Fees paid by the Australian Wheat Board to dominate Iraqi wheat market were a 'bribe', court told


AWB paid $300m in trucking and after-sales fees, Victorian court hears, as former executives Trevor Flugge and Peter Geary face civil trial over breach of duty

The vast sums of money AWB paid in trucking and other fees was a “bribe” that strengthened its grip on Iraq’s surging wheat market. The corporate watchdog says this was the only explanation for AWB’s rise to dominate the Iraqi wheat market at a time when Australian grain was not the cheapest available.


“Eventually AWB is boasting it has got nearly 90% of the total Iraqi wheat trade,” Australian Securities and Investments Commission counsel Norman O’Bryan told the Victorian supreme court on Thursday.


“For a premium to be paid and to still gain more market share each year, something else is happening ... a bribe.”

Two former AWB executives – chairman Trevor Flugge and group general manager trading Peter Geary – are facing a civil trial for breach of duty over $300m in so-called trucking fees and after-sales service fees.


The money was allegedly paid to intermediaries of the Iraqi regime from late 1999 until the 2003 US-led invasion of Iraq, in breach of sanctions and outside of the UN’s oil-for-food program.


The court was also on Thursday told of other high-stakes deals and bartering between AWB and Iraq.


AWB brokered settlement of an $US8m debt Iraq owed to another company, Tigris Petroleum, over a 1996 shipment of wheat that was never paid for.


Iraq countered with several “trivial claims” of wheat shipments being contaminated, including one with iron filings for which it sought millions in compensation from AWB.


“They were not paid, your honour, because Saddam Hussein was dealt with in early 2003,” Mr O’Bryan said.


The prosecution will continue its opening address into early next week when the first witnesses will be called.


In a statement issued before the hearings began on Monday, Flugge said he hoped the case would finally put to rest the untested allegations, rumours and innuendo he and his family had lived with since the ASIC action started in 2007.


The case was adjourned to Monday.