ASIC has commenced civil penalty proceedings in the
Supreme Court of Victoria against six former directors and officers of
AWB Limited (AWB).
ASIC alleges that the defendants contravened section
180 of the Corporations Act, which requires company officers to act
with care and diligence, and section 181, which requires company
officers to discharge their duties in good faith and for a proper
ASIC is asking the Court for declarations that each
defendant has breached the law, the imposition of pecuniary penalties
(for each breach a maximum of $200,000), and disqualification of each
defendant from managing a corporation.
These actions arise out of investigations following the Cole Inquiry.
The contracts covered by ASIC’s proceedings were
entered into between 20 December 2001 and 11 December 2002 and involved
the payment of AUD$126.3 million in breach of UN sanctions.
The defendants in the ASIC actions are:
- Andrew Lindberg, the former Managing Director of AWB;
- Trevor Flugge, the former Chairman of AWB;
- Peter Geary, the former Group General Manager Trading of AWB;
- Paul Ingleby, the former Chief Financial Officer of AWB;
- Michael Long, the former General Manager of International Sales and Marketing for AWB (2000-2001); and
- Charles Stott, the former General Manager of International Sales and Marketing for AWB (2001-2006).
ASIC alleges that these officers breached their
duties under the Corporations Act in connection with AWB’s contracts
with the IGB under the United Nations (UN) Oil-for-Food Program, which
contained payments for purported inland transportation fees (ITF). The
ITF payments were made to Alia, a Jordanian company partly owned by the
Iraqi Ministry of Transport.
ASIC alleges that Messrs Long, Geary and Stott were officers of AWB who:
- knew of and implemented various AWB contracts that included the purported inland transportation fees;
- were aware or ought to have been aware that the fees were not genuine; and
- knew or ought to have known that the fees were, or were likely to be, contraventions of the UN sanctions upon trade with Iraq.
ASIC alleges that Messrs Lindberg, Flugge and Ingleby:
- knew, or ought to have known, about the AWB contracts that included the purported inland transportation fees;
- had obligations to make reasonable
inquiries to ensure that AWB complied with obligations under UN
sanctions upon trade with Iraq;
- were aware, or ought to have been aware, that the fees were not genuine; and
- knew, or ought to have known, that the fees were, or were likely to be, contraventions of the UN sanctions.
The regulator further alleges that all defendants caused harm to AWB through their conduct.