Civil trial set for AWB bribes

09 Oct, 2014 02:00 AM
Former chairman of the Australian Wheat Board Trevor Flugge leaves the Cole inquiry.
They weren't criminals and never had any criminal intent
Former chairman of the Australian Wheat Board Trevor Flugge leaves the Cole inquiry.

THE Iraqi wheat-for-weapons scandal is set to reignite headlines again next year with former Australian Wheat Board (AWB) chair Trevor Flugge due to face court in a lengthy civil trial examining his central involvement in the bribes controversy.

AWB’s former group general manager trading Peter Geary is also listed to have his case heard during the same court proceedings, covering alleged breaches of the Corporations Act.

A court spokesperson confirmed Justice Ross Robson of the Supreme Court of Victoria - during a directions hearing on September 25 this year - had set down a tentative trial date for proceedings against Mr Flugge and Mr Geary, on October 5, 2015.

The trial duration is approximately 10 weeks with the next court hearing scheduled for February 6, 2015, the spokesperson said.

Mr Flugge was a symbolic figure in the high profile scandal which saw AWB eventually stripped of its single desk monopoly powers over bulk wheat exports in 2008.

The one-time Katanning farmer was AWB chair from 1995 to 2002 when the company was embroiled in making inflated payments to trucking company Alia to help secure wheat export contracts with Saddam Hussein’s Iraqi regime, in breach of UN sanctions.

The contracts were investigated by the 2006 Cole Royal Commission which resulted in civil penalty proceedings being lodged in the Supreme Court of Victoria in 2007 against six former AWB directors and senior officers, including Mr Flugge and Mr Geary.

The Australian Securities and Investments Commission (ASIC) claims alleged contraventions of sections 180 and 181 of the Corporations Act arising from conduct associated with five contracts for wheat supply to Iraq, entered into between December 20, 2001 and December 11, 2002, involving the payment of $A126.3 million by AWB to Iraq.

The Cole inquiry was also heavily politicised with former Prime Minister John Howard called as a witness, along with former Deputy Prime Minister and Trade Minister Mark Vaile and Foreign Affairs Minister Alexander Downer.

As Labor’s foreign affairs spokesman at the time, former Prime Minister Kevin Rudd used the scandal to build his public profile by seeking to link the wheat contract irregularities to the long-serving Howard Coalition government he eventually defeated at the 2007 federal election.

However, Commissioner Cole eventually cleared the senior government ministers of having any prior knowledge of the kickbacks.

But he did recommend a legal taskforce investigate potential criminal charges against 12 former AWB executives, which led to the AFP’s Oil for Food Taskforce (OFFTF) being established in 2007.

The OFFTF ceased operating in August 2009 on advice from Paul Hastings QC due to limited prospects of gaining any successful criminal convictions.

Greens pushed new Senate inquiry

In June this year a new inquiry was approved for the federal Senate’s Legal and Constitutional Affairs References Committee to investigate the resourcing levels provided to and used by the OFFTF and “any other related matters”.

Greens leader Christine Milne said her party initiated the Senate inquiry because many leads in the oil-for-food kickbacks scandal had been left unexplored and many questions left unanswered about the AFP's handling of the case.

Senator Milne said without a federal anti-corruption body, the Senate was the only institution “capable of delving into such murky waters”.

The inquiry was originally scheduled to report its findings on September 4, 2014, but an extension has now been granted to November 26.

In mid-2008, five of the six AWB defendants applied successfully to the Victorian Supreme Court to stay the ASIC proceedings on the basis that the criminal conduct being investigated by the OFFTF was also the subject of ASIC’s civil penalty proceedings.

However, the Court dismissed the stay of proceedings application made by former AWB managing director Andrew Lindberg, who subsequently admitted four contraventions of section 180(1) of the Corporations Act.

The contraventions arose from AWB’s wheat supply to Iraq under the UN’s OFF program and subsequent inquiries conducted by AWB in relation to that supply.

The admissions led to a $100,000 fine and Mr Lindberg’s disqualification from managing corporations until September 15 this year.

At the time, ASIC chair Greg Medcraft said Mr Lindberg - who infamously broke down in tears while giving evidence at the Cole inquiry - had acknowledged a number of serious contraventions relating to his duties as a director.

ASIC’s submission to the federal Senate inquiry also details the watchdog’s successful prosecution against former AWB chief financial officer Paul Ingleby.

By June 2012, ASIC and Mr Ingleby reached an agreement under which he admitted contravening section 180(1) of the Corporations Act and also accepted a statement of facts in relation to his contravention.

He agreed to a $40,000 fine and 15 months' disqualification as a director, however, the August 2012 court judgement issued a $10,000 fine and his disqualification as a director until the end of 2012.

But ASIC filed an appeal against the ordered penalties, which reinstated the original agreed punishments.

No longer 'in the public interest'

The ASIC submission also shows proceedings against the two other former AWB executives were discontinued - general manager of international sales and marketing Charles Stott and general manager of international sales and marketing Michael Long.

“On 23 December 2013 ASIC discontinued its proceedings against Messrs Stott and Long on the basis that ASIC considered it no longer in the public interest to pursue those claims,” the submission said.

“The proceedings were discontinued by consent on terms that the parties bear their own costs of and incidental to the proceedings.”

In an ABC report, OFFTF head Ross Fusca complained the Australian Federal Police (AFP) investigation ended too soon, despite revealing “indicators of criminality” and was frustrated by lack of resources.

“The inquiry had made a significant amount of progress and identified some issues that, put into a brief of evidence, could be presented to the DPP for their consideration,” he said.

“There was thousands upon thousands of documents that hadn't been examined correctly and weren't being examined because members weren't being replaced.”

Memory loss

Mr Flugge was contacted for comment by Fairfax Media but did not respond by deadline.

It’s understood he’s now involved in a family restaurant business in Busselton, Western Australia, but returns to the family’s grain farming operation in Katanning to assist with the annual harvest.

He became a leading symbol of the wheat-for-weapons scandal after being infamously pictured bare-chested and touting a handgun during a visit to Iraq, where he spent time representing the Australian government to assist with co-operative government efforts rebuilding the war-torn nation, with a focus on agriculture, after Saddam Hussein’s regime was defeated in early 2003.

Mr Flugge was a fundamental witness at the Cole inquiry but his testimony was marked by memory loss on key questions concerning important meetings and other vital details surrounding the alleged rorting of the UN’s OFF program.

The former National Party candidate for O’Connor, who unsuccessfully challenged long-serving WA Liberal MP Wilson Tuckey in 1987, was reportedly paid about $1 million for his work for the Australian government rebuilding post-war Iraq.

In 2006, then Foreign Affairs Minister Mr Downer was also questioned about the Australian government providing Mr Flugge with a written undertaking that, in the event of his death while on government services in Iraq, his estate would be compensated.

Mr Downer’s response confirmed the government undertook to compensate, in the event of death, the amount of Mr Flugge’s pre-existing life insurance policy that became invalid in a war zone.

But the Minister said due to requirements under the Privacy Act 1988, the specific amount of that coverage would not be released.

In late 2009, Mr Flugge broke a long media silence shortly after the AFP dropped its pursuit of criminal charges where he claimed the trucking fees weren’t kickbacks but were paid to overcome the logistical challenge of distributing grain in Iraq.

“Right from the word go, I never believed we were paying kickbacks,” he said in an interview with The West Australian.

“I knew we were paying a trucking fee and as far as I can see, in the evidence that was presented, that's where the money went.

“I believed at the time and I still believe, a lot of that money, if not 90 per cent, went to paying actual fees.

“We were delivering up to two million tonnes and that had to be shifted up to 800 kilometres.”

Mr Flugge said the Cole inquiry wrongly painted AWB staff as criminals and he was not surprised the AFP investigation was dropped, believing nobody had done anything criminally wrong.

“I know the individuals involved and they were not criminals,” he said.

“They may or may not have done little things wrong that were not perfectly correct but they weren't criminals and never had any criminal intent.”

Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
Date: Newest first | Oldest first


9/10/2014 4:36:40 AM

the only ones who should be in court regarding this matter is George Bush and his allies (including us) for the illegitimate sanctions and invasion of Iraq in which 2.1 million children were starved to death. As Malaysia recently found out, anyone who requests accountability upon the US and its puppet the UN, find themselves the receiver of brutal treatment. This was only ever about the petrodollar and fragmenting Eurasia, just as it is today with Syria and the new WMD that is Islamic state. AWB was the lifeline for these people, Saddam was not a nice person, however under him people got food
9/10/2014 5:13:50 AM

WTF, I think you have made a very good assessment. As Mr Flugge said, the AWB people were never criminals. The wheat they sold had to be transported 800 klms under difficult conditions to get to Iraqi people. The AWB Staff were simply wheat grower servants making commercial decisions, which were necessary to achieve the sale and delivery of food, to the starving people of Iraq. As WTF has pointed out, Iraq was actually better governed under Saddam than it has been ever since. There has always been too much politics involved in this for fairness and justice to apply to honest AWB servants.
9/10/2014 6:04:12 AM

I agree with you JT. And the Greens, who have pursued the AWB over this matter have far more to answer for in the destruction of Australia and Australia's credibility, than the great servant of the growers, the AWB, ever had. What about the Greens role in the Pink Bats disasters for example? The AWB stood up in the corrupted international market every day and cleared every ton of wheat ever produced and saw the growers all paid, with no defaults. This was in a market where the Govts of USA and EU and others, were corrupting the market via intervention with mega $$$s.
9/10/2014 6:50:25 AM

Stop drinking the koolaid WTF. 2.1 million children starved??? There are only 25 million people in the country and you think 8% starved??? Seems to me everyone was really worried about ISIS getting Saddam's old WMDs a few months ago.
John Newton
9/10/2014 7:39:37 AM

cmt – what Greens role in the pink batts 'disaster'? They were not in coalition t the time. and please remember, there were 236 industrial deaths in that year, only three of them due to home insulation. For goodness sake, next thing you'll be blaming the Greens for WW2. Why don't we wait and see what hapens in the case? Methinks the real problem is it is alleged Mr Flugge and his mates were lining their pockets
9/10/2014 7:52:00 AM

The AWB sale of wheat to Iraq was a scandal and the Howard government did everything possible to prevent the truth from coming out and if I recall preventing public servants from appearing at the inquiry. It seemed we were quite happy to sell wheat to a dictator before declaring war on him. It is beyond belief that Flugge thought these huge payments were for shipping. There was a lot of wilful blindness going on.
9/10/2014 8:30:00 AM

how long did the sanctions and war go on for PA? my information came from a ex CIA Iraq analyst and whistleblower, no koolaid here. imagine how many old people died as well?, think about that while your enjoying your deregulated, high frequency rigged market.
9/10/2014 8:37:38 AM

Perhaps this situation needs a federal ICAC so it is clear what our Government and politicians actually knew was going on.
9/10/2014 12:31:14 PM

D8 and AWBK, just because you may believe in lining your pockets with other peoples money, does not mean that everybody does. Don't judge others by your own standards. BTW, there was never any suggestion by any investigating authority, of such behavior by AWB servants, so only rat bags would make such nonsensical suggestions. You should be ashamed of yourselves, if you have a conscience.
9/10/2014 12:43:26 PM

JT is 100% right. Those opposing his view are probably free trader stooges who are paranoid that the Single Desk may return to spoil their dominance over Aussie wheat growers.
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