AWB apparently paid millions of dollars in bogus inland transport fees to Iraq even when the Australian grain exporter's wheat shipments were rejected at the port of Um Qasr, according to internal company documents tendered in the Victorian Supreme Court.
A detailed schedule compiled by a senior AWB executive in December 2002 showed how much AWB paid to Iraq for the so-called trucking fees between late March and October 2002.
The Australian Securities and Investments Commission has told Justice Ross Robson that the fees were "bribes" or kickbacks paid to the Iraqis in breach of UN sanctions.
A UN investigation commissioned in 2005 revealed AWB was the biggest single contributor of kickbacks to Iraq, handing over $US225 million in breach of the sanctions between 1999 and 2003.
The schedule ASIC's counsel, Norman O'Bryan, QC, presented in court yesterday showed AWB paid €59.98 million of "trucking fees" during the period at a rate of €55.17 a tonne for one contract and €55.40/t for another.
But this included €2.84 million of kickbacks paid in advance for the delivery of wheat by the ship, Ethnos, even though the schedule indicated the ship's 51,300 tonnes of wheat had been rejected by the Iraqis for quality reasons.
ASIC is seeking civil penalties against former AWB chief executive Andrew Lindberg, arguing that he breached his duties to the company because he knew about the illicit payments and failed to halt them, thereby bringing the company into disrepute and ultimately causing it commercial damage.
ASIC's lawyers have told the court that although AWB identified the fees as being for trucking purposes in contract negotiations with the Iraqi Grains Board, the payments had nothing to do with transportation.
ASIC has also told the court that references to the fees were deleted from documentation the wheat exporter forwarded to the UN when it sought reimbursement under the UN oil-for-food program.
The schedule presented yesterday also showed that the "inland transport fees", levied per tonne, were paid on the full contracted weight of wheat sent from Australia, although the volume of wheat discharged at the Iraqi port of Um Qasr occasionally fell short of the contract specifications.
Mr O'Bryan said an AWB manager, Tony Au, appeared to pick up the discrepancy in June 2002.
Mr Au emailed AWB colleague Nigel Edmonds Wilson and queried why AWB had paid €2.825 million for "inland transport" fees against a 51,000-tonne shipment to Iraq by the vessel Heraklia when, in fact, 30,000 tonnes of the shipment ended up in Egypt.
ASIC has argued that as CEO, Mr Lindberg paid attention to detail, including attention to costs and other inputs, and that he was regularly informed about the details of AWB's crucial and lucrative wheat deals with Iraq, including the trucking fee.
Mr O'Bryan told the court that part of ASIC's case would be that there was "no word, no whisper" from Mr Lindberg to his boardroom colleagues about the kickbacks.
Mr O'Bryan said although Mr Lindberg gave the board detailed reports about various aspects of the Iraq business, he never mentioned the trucking fees because they were "a very big ugly secret … [like] a time-bomb ticking under this business".
The hearing will resume on Monday.
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