Australia’s wheat exporter allegedly colluded with Iraq to extract $US8m from the United Nation’s oil-for-food program to pay off Iraqi debt.
The Victorian supreme court was told on Monday AWB did not appear concerned the cash would be drawn down from a UN scheme set up to meet the humanitarian needs of the Iraqi people.
“The problem was to hide [the money] in a way so the UN would not find out about it,” Australian Securities and Investments Commission counsel Norman O’Bryan said.
The court heard AWB agreed in 2001 to act as debt collector for another company – Tigris Petroleum – which was owed US$8m over a mid-1990s grain shipment Iraq never paid for.
AWB and Iraq colluded to set an inflated grain supply contract and the “loaded up” deal triggered an exaggerated payment to AWB from the UN.
O’Bryan read from emails in which AWB executives discussed ways to make the arrangement appear less irregular and hide the “nefarious behaviour AWB was proposing to engage in”.
The money was paid to Tigris in 2004 using a sham invoice, though AWB kept US$500,000 for its troubles.
O’Bryan said there were UN resolutions forbidding access to the oil-for-food program account “for anything other than meeting the humanitarian need of the people of Iraq”.
The court was also told Iraq claimed in the early 2000s that 300,000 tonnes of grain it received across several shipments was contaminated, and it unsuccessfully sought about US$2m in compensation from AWB.
Complex financial dealings between AWB and Iraq – at the time under strict sanctions – were detailed in the court as the Asic outlined its case against two former AWB executives.
Former chair Trevor James Flugge and group general manager trading Peter Anthony Geary are facing civil action for alleged breach of duty.
The men also allegedly oversaw the improper payment of US$223m (AU$300m) in trucking and after-sales service fees into Iraq from 1999 to 2003 in breach of UN sanctions.
The first witness in the case – Nigel Edmonds-Wilson, a former member of AWB’s international sales and marketing unit – is due to be called on Tuesday. Lawyers for Flugge and Geary are also expected to make an opening statement.
In a statement before the case got underway, Flugge said nothing improper was done.
