In December 2007, ASIC commenced civil penalty proceedings in the Supreme Court of Victoria against six former directors and officers of AWB Ltd, the ex-ASX 100 constituent. The trial against the former CEO, Andrew Lindberg began in the Victorian Courts this week and is expected to run for several months.

The court proceedings have heard that AWB management knew that the "inland transport fees" levied by the Iraqi Grains Board between 1999 and 2003 had nothing to do with trucking wheat inside Iraq, that they were contrary to UN sanctions, and that by paying the fees the wheat exporter was ''simply paying a bribe'.

ASIC alleges that the defendants contravened section 180 of the Corporations Act, which requires company officers to act with care and diligence, and section 181, which requires company officers to discharge their duties in good faith and for a proper purpose.

ASIC is asking the Court for the disqualification of each of the defendants from acting as a director and for the imposition of penalties. The Cole Inquiry had previously been set up to examine contracts between AWB and the Iraqi Grain Board. ASIC alleges that these officers breached their duties under the Corporations Act in connection with AWB’s contracts with the IGB under the United Nations (UN) Oil-for-Food Program, which contained payments for purported inland transportation fees. The contracts covered by ASIC’s proceedings were entered into between 20 December 2001 and 11 December 2002 and involved the payment of A$126.3m in breach of UN sanctions.

A UN investigation commissioned in 2005 revealed AWB was the biggest single contributor of kickbacks to Iraq, handing over $US225m in breach of the sanctions between 1999 and 2003.

The defendants in the ASIC actions are:

Individual Position at AWB Andrew Lindberg Former Managing Director Trevor Flugge Former Chairman Peter Geary Former Group General Manager Trading Paul Ingleby Former Chief Financial Officer Michael Long Former General Manager of International Sales & Marketing (2001-2006) Charles Stott Former General Manager of International Sales & Marketing (2000-2001)

Further Reading

ASIC: Media Release

Business Day: AWB paid Iraq trucking fees regardless, court told

Business Day: AWB managers knew of Iraq scam, court told