THE Australian Securities and Investments Commission's civil penalty case against former AWB chief executive Andrew Lindberg has taken a bizarre turn after Mr Lindberg's lawyers revealed in court that the regulator intends launching a new case against him in four weeks.
Mr Lindberg is already facing allegations that he breached his fiduciary duties by presiding over AWB when it contravened UN sanctions against Iraq and paid almost $300 million in secret kickbacks to Saddam Hussein's regime.
That trial, which began in the Victorian Supreme Court yesterday, is expected to run for months.
But just minutes after Justice Ross Robson opened the court, Mr Lindberg's counsel, David Collins, SC, revealed that ASIC had emailed Mr Lindberg's legal team after normal business hours on Friday stating that it would issue new court proceedings against him.
Asked by Justice Robson if he wanted to respond, ASIC's counsel Norman O'Bryan, QC, replied: "Not unless your honour requires me to, no."
Mr Collins said ASIC's proposed move was "unjustifiably vexatious and oppressive and unfair" to Mr Lindberg, and the prospect of having to defend two cases on ostensibly the same issues presented an "intolerable burden".
Mr Lindberg, dressed in a charcoal-coloured suit, sat next to his wife, Leigh, in the front row of the court during proceedings yesterday. He took copious notes and conferred frequently with his lawyer, Paul Galbally of Galbally & O'Bryan, but declined to comment outside the court.
Mr O'Bryan began four days of opening submissions yesterday in which ASIC will allege Mr Lindberg knew or should have known about the payments to Iraq, that he failed to halt the kickbacks, and that by failing to do so he brought the company into disrepute.
Mr Lindberg was AWB's CEO from early 2000 until February 2006. Mr O'Bryan said the kickbacks, which contravened UN sanctions, began in mid-1999 and were disguised as "trucking fees" or after-sales service fees in invoices that AWB submitted to the UN oil-for-food program.
He produced numerous emails from AWB managers who, he said, were struggling in 1999 to appease the Iraq Grains Board's demands while knowing the proposal broke sanctions.
He said Iraq engineered a new term previously unknown in international trade arrangements - "CIF (cost, insurance and freight), free-in-truck to all silos within all governorates within Iraq" - which required AWB to pay sham fees for trucking once the wheat was discharged from ships. Yet AWB never had anything to do with trucking.
Mr O'Bryan said while AWB managers knew about the payments, they believed it was "no skin off AWB's nose" because AWB simply recouped the fees off the UN escrow account.
He said by 2003 "alarm bells were ringing" and "red flags were waving" and while Mr Lindberg had plenty of opportunity and the means at his disposal to investigate the nature of the payments and put an end to them, he did not.
He said despite the change of regime inside Iraq after March 2003, AWB continued paying kickbacks "and AWB under the command of Mr Lindberg simply ignored the alarm".
The new case flagged by ASIC to Mr Lindberg's lawyers is likely to allege that Mr Lindberg breached his fiduciary duties in relation to the Tigris transaction, Project Rose, and in how he responded to the Volcker Inquiry.
Tigris was a secret deal in which AWB agreed to aid a British-based, former senior executive of BHP, Norman Davidson Kelly, who wanted to recover a dubious "debt" from Iraq for his obscure company Tigris, which was registered in Gibraltar.
AWB and the Iraqi regime agreed the Tigris "debt" could be recouped via the UN oil-for-food program by inflating the stated price of wheat that AWB sold to Iraq in late 2002.
After receiving reimbursement from the UN, AWB paid about $US8 million to Mr Davidson Kelly's account in December 2004.
Project Rose was AWB's internal investigation into the kickbacks, which was subsequently denounced as a ruse to cover up the illicit payments, and the Volcker Inquiry was the UN's investigation into rampant corruption that all but overwhelmed its oil-for-food program.
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