Lindberg case reminds us why AWB didn't work

Andrew Lindberg.
Andrew Lindberg.

UNLESS you were a follower of the oil for food scandal, you may not have seen any significance in the announcement that former AWB chief executive Andrew Lindberg has been fined $100,000 and disqualified from running companies for a bit over two years.

But it is significant. Between 1999 and 2002, under Lindberg’s leadership, AWB flagrantly disregarded UN sanctions against Iraq, paying $290 million in bribes to the country’s ruthless dictator, Saddam Hussein.

At the time AWB was Australia’s monopoly exporter of Australian wheat and legally obliged to comply with UN sanctions. Bribery is also illegal.

As well, some of the "kickback" money could potentially have been used to purchase weapons that were used by the regime to resist the US-led invasion in 2003 and then by factional groups in the subsequent insurgency.

Exposure of the bribery became a national embarrassment and led to international condemnation and litigation. The Cole royal commission, at which Lindberg suffered a profound but temporary memory loss, recommended 12 people including Lindberg be investigated for criminal and corporations offences. Australia was barred from selling wheat to Iraq for a while. Several lawsuits were initiated, with one ultimately costing the company $39.5 million.

Ten years later, there have been no prosecutions. While the evidence at the Cole commission would have been sufficient to put several people in jail, it was not admissible. The Australian Federal Police, which had responsibility for finding admissible evidence, was apparently not interested.

Lindberg’s settlement, while it involved admissions relating to bribery, was a result of action by ASIC. Similar action against several other former AWB employees is ongoing but unlikely to lead anywhere.

There are two important conclusions from all this. One is that a major corporation engaged in conduct that was not only illegal but seriously contrary to Australia’s national interest, and the responsible individuals have got away with it largely or entirely unscathed.

The other conclusion is that it illustrates the folly of granting an organisation control over a market. AWB would never have used $290 million of its own money to bribe Saddam Hussein. The money it spent on bribes belonged to Australian wheat growers.

This case shows how easily corruption can flourish when markets are distorted. The best safeguard against corruption is a free and transparent market, as our wheat export market has now become. In fact that’s probably the only positive aspect to emerge from the whole sorry saga.

David Leyonhjelm is an agribusiness consultant with Baron Strategic Services. He may be contacted at reclaimfreedom@gmail.com

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READER COMMENTS

blahblah
7/06/2012 2:04:07 PM

Excellent piece, although I reckon David will be off Jock Munro's christmas card list.
folf
8/06/2012 6:19:01 AM

What a load of crap. The UN conducted its own inquiry and it found that while AWB may have breached the sanctions, it was a relatively minor delinquent in comparison to many of our so called free marketing saviours. The reality is that the AWB did work in the interests of Australia and growrs in Iraq to compete for and maintain market share. The Cole inquiry was a witch hunt that completely missed the point of AWB's activities and who benefitted most from them. The most glaring error in this garbage article is that the author thinks the current marketing system is working.
farmer joe
8/06/2012 6:27:21 AM

Ineptocracy (in-ep-toc'-ra-cy) - a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers. David while you are not a government employee, you fit right in the mould. The current wheat marketing arrangements and even more so those proposed by the MAFF, erode producers returns and enable income shift to traders and handlers at growers expense.
Ralph
8/06/2012 6:32:32 AM

In this sorry saga, AWB was a patsy, led by misguided directors. There were others implicated in the machinations of global trade that was oil for food, they had friends with personal shareholding. I am not defending corrupt behaviour and think Lindberg has got off lightly, there were far bigger fish that went free. Farmers were taken for a row in a barbwire canoe three times, by the AWB executive in the first instant and the liberal party in the second and the media in the third instance. Free trade has stuffed agriculture, higher productivity and lower commodity are not sustainable.
incognito
8/06/2012 6:55:57 AM

jock will come up with some scenario which blames Mr Lindbergs actions on SAFF grains comittee.
X Ag Soiclist
8/06/2012 7:08:44 AM

David while its true it was the wheat growers money used as a bribe ( a loss ) AWB sold wheat at a premium ( short term gain ) Were wheat growers were financially penalised was Our share's lost value. Legal expenses. Golden handshake's to guilty employees was never recovered. The end result was West Australian growers were finally able to separate themselves from a very unequal marketing arrangement. The ongoing fury of eastern growers and the apathy of previously strong AWB supporters in the west is proof of this.
billy
8/06/2012 2:40:43 PM

David is as always the armchair expert who swans in with half the facts and even less integrity to continually insult and denegrate farmers and the essential services and structures that strive to equal the unequal playing field the producers are forced to trade in. Shame on rural press for giving air to this oxygen thief's mindless ramblings.
goo
8/06/2012 4:04:05 PM

i hope no farmer is actually silly enough to have baron strategic services as there agribusiness consultant. let alone have any thing to do with this david leyonhjelm. i for one couldnt care less who australia had to bribe to sell our grain. as long as it got sold. other competing company's had no problem giving bribes. . there were no weapons of mass destruction so there shouldn't of been any reason not to do business with iraq. or was it a way for America to still do business with them and leave the rest of us looking from the side line.
ANTIRISK
8/06/2012 4:35:05 PM

Hardly surprising that David lets his personal bias and theories blind him to the facts - again. Just one crucial error that needs correction is that it was Iraqs oil money via the UN Oil-for Food Program via AWB via Jordanian transport broker Alia that paid the money back to Iraq ! At no point did the premium fee belong to growers, however the ongoing contract price for wheat was still a clear premium over other customers, keeping the Aussie basis about plus $10 -20 versus the minus $30 -60 we are regularly suffering under dereg! Actually virtually every paras got a mistake, even some dates?
Jock Munro
8/06/2012 4:46:45 PM

If the activity of AWB Ltd so damaged Australia's reputation why did Cargill keep the AWB name and go onto speak of its value? What a shocking humiliation for our Nation. Have our politicians no shame ? John Howard launched an Inquiry into the so called scandal because he wanted to keep it low key-If he was serious he would have called a Royal Commission. Howard saw the whole thing as an opportunity to break the single desk. His beloved Liberals will pay dearly for this and their consequent actions.
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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com

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