Do agricultural groups have a problem with good corporate governance?
It would certainly appear so with AWB, but what about Australian Wool
Services, the company which until this week was chaired by the
forgetful and hard of hearing Trevor Flugge.

AWS, which operates The Woolmark
Company, also lost its managing director a month ago when Peter
Wilkinson returned from whence he came to head up the Myer family’s tilt at Myer.

That left Flugge floundering away at AWS without a managing director trying
to get up a merger with Australian Wool Innovation, whilst he was under
siege over AWB. That was all too much on Tuesday when he stepped down as chairman but inexplicably remained on the AWS board.

However, it gets worse. Flugge’s AWS board understudy, John Patten, was
former deputy chairman of retailer Harris Scarfe and chairman of its
audit committee when it collapsed in 2001, although this is
conveniently excluded from his AWS board CV. Patten was a respondent in
the subsequent shareholder class action and you can see the announcement here when he joined other colourful characters on the AWS board in 2001.

We also hear
that company secretary Peter McKeown is about to depart as well, so
Flugge has clearly presided over a complete mess. Having been voted
off the AWB board in 2002, it does seem a little odd that he was then
installed as AWS chairman in 2003. Check out the full board, all
four of them, on page 13 of last year’s AWS annual report.

Australian Wool Growers, which bills itself as the voice of the grower, on 7 February demanded Flugge resign from the AWS board with a home page message that read:

The Australian Wool Growers Association (AWGA) is demanding that Trevor Flugge,
Chairman of Australian Wool Services Ltd (AWS), step aside from the Board
immediately, until the Cole inquiry into AWB Ltd’s activities is settled.

The ABC reported Flugge’s response as follows on 8 February:

Mr Flugge says there is no relation between the two and the call is
politically motivated. He says the AWB inquiry has not distracted him from
organising a merger between AWS and Australian Wool Innovation.

Clearly that all changed this week when Flugge stood aside
from his three public company board seats, including Wesfarmers,
but why is he still hanging around on AWS like a bad smell?

This Woolmark newsletter
from Flugge last year points out some of the operational problems the
wool marketer has faced under his stewardship, but the board and
management vacuum is far worse than The Agereported yesterday.