Six former executives of wheat exporter AWB will face court over their alleged roles in more than $126 million of kickbacks paid to Saddam Hussein's regime in Iraq.
In November last year, Commissioner Terence Cole recommended 11 former AWB executives face possible criminal charges.
In the first action from the regulator since the Cole inquiry, the Australian Securities & Investments Commission (ASIC) yesterday launched civil proceedings against six of the 11 executives in the Victorian Supreme Court.
ASIC chairman Tony D'Aloisio said the investigation was ongoing and did not rule out future criminal proceedings against the six men or other executives.
He also refused to reveal whether the conduct of ministers or departmental staff was investigated.
Each executive charged faces a fine of up to $200,000 for each breach and a possible ban from running any corporation.
AWB's former chairman Trevor Flugge and former managing director Andrew Lindberg – against whom Commissioner Cole made no adverse finding – are among the executives charged with breaching the Corporations Act.
ASIC alleges the executives failed to act with care and due diligence in relation to five contracts and between the wheat exporter and the Iraq Grain Board.
The contracts allegedly involved the payment of $126.3 million in breach of United Nations sanctions between December 20, 2001 and December 11, 2002.
AWB group general manager trading, Peter Geary, former general manager of international sales and marketing, Michael Long, and former general manager of international sales and marketing,
Charles Stott, are alleged to have implemented the contracts, which included illegal “inland transportation fees”.
Mr Flugge, Mr Lindberg and former chief financial officer Paul
Ingleby are alleged to have either known about the kickbacks, or they ought to have known about them.
Mr D'Aloisio said it will be alleged the executives' behaviour hurt AWB.
“What we are saying here is that the alleged misconduct has overall damaged the AWB as a corporation,” he told reporters.
An AWB spokesman said the company would continue to cooperate with investigators.
“We note the action taken by ASIC against former directors and officers of the company,” he said.
“AWB will continue to cooperate appropriately with all investigations.
“AWB believes it is inappropriate to comment further on individual cases or current legal action.”
A spokesman for Attorney-General Robert McClelland said it was not appropriate to comment while the matter was before the courts.
AWB is facing a class action by Iraqi citizens, filed in the
University of Melbourne Centre of Corporate Law director Ian
Ramsay said ASIC's move today was significant because it was the first enforcement action brought by the regulator since the conclusion of the Cole Inquiry.
During his inquiry into $290 million of kickbacks to the Hussein regime, Commissioner Cole found AWB had a “closed culture of superiority and impregnability, of dominance and self-importance”.
“Today's development is in this broader context of accountability if you like for what Cole found were just major and profound failings in governance and corporate culture by a very high profile company,” Professor Ramsay said.
ASIC expects the matter to be before the court early next year.
Mr Lindberg and Mr Geary are each charged with 10 breaches of the Corporations Act.
Mr Flugge is charged with seven breaches, Mr Long with 17, Mr Ingleby 16 and Mr Stott 12 alleged breaches.