ONE of the biggest and most high-profile commercial cases Australia has seen in years will begin this morning in the Victorian Supreme Court as Andrew Lindberg, the former boss of AWB, defends allegations about his role in allowing the wheat exporter to pay $300 million of illicit kickbacks to Iraq.
Over the next few months, Justice Ross Robson will hear details of AWB's secret payments from a cast of witnesses, including several former AWB managers involved in the Iraq wheat trade, at least two former AWB directors, officers of the Department of Foreign Affairs and Trade, and a New York-based official of the United Nations oil-for-food program.
Also called to give evidence in court is Othman Al-Absi, the Jordan-based general manager of Alia, a trucking company half-owned by Iraq's Ministry of Transport which was used by Saddam Hussein's regime as a facade for receiving AWB's kickbacks.
From at least 1999 and into 2003, AWB, anxious to preserve its multi-billion dollar wheat trade with Iraq, bowed to persistent demands by Iraqi officials and circumvented UN sanctions that barred the payment of hard currency to Saddam Hussein's regime. AWB initially asked ship captains to pay the sums while unloading wheat at the port of Um Qasr, but the kickbacks later became institutionalised as "trucking fees" paid to Alia.
The Australian Securities and Investments Commission is prosecuting a civil penalty case, alleging Mr Lindberg breached his duties to AWB because he knew about the payments and failed to halt them.
The regulator will argue that by allowing the illicit payments to continue, Mr Lindberg brought AWB into serious disrepute, damaged its share price and its commercial standing in the US market, and precipitated the loss in 2007 of AWB's monopoly rights to export Australian wheat.
Mr Lindberg so far is the only AWB executive to face court proceedings over the secret payments.
Ironically, of the 11 former AWB executives and one former BHP executive singled out by Commissioner Terence Cole, QC, in 2006 for further investigation, Mr Lindberg was the only one that Mr Cole suggested was not likely to face criminal charges.
Civil penalty cases initiated by ASIC against five of Mr Lindberg's AWB colleagues were postponed indefinitely late last year after Justice Robson decided it was "on the cards" that they would face criminal charges. So far no charges have been laid against any AWB executives.
On August 28, the Australian Federal Police abandoned its investigations into the Iraq oil-for-food scandal after deeming there was almost no hope of successfully prosecuting criminal charges. Victoria Police has also quit the investigation. However, ASIC's investigations into AWB and its officers continue.
It is not yet clear if Mr Lindberg will attend the Supreme Court case, which is expected to run until early next year. Since his sudden and dramatic resignation as chief executive in early 2006, soon after giving evidence before the Cole Inquiry, Mr Lindberg has kept a deliberately low profile and avoided public comment.
He has made only one, low-key appearance during countless preliminary hearings over the past two years. In an affidavit filed a few months ago, Mr Lindberg told the court the stress of waiting for the court case was taking its toll.
ASIC's preparation for the case, however, has not been as smooth as it might have liked. Justice Robson has rejected several versions of the corporate regulator's claim against Mr Lindberg, and he has barred the regulator from relying on controversial matters including Mr Lindberg's response to the UN's Volcker Inquiry and his knowledge of, and participation in, Project Rose.
Paul Volcker, the UN's special investigator who uncovered endemic corruption inside the oil-for-food program, was especially critical of AWB. He noted it was the single-biggest contributor to Iraq's vast kitty of kickbacks.
Project Rose was AWB's internal inquiry into the Iraq payments. It has since been dismissed as an elaborate scheme to deny the kickbacks and cover up evidence.
The case is expected to run four days each week until at least Christmas.
ASIC's counsel is Norman O'Bryan, QC. David Collins, SC, is representing Mr Lindberg.
AWB, which has already spent many millions of dollars responding to various inquiries into the Iraq kickbacks, is expected to have a barrister on hand during the case. It has repeatedly objected to the use of documents that it suspects may include advice from its lawyers.
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