Supreme Court Case: ASIC V. Andrew Lindberg

Case: ASIC V Andrew Lindberg

Judge: Robson J

Introduction

In 2007, Australian Securities and Investiments commission instituted civil penalty proceedings against Mr Lindberg claiming that whilst as the mananging director of AWB Limited (AWB) he breached the Corporations ACT 2001 (the Act) through his alleged involvement in AWB’s wheat trade with Iraq and the alleged misuse by AWB of the Oil For Food Program administered by the United Nations.

On 9 Ausgust 2012, the judge Robson of the Victoria Supreme Court pronunced his penalty judgment after the parties reached agreement to settle the proceedings. The decision involves Mr Lindberg formally assuming to 4 contraventions of s 180(1) of the Act involving a failure by the director.

Background

These resolutions called on UN member states agreed to avoid commodities export to Iraq (saved some exceptions such as essential human needs including food and first aid).

Because the trade would benefit Iraqi government by facilitating access to strong currencies, the UN created the Oil for Food Program (OFFP) – the agreement would allow earnings generated by Iraqi petroleum to be paid into an account managed by a third party. Resources deposited in this account could only be used to buy allowable supplies, including food. The AWD as the main supplier of wheat to Iraq from Oil for Food program.

The trade beetween AWB and Iraq conflicted with UN resolution in different ways. Firstly, AWB paid a 10% “trucking fee” to a third part supplier called “Alia” that has transferred the fee to The Government. The transaction permitted access to Iraqi Government to foreign currency. Furthermore, part of the proceeds from the wheat received by AWB was intended to refund the 10% fee, therefore, the money from UN escrow account has been supposedly utilised to make payments for purposes different from the allowed commodities.

Then, AWB made a deal with another company, called “Tigris” with the intention to recover a $8 million debt associated with transportation costs of wheat to

1 – to check and make sure if the recovery of $8 million “Tigris” debt incresing the price of wheat sold by AWB under contract OFFP was legally and no infrige the resolutions from UN.

2 - to inform the AWB Board that the Tigris debit was paid by increasing wheat contract prices and the agreement between AWB and Tigris corporation incorrectly stated the payment such as “service fee” rather than a debt and payment to AWB of a commission.

3 - to inform the AWB Board that AWB’s internal Project Rose investigation (the internal AWB review of allegations from the United States that AWB had paid kickbacks to Iraq to secure wheat contracts) as based in axamination of documments and the main keys was former employee and they had not been interviewed.

4 - to inform the AWB Board that he was advised by UN IIC Inquiry into the Oil-For-Food Program that Alia Transport Company was used to channel funds to the government of Iraq and the pricce of wheat was reduced to cover the 10% “trucking fee” .

Sentence

The Victorian Supreme Court concluded that Andrew Lindberg, a past AWB senior executive fail to meet United Nations resolution – of duty of care breach under the s180(1) of the Corporations Act 2001