US Farmers, Shareholders Sue AWB For $150m
AUSTRALIAN wheat exporter AWB Ltd will be forced to defend law suits on two continents after lawyers in both Sydney and New York yesterday lodged claims for a combined $125 million in damages over the Iraq kickback scandal.
Retired farmer John Watson, 70, and his wife, Kaye, are the lead plaintiffs in a class action lodged on behalf of AWB shareholders in Sydney's Federal Court.
Mr Watson, who until recently farmed a property at Moama on the NSW border, owned 10,000 AWB shares once worth more than $6 each. The share price halved during the Cole inquiry into the Iraq kickback scandal, which found that AWB had been funnelling money to Saddam Hussein's regime in the lead-up to the Iraq war.
Mr Watson says he lost around $10,000 of his investment in AWB.
Mr Watson's daughter, a lawyer, works for Maurice Blackburn Cashman, the law firm handling the action.
“But she is not working on the case,” he said. “I knew they were looking at a class action and I got in touch with them.”
Mr Watson has previously sold wheat into AWB's national pool but said “that's irrelevant to this case. The evidence suggests they were corrupt, full-stop. They were supposed to keep the market informed but they misled the government and the shareholders.”
Just hours before the Australian shareholder action was lodged, a US law firm of Cohen, Milstein, Hausfeld and Toll filed a class action lawsuit on behalf of American wheat farmers in federal district court in New York.
The suit seeks up to $100 million in damages from AWB Ltd and its US subsidiary, AWB (USA) Ltd.
US farmers claim they were “stuck with an oversupply of wheat” between 1999 and 2003 because Iraq dealt only with AWB Ltd, which was paying kickbacks to Saddam Hussein's regime.
The complaint was lodged on behalf of farmers who produced hard red winter wheat, of the type grown across the great plains, including Texas, Oklahoma, Kansas, Nebraska, Colorado, Wyoming, South Dakota and Montana.
It invokes the so-called RICO or racketeering law, originally designed to hobble the Mafia and tackle organised crime. It says AWB “paid bribes to the Iraqi government” to “exploit a monopoly on wheat sold into Iraq.”
The lead plaintiff is John Boyd of Baskerville, Virginia, who growers hard red winter wheat on 1000 acres in Virginia. Four Kansan farmers, and one from Montana, are also part of the action.
Partner Benjamin Brown said: “AWB knew that, by paying these bribes, it would profit at the direct expense of American farmers -- its only real competition in the Iraqi market.
“Unfortunately, AWB achieved its monopoly in the Iraqi market not through fair competition, but by deceiving the United Nations into unwittingly funding Hussein's corrupt regime.”
The US action is separate from a $1 billion action, subsequently withdrawn, lodged on behalf of Kansan farmers last year.
AWB spokesman Peter McBride said AWB had not been formally notified of the new US action “but if it's forthcoming, we say it is ill-conceived and will be vigorously defended.”
US Wheat Associates chairman Leonard Schock said the Cole inquiry had found “sufficient evidence of wrongdoing to warrant criminal investigations of AWB Limited, and 11 of its former executives.
"The class action suit just filed focuses on the actions of corporate AWB, not any individual Australian wheat producers who, by trusting AWB, are themselves victims of its heavy-handed tactics.”
The Federal coalition is currently at war over whether AWB should keep its monopoly over wheat sales, in light of the Cole report, which found that AWB had corrupted the oil-for-food program.
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