Chairman fails to allay fears

29 Mar, 2006 08:45 PM

AWB International (AWBI) chairman Ian Donges has refused to confirm that AWBI will not be forced to pay part of AWB's Cole inquiry costs.

This is despite claims by AWB director Chris Moffet that the national pool will not foot the bill.

Speaking at the Victorian Farmers Federation (VFF) grains group conference in Yarrawonga last week, Mr Donges raised concerns among pool participants by refusing to give assurances that AWBI - the pool manager - will not contribute to the estimated $16 million in costs resulting from the inquiry.

Growers sought clarification as to how the legal bill will be paid, hoping for an assurance it will come entirely out of AWB Limited (AWBL) coffers.

However, Mr Donges did not rule out AWBI being involved in the payments.

He said the structure of AWB at the time of the Iraqi oil-for-food (OFF) program investigated by the Cole inquiry meant AWB still had to work out how the costs would be distributed across the two arms of the organisation.

The newly appointed AWBI chairman's comments were not what growers at the conference wanted to hear, with most believing pool participants should not be affected by the costs of an inquiry arising out of AWBL's actions.

Mr Donges attempted to hose down speculation arising from his cagey answers by urging growers to remember that the inquiry was not complete and although he was not ruling out costs to the pool, he was not saying they were definite either.

"At the end of the day, it really is premature to discuss these things before the inquiry runs its course," he said.

The issue of funding Cole costs looks set to continue to be a thorn in the side of AWB, caught between keeping an increasingly cynical farming sector on side, while not alienating shareholders.

The mood at the Yarrawonga conference, where strong support for the single desk did not necessarily translate into backing for the bulk exporter, means AWB will think long and hard about transferring costs to growers.

Along with the logistical problems of administering the costs, the bad publicity engendered by dipping into the pool to cover inquiry costs, would push farmer goodwill to the limit.

With farmer support likely to be crucial in AWB maintaining a strong position once the inevitable post-Cole shake-up takes place, the issue of the Cole inquiry bill is likely to continue to simmer.

Just how potential AWBI payments would be structured was also a question of concern for those in attendance.

Farmer Bruce Crafter, Kewell, Victoria, asked how it would be divided, with the relevant pools affected by the OFF program already closed, and whether it would come from current pools.

While Mr Donges stressed there would not necessarily be any pool contribution to the Cole bill, he said that if such a payment were necessary, a plan as to how payments would be organised - if it would come out of current or future pools - would need to be set down.

Funding the bill from future pools would be fairer, allowing growers to be forewarned that payments were being taken out.

Such a strategy is unlikely to boost the popularity of the pool.

However, growers at the VFF conference made obvious their displeasure at the idea that money be taken from the current pools.

Mr Crafter summed up the feelings of many on the topic when he called for the bill to be picked up by AWBL: "It was the marketing arm that caused the problem and they should pay for it."

Although Mr Donges did not allay grower fears at the meeting, he did win grudging admiration for his straight-forward handling of the issue.

Many at the meeting said they hoped Mr Donges' approach marked the start of increased transparency and improved company-grower communications.



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