AWB officials `untroubled' by kickbacks to Saddam

AWB executives were untroubled by the idea they were funnelling money to Saddam Hussein's regime, a court has been told.

AWB executives were untroubled by the idea they were funnelling money to Saddam Hussein's regime, and the company showed a "lack of internal reflection and soul-searching" about its business dealings with the Iraqi government, a court has been told.

On the second day of his opening address, on behalf of a shareholder class action against AWB, John Sheahan SC told the Federal Court in Sydney yesterday it was remarkable how executives from the Australian company would "blandly" discuss deliberately disguising payments to Jordanian trucking company Alia as business transactions.

Those payments were later forwarded to the Iraqi State Company for Water Transport. Mr Sheahan said the "lack of internal reflection and soul searching" -- demonstrated in the "banal" correspondence between AWB executives about the kickbacks -- was "striking" in its tone, given they were aware the company was making payments to a regime that was the subject of sanctions by the UN.

About 1000 investors have joined the class action against AWB, in the wake of the 2006 scandal. The company's share price slumped on the back of revelations the former monopoly wheat exporter paid kickbacks to Saddam's Iraqi government to secure wheat contracts.

The investors are seeking $100 million in compensation.

Mr Sheahan told the court that AWB feared losing its single desk monopoly, and this gave the company "added impetus" to maintain a good relationship with the Iraqi government. "It's correct to say that AWB sold two things to Iraq. They sold wheat and money," he said. "They became a money-delivering machine. Rivers of hard currency flowed through the Alia account, and on to the Iraqi regime." In the outline of its submissions, released in court documents on Wednesday, AWB admits it knew the "transport fees" it was paying to Alia would end up in the coffers of Saddam's regime. But AWB disputes the claim that these payments were in breach of UN sanctions. The company will defend itself against the class action by arguing it is the obligation of the shareholders to prove the UN and DFAT were unaware of the payments "and/or would not have permitted it if they did know".

Lawyers for AWB will challenge the claim it was legally required to tell the ASX about the payments to Alia, and are expected to argue that the negative publicity from the 2006 Cole report caused the company's share price to plummet.

AWB is set to formally outline its case to the court on Monday.

The hearing, before judge Lindsay Foster, continues.