The 12-year old scandal over the Australian Wheat Board’s payments to the government of Iraq has moved closer to final resolution, with its former chairman Trevor Flugge convicted today of breaching his duties as a director but cleared of more serious charges concerning his knowledge of the payments.
The Supreme Court of Victoria ruled that Busselton-based company director and farmer Mr Flugge failed in his duties when he chaired AWB, in connection with $223 million in payments made to the government of Iraq begining in the late 1990s when Saddam Hussein was in power.
The court found that Mr Flugge failed to make adequate enquiries about the correct payment of inland transportation fees to Iraq while the country was subject to United Nations sanctions.
However, the court also found there was not enough evidence to find that Mr Flugge knew that AWB was making those payments to Iraq.
Mr Flugge said he was satisfied with the court's ruling today.
"I am satisfied that the court has today dismissed the many serious allegations made against me that I had knowledge of any wrongdoing at AWB," he said.
"These accusations have been hanging over me for the more than 10 years since the Cole Inquiry. I welcomed the opportunity to have the evidence underpinning these allegations properly tested by a court of law.
"That has now happened and the court has entirely accepted that I had no knowledge of any wrongdoing.
"As to the sole finding that I breached my duties as a director by failing to conduct further inquiries, I am reviewing the judgment and considering my position."
In a statement today, the Australian Securities and Investments Commission said it was reviewing the court’s decision but made no further comments.
The watchdog is, however, seeking declarations that Mr Flugge contravened the Corporations Act, and orders to disqualify him from managing a corporation, as well as a penalty.
A court hearing to determine Mr Flugge’s penalties will be held in February next year.
The 12-year scandal erupted in 2004 when the UN established an investigation into AWB, a year after the invasion of Iraq by the US.
When AWB began transporting wheat inland to Iraq, it was paying the Iraqi government $US12 per tonne.
About $223 million was paid by AWB under that arrangement, while Mr Flugge was chairman.
Mr Flugge was a prominent company director, having served several years on the boards of Automotive Holdings Group, Wesfarmers and Navitas.
He resigned from those businesses in 2006.
