The Australian


Article By Lauren Wilson

20 October 2009

AWB boss Andrew Lindberg saw 'kickbacks go to Saddam'



FORMER AWB managing director Andrew Lindberg deliberately or negligently ignored the danger signs and failed to stop the flow of $300 million in kickbacks to Saddam Hussein's regime on the eve of the war with Iraq, the corporate watchdog has claimed in its first civil case against a wheat board executive over the kickbacks scandal.


The Australian Securities and Investments Commission yesterday opened its civil penalty case in the Victorian Supreme Court against Mr Lindberg, who resigned as AWB managing director and a board member in the wake of the Cole inquiry in 2006.


Mr Lindberg has maintained he knew nothing of the hundreds of millions in hard currency that was disguised as trucking fees and provided to Iraq until 2003, in breach of UN sanctions.


Norman O'Bryan QC, for ASIC, told the court that as managing director of Australia's former wheat monopoly, Mr Lindberg knew, or should have known, there were UN trade sanctions against Iraq, that the terms of the UN oil-for-food program were "simple and clear", and that AWB was breaching the sanctions when it added "sham fees" to its wheat contracts that allowed illegal funds to be channelled to Iraq.


Over four years, AWB was found to have passed about $US225m (then worth about $290m) in cash to Saddam Hussein's regime, amounting to more than $1m a week. Mr Lindberg was AWB's boss for three of these years.


"Like all successful frauds, this was very simple," Mr O'Bryan said. "The AWB supplied Iraq not only with wheat, but with hard currency that was to be paid for out of (a UN) account."


Mr Lindberg "had direct and ready means of knowing precisely what was going on", Mr O'Bryan said. Many of his senior executives knew of the kickback arrangement, and by inference, so did the AWB boss.


Even if the court were to accept Mr Lindberg did not know about the "sham fees", Mr O'Bryan said, ASIC would maintain he was in breach of his corporate responsibilities. "Ignorance does not excuse him," he said. "The warning bells were clearly ringing, or the red flags were waving, and Mr Lindberg never -- deliberately or at its lowest level negligently -- informed himself of these matters.


"He was derelict in his duties as managing director, chief executive officer and member of the board of directors."


The AWB is not a party in the civil matter, but Mr O'Bryan painted a dim picture of the fallout for AWB from the Iraq kickbacks scandal. "It has not recovered and it will never recover from this episode," he said.


Mr O'Bryan said the loss of AWB's monopoly over wheat sales did it substantial damage, triggering the collapse of its share price and shrinking its business and profits.


"Mr Lindberg should have foreseen this sort of harm coming to AWB," he said.


ASIC has indicated it may launch further proceedings against Mr Lindberg, who was in court yesterday with his wife, within the next four weeks. The current case is expected to run until next year and 30 ASIC witnesses will be called, many of whom, Mr O'Bryan indicated, "are not going to give evidence in a happy frame of mind at all".


Counsel for Mr Lindberg, David Collins SC, said an email sent by ASIC flagging possible further proceedings -- which was received after the close of business last Friday, the last working day before the trial -- was "unjust, vexatious, oppressive and unfair".


Last November, Supreme Court judge Ross Robson ordered that civil charges brought by ASIC against five other AWB executives -- former chairman Trevor Flugge, Paul Ingleby, Charles Stott, Peter Geary, and Michael Long -- should be stayed until it was determined whether criminal charges would be laid. In August, the Australian Federal Police said they had dropped the investigation.


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