ALLEGATIONS of illegal activity by AWB in its contracts with Iraqi wheat buyers, years before the sanction-busting scandal become public, did not cause concern with Australian officials because the company was seen as "incorruptible", a court has heard.
The Victorian Supreme Court also heard that the Department of Foreign Affairs and Trade had a "quiet" word with AWB after discovering the wheat trader had promised to fund a laboratory for one of its Iraqi clients.
DFAT former head of the Middle East Bob Bowker said he received a memo in 2000 detailing serious allegations about AWB's trading in Iraq under the oil for food program in the 1990s but did not refer the allegations to the United Nations or the responsible Australian minister.
This was years before allegations of AWB's bribes to Saddam Hussein's regime came to light in late 2005.
"This was a case where a competitor of AWB was relaying a supposed conversation with Iraqi authorities about the way in which business was being done with AWB and with another company and the allegations themselves were simply an assertion without any evidence in their support."
Professor Bowker said AWB's "enviable reputation in the Middle East" meant the company was seen as not only having the best wheat but also that the company was "incorruptible".
Former AWB chairman Trevor Flugge and former AWB wheat trader Peter Geary have been accused by the Australian Securities and Investment Commission of causing damage to AWB's shareholders by allegedly engaging in secret payments between 1999 and 2003 in breach of international sanctions against Iraq.
The case being heard at the Supreme Court of Victoria by Judge Ross Robson centres on kickbacks allegedly paid by AWB to Saddam Hussein's Iraqi regime wheat buyers during their participation in the United Nations' oil for food program.
Earlier on Monday, former AWB director Warwick McClelland told the court the AWB board saw no problem when it learned millions of dollars were being paid into Iraq for "trucking fees" as this sounded "sensible". He also told the court Mr Flugge had a reputation as a person "of integrity".
The court also heard that Professor Bowker and his team decided to have a "quiet" word with AWB's representatives when they discovered the wheat exporter had promised to fund a laboratory for wheat testingin Iraq which fell outside of the oil-for-food program.
"We took the view that this was an honest mistake on the part of AWB trying to be helpful to its Iraqi customer."