Michael Pascoe writes:
A New Yorker friend keeping an eye on the
Cole inquiry from afar raises the
question of what happens if AWB Ltd itself is indicted and convicted of
“In the States, a criminal indictment of a corporation or business
is the kiss of death (a la Arthur Anderson),” writes the Harvard MBA who’s also
doing a little forensic accounting study. “What would the ASX do? Or whomever
you have as an SEC? You do have securities law there don’t you? Any chance that the UN and/or
new Iraqi state could/should/might sue the AWB for recovery of all payments?” Ka-ching.
It is of course purely in the speculative
realm of what might happen to AWB if it should eventually be charged with and
convicted of a criminal offence, but yet another layer of legal pain would fall
on the shareholders presently hanging tough, perhaps threatening the very
existence of the company.
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The actual penalties under the 1999 bribery
and skulduggery act aren’t much for a big company – just a miserable $65,000
fine. However, if a court looks at every shipment as an individual act and
multiplies that by $65K, it begins to add up. Ka-ching, ka-ching.
But that of itself still wouldn’t be the
main problem. It turns out that the ASX doesn’t have any listing rule about
corporations being criminals – hey, one man’s criminal is another’s
entrepreneurial hero – so there would be
no automatic suspension or penalty.
However, there are listing rules about
disclosure, and an ASX with gonads could treat a criminally convicted company
very harshly on that score, unless it was more interested in collecting
fees. In theory, a company committing crimes has a duty to disclose that to the
ASX if it is material.
And what follows from a non-disclosure
problem is the inevitable class-action by investors who trusted the company.
Ka-ching, ka-ching, ka-ching.
It’s worth remembering that HIH, for example,
lost its ASX listing over non-disclosure, not for ruining countless lives. If
AWB is suspended, the ka-chings would just keep coming.
Then there’s the matter of Federal Government
contracts. Canberra won’t do business with building companies that don’t play by its IR
rules, so how could the government possibly condone the conference of its wheat
export monopoly power on a criminal company? With John Howard already
condemning AWB as a bunch of liars, I don’t like the chances. Exit half of
AWB’s reason for being.
What’s left? Enough to pay the legal bills
through all the mess? AWB’s lawyers will hope so.