By Dr George Venturini
After the allegations of AW.B.’s misconduct became public, A.W.B. suffered “financial harm” (including a loss of market capitalisation and trade, legal costs, class action settlements, redundancy costs and restructure costs) and “intangible or immeasurable harm” (including a “shattered” reputation, loss of corporate knowledge and employee morale, and reduced credit ratings).
The scandal would eventually see the end of A.W.B. A.W.B.’s share-price had continued to suffer, and the cartel was taken over by Agrium Inc. in December 2010 and delisted from the Australian Securities Exchange. On 1 January 2018 Agrium announced that it had agreed to merge with PotashCorp, in a new behemoth called Nutrien, which would become the largest producer of potash and second-largest producer of nitrogen fertiliser worldwide. It has 1,500 retail stores and more than 20,000 employees. It is listed on the Toronto Stock Exchange and New York Stock Exchange, with a market capitalisation of US$34 billion as of January 2018.
A.S.I.C. had called for Mr. Flugge to be fined the maximum $200,000 and banned from managing a company for ten years. It had began its civil case against Mr. Flugge ten years before, but the case was put on hold while it pursued criminal charges, which were dropped in 2010.
The finding might have cost Mr. Flugge anywhere up to $200,000.
The Court also disagreed that Mr. Geary knew the payments to Iraq were contrary to United Nations sanctions and dismissed all proceedings against him, saying that A.S.I.C. had “not proved he has acted anything other than reasonably.”
Unlike the chairman, Mr. Geary had not been put on notice about A.W.B.’s possible misconduct in relation to the inland transportation fees as he was not present at the Washington meeting.
Mr. Geary was expected to be awarded hundreds of thousands of dollars in legal costs (P. Durkin, ‘ASIC loses AWB case against Trevor Flugge a decade after Oil-for-Food,’ The Australian Financial Review, 15 December 2016).
A.S.I.C. had put the civil cases against Mr. Flugge and five other former A.W.B. executives on hold in November 2008 to wait for possible criminal charges, but in a shock decision in mid-2010 it was revealed that the criminal aspects of the long-running A.W.B. investigation had been abandoned.
A.S.I.C later re-ignited the civil penalty cases over the payment of hundreds of millions of dollars in “transport”, “discharge” and “sales service fees” to Jordanian-based trucking company Alia, revealed later to be a front for the Iraqi government.
In a limited victory A.S.I.C. had won two of the civil cases in 2013 against former managing director Andrew Lindberg, who would pay a penalty of $ 100,000, and against former chief financial officer Paul Ingleby, who would pay a penalty of $ 40,000. But cases against former directors Michael Long and Charles Stott were dismissed.
On 15 February 2017 the ‘corporate regulator’ sought on appeal to overturn the Supreme Court decision clearing Messrs. Geary and Flugge of knowing about the ‘kickbacks.’ (Asic appeals verdict AWB directors did not know about Iraqi bribes, The Guardian, 15 February 2017 and Australian Associated Press).
In a brief statement A.S.I.C. said that the matter was expected to return to Court on a date to be fixed and it would not make any further comment.
On 14 March 2017 the Court was to hear arguments about what penalties should be imposed on Flugge, who was facing a fine of up to $200,000 and disqualification from managing a corporation.
On 10 April 2017 Mr. Flugge was fined $50,000 and banned from managing a corporation for five years for failing properly to investigate $ 23 million in ‘kickbacks’ paid to Saddam Hussein’s régime.
The Supreme Court of Victoria ordered that Trevor Flugge, the former chairman of A.W.B. Ltd., pay a fine of $50,000 and be disqualified from managing corporations for five years. These penalties were imposed in consequence of the Court’s finding that Mr. Flugge had breached his duty of care by failing to make adequate inquiries about the propriety of certain payments by A.W.B. to the Iraqi Government.
True, the Court found that Mr. Flugge had acted honestly, nevertheless it denied his application to be relieved from liability on the basis that the breach of duty was “not a minor or accidental breach of duties that could be excused.”
A.S.I.C. had brought similar proceedings against five other directors and executives of A.W.B. The proceedings against two of those individuals had been discontinued and another two had been settled. (E. Younger, ‘AWB’s ex-chairman fined $50k over Iraq food-for-oil scandal,’ abc.net.au, 10 April 2017).
* * * * *
Some information that a careful search might have made available to the Cole Inquiry is still accessible. A search produced: AWB – What the Middle Man Knew, Journeyman Pictures.
The transcript is of extraordinary interest and anyone who wishes to pursue the sound basis of this libretto could do so, freely.
The interviewee is Otham Al Absi. He was the agent of A.W.B. in Jordan.
The transcript begins as follows:
“Reporter: Thom Cookes.
It’s been 23 years since a serving Prime Minister has been called before a Royal Commission to explain himself. Not only John Howard, but his Foreign Affairs and Trade Ministers were all required to tell the Cole inquiry exactly what they knew about the $295 million paid in kickbacks by the AWB to the Iraqi government of Saddam Hussein.
John Howard, Australian Prime Minister [is seen and heard as saying]: “I did not know, my ministers did not know, and on the information that I have been provided and the advice I have received from the Department of Foreign Affairs and Trade, I do not believe that the Department knew that AWB was involved in the payment of bribes.” Emphasis in original]
Tonight, a key player in the scandal tells Dateline that he had been meeting with the Australian Government Trade representative in Jordan since the mid’’90s. His company, Alia, was a money launderer for the AWB, allowing it to funnel hundreds of millions in illegal payments in breach of United Nations sanctions.
Reporter: Do you believe that the Australian Ambassador and the Australian Embassy in Jordan, they knew the relationship with AWB that they understood that?
Interviewed was Othman Al Absi: Yes, yes. Because the Austrade – there is a company name here is Austrade, belong to the Embassy – they know about us.
Reporter: Right from the beginning, the relationship?
Othman Al Absi: Yes, yes. And there is a guy – Ayyash, Ayman Ayyash – although I don’t remember the first name, he sit with us, he came to our office here, and we sit in some restaurant in Amman with the AWB – it was a dinner or something – so they know about us and we know this guy from Austrade.
Reporter: And this is right from the beginning of the relationship, this is when you were first setting it up, or this is some later time?
Othman Al Absi: No, it was since 1995, ’96, something like that.
Ayman Ayyash was the Austrade representative in Jordan from 1994 to 2003. Austrade is the trade agency of the Australian Government.”
And the transcript goes on:
“Reporter: Right from the beginning, was the company a joint venture with the Iraqi government?
Othman Al Absi: Yeah, that’s right. It was a joint venture between Ministry Of Transport of Iraq and our Sheik al-Khawam because at that time there is embargo and it’s very difficult, communication, and they need some people from outside Iraq to work in transportation and especially in maritime. So this is the idea came off.
Reporter: And it was well known – from what I understand – right from the beginning, that it was a joint venture with the Iraqi government – there was no secret about that?
Othman Al Absi: It’s not secret. It’s registered in Ministry of Trade in Jordan, and there is nothing to hide.
Alia has also emerged as one of the major front companies used by the Iraqi government to rort the oil-for-food program, set up when trade sanctions were imposed after the first Gulf War. And according to the UN investigation, between March 2000 and December 2003, around $1 billion flowed into accounts held by Alia at this branch of the National Bank of Jordan. Nearly $300 million of this were illegal payments from AWB disguised as either “after sales fees” or as bogus transport services that were never supplied. After taking a cut of between 0.25% and 1%, Alia transferred the money to an Iraqi government account at the al-Rafidain bank in Amman. Othman al-Absi doesn’t dispute this money flow.
Othman Al Absi: As agent for AWB, I will receive that money officially through our bank in Jordan, and also this money, officially to al-Rafidain Bank, transfer it in Amman, Jordan, in account of Water Transportation Company of Iraq. It’s not to any personal account, it’s for a government account.
Reporter: So you’re not concerned with what those fees were for?
Othman Al Absi: I’m concerned that this is a fees, but fees for what, for whom? All what I know it is for government of Iraq, that’s what we know. And in that time, because there are more than 200-300 companies they have a contract with Ministry of Trade, with Ministry of Transportation, with any ministries in Iraq, and they do the same procedure, so nothing to hide in that time. So where was the United Nations in that time? Why nobody said, “What you are doing?” or “What’s that?” Because, as what I told you, it was official.
According to Mr. Al Absi, his company was on the guest list to the Australian Embassy in Amman.
Othman Al Absi: The Embassy here in Jordan, they know us and they invite us as a famous company in Jordan, and they invite our chairman to the home of the Ambassador around two times, and they know about all our activities and our working. So we don’t feel that it must be through official channel because all what we hear in that time – AWB also it’s a part of the Government.
Reporter: So did you think you were dealing with the Government, in one sense, with the Australian Government?
Othman Al Absi: That’s what we felt. Because when any government gives the license to export the wheat to just one company, that means there’s a relationship between the Government of Australia and this company.”
Here is how the transcript continues:
[It had already been confirmed that Ayman Ayyash was the Austrade representative in Jordan from 1994 to 2003. Of course, Austrade is the trade agency of the Australian Government.]
Reporter: And for that reason you felt that you were essentially dealing with the Australian Government?
Othman Al Absi: Yeah, we are dealing with the Australian Government and everything is official, and everything is in the right way, let’s say. That’s what happened.
According to Mr. Al Absi, this is not the first time that he has told of his early links with Austrade. In February this year, he was interviewed by an Australian Government solicitor.
Reporter: What did the Australian Government want to know, what did they want to talk to you about?
Othman Al Absi: About the same issue – about the relation between AWB and our company, and about the transferring that money and lots of questions. And we gave them a statement about all the questions they need.
Mr. Al Absi told Dateline that he had informed the Government solicitor about his meetings with the Austrade representative, Mr. Ayman Ayyash. But none of this made it into this statement tendered to the Cole Royal Commission.
So what else can Alia Transportation, the mysterious Jordanian conduit in this scandal, tell ? When Dateline interviewed Mr. Al Absi there was a reminder of the strong ties between his company and the AWB.”
Later on the interview recorded Dr. Labib Kamhawi. He is the managing director of Cessco, a Jordanian company supplying the oil and gas industries.
“His company was also identified by the U.N. inquiry as having made illegal payments to the Iraqi government in breach of sanctions. He claims these “taxes” were an unavoidable cost of doing business with Iraq.
Dr. Labib Kamhawi: But I’m talking about the tax itself, I mean, and the tax itself was not a secret, no. If it was a secret, it was the worst-kept secret on Earth.
Reporter: So, you believe that the extra charges that Iraq was imposing were totally out in the open? Everybody knew about this, there should be no surprise about this?
Dr. Labib Kamhawi: It was mandatory on everybody and it was not a secret. And it was a tax, OK, which every contract had to pay. And the money went to the Iraqi government. This is not the responsibility of the business community, it is the responsibility of the United Nations to make sure that its regulations were observed, that its sanctions were observed.
According to Dr. Kamhawi, Jordan had to break the sanctions regime simply to survive.
Dr.Labib Kamhawi: We cannot afford this luxury in Jordan, you have to understand this. If we do what we are told to do, we die. We cannot afford it.
Reporter: What do you mean if you do what you were told to do?
Dr. Labib Kamhawi: For example, “Don’t do this, don’t do that, don’t export, don’t, don’t, don’t.” It’s not really a luxury. If we don’t sell to Iraq, then we sell to somebody else.
Reporter: There is no other choice ?
Dr. Labib Kamhawi: Absolutely.
Dr. Kamhawi’s company, Cessco, is just one of the more than 2,000 identified by the United Nations inquiry as having made illegal payments to the Iraqi government. The list is a who’s who of international business. But the granddaddy of them all, accounting for 14% of all the kickbacks paid by suppliers to Iraq, was the AWB. In 2004, when the United Nations announced its inquiry into the oil-for-food program, Alexander Downer wrote to the AWB to offer his support, and to:
Alexander Downer, Letter: … “congratulate AWB Limited in its impressive performance in securing exports to Iraq. This reflects… the close co-operation between AWB Limited and the Government. The Government remains committed to working closely with AWB Limited “in pursuing export opportunities in Iraq.” ”
That close co-operation appears to have evaporated. But according to Othman Al Absi, the Australian trade agency on the ground in Jordan was well aware of the links between Alia and the AWB right from the beginning.
George Negus: Dateline attempted to contact Ayman Ayyash, the former Austrade representative in Jordan, but he didn’t return our calls. Some of our written questions to DFAT, the Department of Foreign Affairs and Trade in Canberra remain unanswered. Late this afternoon, officers from the Cole Royal Commission into the Oil-for-Food scandal came here to the SBS studios and subpoena-ed Thom’s interview, much excitement. The inquiry gets under way again in Sydney tomorrow. (© 2013 Journeyman Pictures, Journeyman Pictures Ltd. 4-6 High Street, Thames Ditton, Surrey, KT7 0RY).
* * * * *
And what of three cabalistas protecting the racket?
Following the Coalition’s defeat at the 2007 federal election, Mark Anthony James Vaile AO resigned his position as Nationals leader and moved to the backbench. On 19 July 2008 Vaile announced his forthcoming resignation from Parliament; he submitted it on 30 July. In September 2008 Vaile was appointed to the board of Virgin Australia Holdings. Vaile is also the independent chairman and a non-executive director of Whitehaven Coal Limited, chairman of the Regional Infrastructure Fund of Palisade Investment Partners, a specialist independent infrastructure manager, a non-executive director, appointed by the Australian Hotels Association of HOSTPLUS, an industry superannuation fund, a non-executive director of Servcorp, a director of the Singapore-listed Stamford Land Corporation, and chairman of 123 Childcare, an education provider in the People’s Republic of China. Trade’s Vaile now amply and successfully represents foreign business.
Alexander John Gosse Downer AC, Minister for Foreign Affairs from 1996 to 2007, resigned from Parliament on 14 July 2008. He set up a boutique consultancy firm, Bespoke Approach, through which he became consultant to Woodside Petroleum – erroneously mentioned as Lakes Oil (P. Cai, ‘Downer joins Lakes Oil as Rinehart board appointee’, The Sydney Morning Herald, 1 February 2013 – where Rinehart is of course Gina Rinehart).
In time, Downer took up the position of United Nations envoy to Cyprus with the U.N. Secretary-General to help revive the peace process; the appointment took effect on 14 July 2008. He also held a number of board appointments, including the Advisory Board of British strategic intelligence and advisory firm Hakluyt & Company, Merchant Bankers Cappello Capital Corp., the Adelaide Symphony Orchestra, Huawei in Australia. It did not matter that Huawei Technologies, a Chinese telecommunications equipment maker, was to be unofficially banned from tendering for the National Broadband Network for security reasons. He resigned the U.N. position in February 2014 to be ‘sent home’ as His Excellency The Honourable Alexander Downer, AC, Australian High Commissioner to the Court of St. James, more closely to consort with ‘the Hanover’, ‘the Hun’, ‘Charlie’, Andy – all of ‘The Firm’.
Continued Wednesday – Comedy without art (part 1)
Previous instalment – Our mate: Saddam Hussein al-Tikriti (part 7)
Dr. Venturino Giorgio Venturini devoted some seventy years to study, practice, teach, write and administer law at different places in four continents. He may be reached at George.firstname.lastname@example.org.
Like what we do at The AIMN?
You’ll like it even more knowing that your donation will help us to keep up the good fight.
Chuck in a few bucks and see just how far it goes!
594 total views, 2 views today