AWB shows concern over “too direct” payment to Iraq

Emails were sent back in 1999, when AWB first agreed to pay Iraq a so-called trucking fee for Australian grain show its executives discussing how to do so under UN sanctions.
Via email, AWB executive said of an Iraqi official, "He understands we can't pay him direct." He also added, "I know this is a little too direct but he assures me that it is a one-off."
Two former executives - then Chairman Trevor James Flugge and group general manager trading Peter Anthony Geary - are facing a civil trial for allegedly breaching their duties. AWB first paid $US453,600 into a Jordanian bank account in November 1999, and a total $US223 million ($A300 million) was paid in trucking and after-sales service fees up to 2003.
More emails show AWB executives discussing how to route the payments through third parties and encountering hurdles because of international bank rules curbing money laundering. Australian Securities and Investments Commission counsel Norman O'Bryan also read emails from UN officials who, in 2000, were becoming concerned the UN's Food for Oil program was being subverted.
A UN official warned against "any hard currency payment" being made to Iraq, as a review of AWB's contract arrangements was ordered. The UN official stated, "We may have stumbled across a case of sanction evasion."
Canada had complained to the UN that its grain supply contract had been cut back after it declined an Iraqi request to pay a trucking fee.
On Monday, Mr. O'Bryan told the court, "The money that was being paid was finding its way to the IGB (Iraqi Grain Board) and not to any trucking company of any sort."
"All of this behavior by AWB was happening while the UN was discussing this issue and trying to get to the bottom of it."
Emails at the time show AWB gave assurances it was fully aware of the Australian government's obligations and the UN Security Council's sensibilities. In the years AWB paid the fees, Australia's share of Iraq's grain market rose to 90 per cent and it was the US-led invasion that brought an end to the fees.
Flugge has issued a statement denying any wrong-doing and the court is yet to hear from Flugge or Geary's lawyers. The prosecution opening continues on Thursday.