AWB splits over oil-for-food scandal - Taipei Times
Thu, Nov 30, 2006 - Page 5 News List

AWB splits over oil-for-food scandal


Australia's monopoly wheat exporter AWB Ltd announced plans yesterday to restructure because of its kickbacks to Iraq's former dictatorship, but Australian Prime Minister John Howard suggested wheat farmers would still negotiate exports with a single voice.

AWB said it planned to split into two companies as part of its response to an inquiry commissioned by the government that reported this week the company deceived the UN and Australian government by paying over US$220 million in kickbacks to Saddam Hussein's regime between 1999 and 2003 to secure lucrative wheat contracts under the UN's discredited oil-for-food scheme.

In the inquiry report former judge Terence Cole recommended a range of charges against former executives.

AWB chairman Brendan Stewart expressed AWB's "deep regret" for the way it conducted its business under the humanitarian program.

"Our reputation has been shattered by the events of the past year," Stewart told reporters in the company's hometown of Melbourne, referring to damning revelations of corruption that came from public hearings that began in January.

"At the end of the day, the board ultimately accepts responsibility for what happened and is committed to making significant changes to make sure that it never happens again," he added.

Stewart said AWB already had a new management team and was conducting reviews of the company's governance structures and its international marketing activities.

He said he would step down after AWB split its monopoly wheat exporting business away from its other operations "to ensure improved governance, culture and operating performance."

But Howard said the government could move further to reform the wheat trade system.

He suggested Australia was likely to hang on to its monopoly export market, enshrined by law, which competitors -- including the US -- argue give Australian farmers an unfair price advantage. But he has not guaranteed AWB will maintain control over that monopoly.

Australia's so-called single desk wheat export policy is seen as a bargaining chip for Australia in its negotiations with the US to reduce farm subsidies and with Europe to lower tariffs.

"A unilateral move totally away from the present situation without something being given in return would be foolish," Howard told reporters in Canberra, referring to the export monopoly.

Howard said he would discuss with his ministers what should replace the existing export system and would reveal the Cabinet's decision on Tuesday.

"Any changed arrangements have to be ones that work and have wide acceptability among Australian wheat growers," Howard said.

Australian grain growers and lawmakers are bitterly divided about whether the 70-year-old monopoly export system should be maintained.

A consortium of grain handlers -- ABB, CBH and GrainCorp -- was allowed to break the monopoly and supply 350,000 tons of wheat worth A$90 million (US$69 million) to Iraq in May because AWB is now banned from that market due to the scandal.

AWB is also under pressure from US wheat farmers who are planning to sue the company in the US Federal Court under the Racketeer Influence and Corrupt Organizations Act (RICO), usually reserved for organized crime.

"The AWB was involved in a criminal enterprise -- ie, paying money to the Hussein government in order to have ... an almost exclusive right to sell wheat to them through the UN program and that is a violation of the United States RICO law," Washington-based lawyer Palmer Foret told Australian Broadcasting Corp radio.

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