Lindberg pays price for breaches

Countryman
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Former AWB boss Andrew Lindberg says his punishment over the Iraqi kickbacks scandal demonstrates the perils of trading with under-developed countries.

Last Thursday, Mr Lindberg was fined $100,000 and banned from managing companies for two years for failing to disclose what he knew about the kickbacks.

The former AWB managing director had struck a deal with the Australian Securities and Investments Commission (ASIC) to admit to breaching the Corporations Act, concluding one of six civil prosecutions launched by the corporate watchdog in December 2007.

Mr Lindberg admitted to four breaches of the Act through failing to tell the AWB board or the United Nations about bribes paid to Saddam Hussein's Iraqi Government between 2000 and 2005 to secure wheat sales.

Victorian Supreme Court Justice Ross Robson said while Mr Lindberg's negligence was not deliberate and he had otherwise maintained "honest and loyal conduct" throughout his career, his breaches were serious.

"None of the contraventions involve deliberate wrongful acts, dishonesty or any moral turpitude.

"Nevertheless, Mr Lindberg failed to perform his duties as a reasonable director or officer would in his situation. I find that the breaches of the Act were serious."

Outside court, Mr Lindberg said he accepted the punishment.

"It's been a long ordeal, six-and-a-half years," he said.

"I've never resiled from my responsibilities and I don't do it now. I just want to get on with my life and do what I can."

Mr Lindberg also warned Australians involved in overseas trading to be vigilant.

"In any market, but particularly overseas, when you deal with third world countries I think you've got to be very careful," he said. "It's perhaps easier than you think to make mistakes."

ASIC chairman Greg Medcraft said Mr Lindberg's punishment should remind executives to fully grasp and obey their corporate responsibilities.

"Good corporate governance requires executive directors to make adequate inquiries in relation to matters before them and properly inform the board," Mr Medcraft said.

Mr Lindberg admitted failing to tell the AWB board that former employees of the company likely to have information "relevant to the allegations of impropriety" were not being interviewed for the company's internal investigation, dubbed Project Rose.

The court heard that Mr Lindberg had also failed to tell the board that the UN Independent Inquiry Committee's 2005 Volcker investigation into the oil-for-food program had heard allegations AWB was among companies that had paid kickbacks to Iraq.

He resigned as AWB's managing director after the 2006 Cole inquiry into the scandal.

A decision against former AWB chief financial officer Paul Ingleby was also handed down last Friday.

Mr Ingleby was fined $10,000 and banned from managing a corporation until the end of the year for his role in the scandal.

ASIC had pushed for a $40,000 fine and two-year ban after striking a deal with Mr Ingleby in June.

But Justice Robson said such a penalty was too harsh for a single breach of the Corporations Act.

Mr Ingleby breached his duties between December 2001 and September 2004 when AWB paid the Iraqi Government bribes for wheat deals.

The court heard Mr Ingleby co-authorised payments to trucking company Alia, which channelled bribes disguised as "inland transportation fees" to Saddam Hussein's Government to secure lucrative deals.

He had information that should have seen him "raise questions as to the legitimacy" of the fees, but failed to realise they were ultimately being paid to Saddam Hussein's Government rather than a United Nations-authorised escrow account, the court heard.

"Mr Ingleby accepts that he failed to join the dots," Justice Robson said.

"It is not alleged, however, that he was actually told in a face-to-face meeting of the details of how inland transport fees were paid, nor is it alleged that he had actual knowledge of what was going on or that he was directly advised by officers of AWB."

Mr Ingleby did not appear in court last Friday.

Key developments *

_Key developments in the AWB oil-for-wheat scandal: _

·December 1996 - United Nations establishes oil-for-food program after claims trade embargoes are starving Iraqi people. Iraq is allowed to sell oil, provided the funds are deposited in a UN account. Australia says it will sell wheat to Iraq.

·July 1999 - The Australian Wheat Board, a government body, is transformed into private company AWB Limited, owned by wheat growers.

·November 1999 - Saddam Hussein imposes 10 per cent 'trucking fee' on wheat imports; this is in fact a bribe required to secure lucrative wheat deals.

·December 1999 - Canadian wheat farmers, angry at losing contracts with Iraq, protest to UN officials that AWB is paying kickbacks to Saddam's officials in return for deals.

·March 2003 - Iraq war spells the end of oil-for-food program.

·June 2003 - Michael Long, a former AWB employee, tells Australian bureaucrats about kickbacks being paid to the Iraqi Government.

·September 2003 - US Defence Contract Audit Agency report accuses AWB of overpricing 500,000 tonnes of wheat "to the tune of $US14.8 million".

·April 2004 - UN secretary-general Kofi Annan appoints former US banker Paul Volcker to lead an inquiry into the kickbacks scheme.

·October 2005 - AWB's kickbacks are publicly exposed in the Volcker inquiry.

·November 2005 - Australian Government establishes Cole inquiry.

·February 2006 - Andrew Lindberg resigns as managing director and board member of AWB.

·November 2006 - Cole inquiry recommends 12 people be investigated for possible criminal and corporations offences.

·December 2007 - Corporate watchdog ASIC starts civil penalty proceedings in the Supreme Court of Victoria against six former directors and officers of AWB, including Mr Lindberg and former chief financial officer Paul Ingleby.

·August 2009 - Australian Federal Police drops investigation, meaning no former employee or director of AWB will face criminal charges.

·August 2012 - Supreme Court fines Mr Lindberg $100,000 and bans him from corporate management until September 14, 2014, after he admits to four breaches of the Corporations Act. Mr Ingleby is fined $10,000 and banned from management until the end of 2012 for failing to join the dots as kickbacks were paid under his watch. <div class="endnote">

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