Head of AWB quits amid Iraq kickback probe

By Leora Moldofsky 
February 9, 2006
The Financial Times
Original Source: http://news.ft.com/cms/s/3f15ef28-9950-11da-a12a-0000779e2340.html

 
The head of AWB resigned on Thursday as the Australian monopoly wheat exporter sought to restore its reputation in the face of allegations it paid A$300m in kickbacks to the former regime of Saddam Hussein.
Andrew Lindberg quit “in the best interests of the company” and had already relinquished his executive responsibilities, AWB said in a statement. “The board will take all necessary steps to protect AWB and restore its reputation.”
Mr Lindberg’s resignation had been widely expected since he appeared before the Cole Commission of Inquiry last month.
“We expected a purge of AWB management; this is the first step to rebuilding investor confidence in the company,” said Greg Canavan, a senior equities analyst with Fat Prophets, an independent fund manager in Sydney. “We don’t think Mr Lindberg will be the last.”
Roger Chandler, a senior client adviser with ABN Amro Morgans in Melbourne, said: “You can’t have a managing director that’s been called to fault by a million people without sacking him, or him resigning.”
Kevin Rudd, the Labor opposition’s spokesperson for foreign affairs, said that while Mr Lindberg had done the right thing by resigning, it was time for the government to show the same level of responsibility.
“Mr Lindberg has taken responsibility for his actions but [prime minister] John Howard refuses to take any responsibility for the actions of his government in approving these contracts with Iraq,” he told reporters.
Mr Howard, who has denied knowing that AWB had paid bribes or circumvented UN rules to seal wheat contracts, has refused to permit the inquiry to widen its investigation to include the role of ministers or officials.
During his four-day session before the commission, Mr Lindberg admitted he had signed a deal that breached the United Nations’ sanctions policy against the Iraqi government during a pre-war visit to Iraq in 2002, aimed at shoring up wheat sales for the prized market.
AWB’s share price has fallen around 30 per cent since the inquiry into AWB’s conduct under the UN’s discredited oil-for-food programme began three weeks ago.
The publicly listed company could soon face a legal challenge from its shareholders, according to a Melbourne-based law firm.
Maurice Blackburn Cashman said on Thursday that it was preparing a shareholder class action lawsuit which would claim AWB breached its requirement of continuous disclosure.
In 2003 the law firm obtained A$97m for the shareholders of reinsurer GIO, now a wholly owned subsidiary of AMP, in Australia’s largest class action.