Did the AWB pull the wool over investors’ eyes when it floated on the ASX in 2001? If AWB directors and management knew about the risks involved in paying “trucking fees” to Iraq, those risks certainly didn’t feature in the former Wheat Board’s prospectus or the pages detailing the risk factors associated with the business.
The AWB Prospectus was lodged with ASIC on 6 July 2001, and by the time AWB directors – including then chairman Trevor Flugge and then managing director and CEO Andrew Lindberg – signed off on the legal document on 31 March 2001 it now seems that the risks the company was taking in Iraq were fairly well known within executive ranks.
Here are some of the dates unearthed at Terence Cole’s Commission which show when AWB execs knew about their company’s illegal dealings in Iraq:
March 2000: “If all the UN wants is some understanding on standard terms and conditions in AWB contracts then I think we have nothing to worry about,” AWB executive Tim Snowball said in the March 2000 email to colleague Mark Emons. This was after the foreign affairs department, the head of Austrade and Australia’s permanent UN mission in New York all failed to investigate a warning from Canada, who had heard AWB was paying special “trucking fees” to Iraq to get their wheat shipments through.
2000: An internal AWB report, written by Arthur Andersen, says the London-based company Ronly Holdings was secretly paying inland trucking fees to the Iraqis, on behalf of AWB, as a way of circumventing UN sanctions on Iraq.
2001: Lindberg allegedly saw a fax spelling out the extra costs to the AWB of trucking wheat shipments into Iraq.
And the “Risk factors and approach to risk management” section of the AWB Prospectus included these lines:
Risk management practice standards are the responsibility of each business unit manager throughout the organisation. AWB has recently appointed a new Chief Risk Officer to facilitate ‘best practice’ corporate governance including business risk attribute identification, monitoring and reporting.
The Board has two committees devoted to monitoring risk factors and ensuring compliance with Board policies and delegations, those being the Audit Committee and Corporate Risk Board Committee.
AWB closely monitors the actions of government subsidies and support programs and in conjunction with the Australian Government and industry, actively lobbies against trade distorting practices by competitors.
Crikey called ASIC to ask if the AWB’s 2001 prospectus is being investigated and was told that the regulator is awaiting the outcome of the Cole inquiry and will assess the situation then.