Another Day for Corporate Crooks

AWB in the hot seat
How does a multi billion dollar corporation flourish when directors and executives profess to:

• Extremely poor memory of vital corporate and financial events


• An expressed inability to read internal memos of extreme importance


• An expressed inability to follow up internal investigations of impropriety.

These are just some of the, apparent, confessions coming out of the ‘big guns’ at AWB Ltd, the Australian wheat exporter at the centre of the UNs ‘oil for food’ scandal.
As the representative from the Pastoralists & Graziers Association of Western Australia, Leon Bradley, puts it: "The only conclusions that you can draw is that they were either amazingly negligent or they were complicit in serious wrongdoing.” Wheat chief still chuffed despite the chafe

The difficulty our boys at AWB have is that their misdeeds have been openly discussed around the world for some years.

• US wheat growers took their complaints about AWB to then Secretary for State Powell in 2003.


• The Canadian Wheat Board flagged the issue to the UN even earlier, when they were asked to pay the same bribes to Iraq.


• Evidence before the Cole Inquiry is suggesting that the Australian Department of Foreign Affairs and Trade was briefed on the illicit payments.

It is unclear whether any of these previously informed people will have an opportunity to testify to the Inquiry, but there is ample documentary evidence to establish who knew what when.

What are they telling Justice Cole?
The AWB executives were in no doubt that the fees were kickbacks for Saddam, saying: "We believe the increase in trucking fee ... is a mechanism of extracting more dollars from the UN,” according to company memos available to the Inquiry.

AWB CEO Andrew Lindberg spent a day in the witness box.
Lindberg was shown a memo, which bore his signature, that showed the Iraqis wanted AWB to inflate the prices of at least one of the 41 UN wheat contracts so an old debt to a company called Tigris Petroleum could be paid. He could not remember seeing the document.
"I may have read it," he said. "I can't recall. I don't know."

Inquiry Senior Counsel Agius asked Lindberg to study an AWB report from February 2001 that openly discussed the "transport fees and the fact that the money was going not to Alia, but directly to Iraq".
"The trucking fee is now $US25," it said, adding: "We believe the increase in trucking fee and addition of the service charge is a mechanism of extracting more dollars from (the UN's oil-for-food account)."
Lindberg said he had never seen the report, which apparently was prepared for him.

Other documents noted that AWB was "mindful of the possible implications for AWB on a corporate governance basis" if they inflated the cost of the contracts, to deliver more money to Iraq. It suggested "a number of different methods of repayment of the debt in order to avoid a direct payment to a company with links to the Iraqi regime".
However, it was ultimately decided that the contract price should be inflated.
Shown these documents, Lindberg agreed that it "appears that an amount was added to future wheat contracts".
Commissioner Terence Cole interjected: "A hidden amount?" "I don't know," Lindberg said. "I assume you are correct, that it was added into the price." Asked what he did when it was revealed that the UN had been deceived, Mr Lindberg said: "Well, the oil-for-food program had ceased." The Australian

Former chief executive of AWB Murray Rogers, had difficulty remembering any such arrangements when he was questioned by Agius. The Senior Counsel put to Murray:
"I'm drawing your attention to these things to prompt your recollection as to whether you can recall if you were in the loop, as it were, when these things were being discussed by AWB employees back in October of 1999." Murray responded, "I keep saying it but I have racked my brains on these sorts of things and it is five-plus years ago and I have no recollection of these things."
Although Murray did recall one interesting tit bit: "I think this is about the period we had some dialogue with the Department of Foreign Affairs and Trade in Canberra to make sure things were correct." The ABC (Australia)
Rogers recalled the manager, Mark Emons, and other AWB people "went to Canberra to talk to DFAT, and that's about the only thing I can ever remember - I can remember", Rogers said.
On the third time around, Agius said: "You keep coming back to that, but I don't think I have asked you a single question about the Department of Foreign Affairs and Trade?"
“No", said Rogers, "but I think it was relevant because there was some discussion about these items and that's all I remember." SMH

I guess it’s a matter of ‘ask me no questions I’ll tell you no lies. But Inquiry Senior Counsel, John Agius is now like a dog with a bone, a bone he looks set to worry to death. Terms of reference don not seem to be a barrier to Agius any more than law is to these corporate crooks. We will follow up on that in the next post.