THE Australian Securities and Investments Commission (ASIC) has lodged an application in the Victorian Court of Appeal for leave to appeal from a judgment of the Supreme Court dismissing ASIC’s proceeding against former AWB group general manager trading, Peter Geary.
ASIC will not make any further comment in relation to this matter — or in relation to ASIC’s proceeding against former AWB chairman, Trevor Flugge — at this time.
In 2004, the United Nations (UN) established an Independent Inquiry Committee (IIC) to investigate allegations that the Iraqi government had evaded Security Council Resolutions (which imposed sanctions on Iraq) through bribery, kickbacks and surcharges on oil and illicit payments in respect of humanitarian goods.
In October 2005, the IIC presented its findings that, among other things, kickbacks were paid to Iraq in connection with contracts with various foreign companies, including AWB, in relation to the supply of humanitarian goods.
Arising from the IIC findings, the Australian Government established a Commission of Inquiry (the Cole Inquiry) in November 2005 to enquire into, among other things, matters relating to AWB’s supply of wheat to Iraq under the United Nations Oil-for-Food Program (OFFP).
In his final report in November 2006, Commissioner Terence Cole made various adverse findings against, among others, officers of AWB and recommended that those matters be investigated by relevant agencies, including ASIC and the Australian Federal Police (AFP).
In February 2007, a taskforce was established by the Australian Government, led by the AFP, to investigate matters arising from the Cole Inquiry, with ASIC contributing staff to that taskforce. In August 2007, ASIC withdrew its staff from the taskforce and commenced a separate independent investigation.
In December 2007, ASIC commenced civil penalty proceedings in the Supreme Court of Victoria against former directors and officers of AWB: Andrew Lindberg, Trevor Flugge, Paul Ingleby, Peter Geary, Charles Stott and Michael Long.
In November 2008, the Court ordered a stay of ASIC’s proceedings against each of the defendants (except AWB’s former managing director Andrew Lindberg) until such time as they were advised that no criminal proceedings would be instituted against them.
In August 2009, the AFP announced that its investigation into criminal matters arising from the Cole Inquiry had been discontinued.
In May 2010, ASIC terminated its investigation into suspected criminal contraventions of the Corporations Act (Act) based on its consideration of the evidence it had gathered.
As a result of this and the earlier decision by the AFP to discontinue its investigation, the Court ordered on August 2, 2010, a lifting of the stay of the proceedings against Messrs Flugge, Ingleby, Geary, Stott and Long.
In August 2012, Justice Robson of the Supreme Court of Victoria ordered that Mr Lindberg be disqualified from managing corporations and pay a pecuniary penalty of $100,000 for contravening section 180(1) of the Act which requires company directors and officers to discharge their duties with due care and diligence.
In March 2013, the Victorian Court of Appeal ordered that AWB’s former chief financial officer, Paul Ingleby, be disqualified from managing corporations and pay a pecuniary penalty of $40,000.
In December 2013, ASIC discontinued its proceedings in the Supreme Court of Victoria against Charles Stott and Michael Long for alleged breaches of their duties as officers of AWB in connection with the OFFP after ASIC formed a view that it was no longer in the public interest to pursue its claims.
On 15 December 2016, Justice Robson of the Supreme Court of Victoria found that Mr Flugge failed to make adequate enquiries about the propriety of the payment of inland transportation fees and as a consequence, failed to stop AWB engaging in improper conduct in paying the inland transportation fees to the Government of Iraq, in contravention of section 180(1) of the Act.
The Court also found that it had not been established that Mr Flugge knew that AWB was making payments to Iraq contrary to UN sanctions and, therefore, was not satisfied that he had breached section 181 of the Act.
Also, on 15 December 2016, Justice Robson dismissed the proceedings against Mr Geary, finding that he did not contravene his duties as an officer in connection with AWB’s supply of wheat to Iraq under the OFFP.
The Supreme Court has listed the hearing of further matters in relation to the case against Mr Flugge, including orders as to costs and any penalty for the contravention, for March 14, 2017, at 10am.
The Court has also extended the period for any application for leave to appeal by either ASIC or Mr Flugge until 28 days after the date of the Court’s judgment on penalty.