AWB head admits breaching UN sanctions on Iraq

By Sundeep Tucker
January 18, 2006
The Financial Times
Original Source: http://news.ft.com/cms/s/383be3f8-880f-11da-a25e-0000779e2340.html

The head of the Australian company at the centre of an Iraqi bribes probe on Wednesday admitted that he signed a deal that turned out to breach the United Nations’ sanctions policy towards Saddam Hussein’s regime.
Andrew Lindberg, chief executive of AWB, the country’s national wheat exporter, told an official inquiry in Sydney that he agreed to the deal during a pre-war visit to Iraq in 2002 aimed at shoring up wheat sales for the prized market.
On a day when counsel to the inquiry presented startling evidence of AWB’s attempts to hide the deal from the UN, Mr Lindberg was also forced to withdraw a “misleading” statement made by the company to the Australian stock exchange about deals which saw it transfer up to A$300m to the Iraqi government as part of the UN’s now discredited oil-for-food programme.
The inquiry, which started this week, is expected to last a month and was set up by the government to investigate claims made by Paul Volcker in November that AWB and two small Australian businesses were among 2,200 companies worldwide that paid kickbacks to Saddam’s regime as part of lucrative contracts.
The deal signed by Mr Lindberg had been demanded by the Iraqi government to extract US$2m from AWB to compensate for wheat shipments which the Iraqi Grain Board claimed had been contaminated with iron powder.
Any settlement should have been brokered by the UN but AWB and IGB agreed that the supplier would inflate the price of a wheat contract and add it to the phantom “trucking fees” it was already paying as kickbacks to Saddam’s government.
Mr Lindberg admitted that he agreed to compensate IGB for its cleaning costs but denied that he knew the arrangement would involve adding the costs to trucking fees.
Mr Lindberg told the inquiry he believed that the contamination claim was punishment for the Australian government’s decision to join the US’ military action in Iraq.
A surprise AWB statement sent to the stock exchange on Wednesday, signed by Mr Lindberg, attempted to distance the company from the bribes paid to Saddam’s government and said: “Even though no one, to our knowledge, can be sure where the money went, AWB is deeply concerned that … it may have been used for non-humanitarian purposes.”
John Agius, lawyer to the inquiry, said the statement contradicted documentary evidence presented to the inquiry earlier this week which showed senior AWB staff knew that money was being funnelled to the Iraqi government. Terence Cole, the presiding judge, expressed disbelief with the contents of the statement and it was later withdrawn by AWB.
The company’s share price has fallen 10 per cent this week.