Agreement ramifications concern

19 Apr, 2006 08:45 PM
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THE Pastoralists and Graziers Association (PGA) wants clarification on whether an agreement between AWB International (AWBI) and AWB Ltd (AWBL) indemnified AWBL against any losses resulting from their separation.

PGA Western Graingrowers chairman Leon Bradley said provisions of the agreement could be critical to the future of Australia's wheat industry as it struggled to restructure after the Cole oil-for-food (OFF) inquiry.

"Grains Council of Australia (GCA) should be aware of this agreement, which could prove a serious impediment to achieving independence for AWBI," Mr Bradley said.

But the GCA was unable to respond to inquiries from Farm Weekly before it went to press.

Mr Bradley said AWBI director Chris Moffet had said AWBI would not be liable for any of the expected $16 million legal costs from the Cole inquiry, but this claim had not been endorsed by AWBI chairman Ian Donges.

"This confirms our concerns over the existence of an AWBI and AWBL agreement and the degree of protection it offers AWBL," Mr Bradley said.

"We contend that WA director Chris Moffet, GCA and its WA affiliate WA Farmers, as well as the remaining directors of both AWBI and AWBL, have an obligation to wheat growers to disclose the terms of this arrangement."

AWB media adviser Christian Sealey said an agreement did exist between the two companies, but it did not specifically indemnify parent body AWBL for any costs stemming from the separation of its subsidiary AWBI.

Mr Sealey said that if the two companies separated the agreement allowed the AWBL and AWBI boards to negotiate the costs to AWBL from not being able to provide services to AWBI.

The agreement did not specify any amount to be paid," Mr Sealey said.

Mr Bradley also said the resignations of AWB executives Jim Cooper and Richard Fuller on April 12, in the wake of managing director Andrew Lindberg's departure, foreshadowed an increasing accountability test for all AWB directors and staff.

"We note that the AWB staff spokesman, who for the past six years has been responsible for issuing all of the media denials of AWB involvement in the OFF scandal, is still defending AWB's infamous role as executives depart and the legal challenges roll in," Mr Bradley said.

Mr Bradley was referring to AWB spokesman Peter McBride, who said he was angry at such an accusation and denied having any knowledge of AWB's payment of kickbacks to Iraq until the Cole inquiry.

Meanwhile, Mr Bradley said the matter of AWBL's legal liability had intensified this week with a major US bank suing AWB's US subsidiary for $48m over its ties with Indonesian importers.

He said the US Standard Chartered Bank was accusing AWB of involvement in non-transparent financial deals with defaulting Indonesian importers that caused the bank substantial losses.

Mr Bradley said the action related to six contracts for soybeans signed by AWB USA with three Indonesian importers in 2003-04 and that the case was due to be heard in the US in July.

"AWB has already cut its profit guidance for 2005-06 partly because of an estimated $16m cost for the Cole inquiry, and we have yet to measure the cost of losing wheat sales to Iraq and other customers," he said.

"The cost of further legal actions such as the Indonesian default and possible action by Iraq to recover the $300m AWB paid to Alia would be well beyond the resources of Australian wheat growers."

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