No breach of law: Stewart

31 Jan, 2006 09:00 PM

AWB Ltd (AWBL) and AWB International (AWBI) chairman Brendan Stewart assured the Pastoralists and Graziers Association (PGA) 18 months ago that the wheat marketer did not breach any law when dealing with the Iraqi Government under the oil-for-food (OFF) program, and its directors were aware of their role in ensuring business transactions were conducted legally and ethically.

The PGA sent a letter to Mr Stewart on August 2, 2004, signed by grains chairman Leon Bradley, seeking reassurance from AWB that everything was above board after the UN announced it would investigate alleged corruption in its OFF program.

Mr Stewart replied on August 6, saying: "The directors are fully aware of their role and responsibility according to the principles of good governance, and in ensuring that at all times the business operations and affairs of AWB are conducted legally, ethically and in accordance with the highest standards of integrity and propriety."

AWB was a major food supplier to the OFF program and in October last year, a UN inquiry found it paid $290 million in kickbacks to the Iraqi regime from 1999-2003.

The amount represents 14pc of illicit funds siphoned off by Iraq in its kickback schemes, which allowed it to net $1.5 billion from so-called after-sales service fees and inland transport fees.

AWB claims it believed the $290m paid to Jordanian transport company Alia was for legitimate inland transport fees and was unaware Saddam Hussein's reigme was collecting the funds.

But evidence at the Australian OFF inquiry, headed by Terence Cole, suggests some AWB employees knew money was being channelled to the Iraq Government under UN sanctions.

The PGA letter, seeking a personal repsonse from Mr Stewart, contained eight questions:

1) Are you satisfied with the response given by AWBL about this issue?

2) Is the response given by AWBL sufficient?

3) Is the response given by AWBL the same as your own?

4) What measures outside AWB management have you undertaken to verify to your own satisfaction that accuracy and truthfulness of the statements made by AWBL?

5) What effect will a negative judgment or successful prosecution in this matter have against the value of AWBL?

6) What instructions have been given to AWB management in regard to the provision of relevant documents or other evidence in relation to the sales and other relationships with Iraq in the period of the OFF program?

7) Are you satisfied there has been no fraud in the sale of Australian wheat to Iraq in the period of the OFF program?

8) What instructions have been given to the auditors and accountants of AWBL in regard to the forensic examination of past dealings with Iraq?

The letter, which also was sent to each director, said the PGA considered the matter urgent because AWB directors had not made statements.

Mr Bradley said the Cole inquiry had found evidence of fraud in the AWB OFF program but he had not received a follow-up letter from Mr Stewart to correct his August 6, 2004 response, which said there was no cause for concern.

Mr Bradley said in light of the inquiry's revelations, AWB had breached its principles of corporate governance.

"Even after the UN inquiry, AWB has still taken no action to ascertain what the truth may be," he said.

"It has been a derelict of duty by the directors.

"How can they say now from the revelations of the Cole inquiry that their answer to us in 2004 was not completely untrue?

"They (AWB) have already admitted they have deceived the UN."

Inquiry transcripts are available at, which is updated daily.



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