protect its position in light of existing proceedings taken against the company relating to legacy issues.”

The AWB’s “position” has changed beyond all recognition from the days it was a government-run single desk marketing organisation for Australian wheat growers. Over the decades it has been corporatised and privatised. In the wake of the Iraq kickbacks scandal, the preferred neo-liberal option of destroying the single desk was moved up the agenda. In spite of support from over 80 percent of growers for a single desk arrangement and grower protests in Canberra, the Rudd government scuttled the system in mid 2008.

The AWB was in short-lived merger talks with rival grain handling company ABB. It wasn’t among the first five companies accredited to export under the new system overseen by Wheat Exports Australia. In September last year, the new company management won a vote at the third attempt to scrap the two class share structure that gave privileges to the 18,000 wheat growers who owned them. ?

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