David Jacobson's External Insights

Kickback: a story about AWB's corporate culture

I have just finished reading Kickback : inside the Australian Wheat Board Scandal by Caroline Overington.

It is a very readable exposition of the AWB saga, structured in a way that tries to makes sense of how AWB came to enter into corrupt contracts with Iraq, what happened when the war began and the UN investigated the contracts and finally the role of the Cole Inquiry and the Australian political context.

It is not a legal or commercial analysis; Overington describes how she got involved in the story even though she had no business journalism background. But by placing her activities in the story as it unfolds she asks commonsense questions and explains the media perspective.

The overall messages are :

How could a reputable Australian company become complicit in corruption?  Is it as simple as not wanting to lose a $1 billion a year customer? Was it a culture of doing business and making money no matter what the ethical cost? whatever it took to get the business done? Did it just believe that if AWB did not agree to Iraq's demands for kickbacks, some other country would and the payments were just a cost of doing business?

How could the Australian Government ignore the warnings about AWB's activities? Did it not investigate AWB earlier because it did not want to know the truth?

Kickback: inside the Australian Wheat Board scandal

Caroline Overington, the reporter who covered the AWB Inquiry for The Australian, has written a book on the story.

I have not yet read Kickback but based on her 2006 Walkley Award for Investigative Journalism and her interview on Radio National (about the first 10 minutes of Philip Adams Late Night Live program) I look forward to it.

Government responds to Cole Inquiry AWB Report

The Commonwealth Government has issued its response to the Cole Inquiry Report tabled on 27 November 2006.

The Government has accepted the Cole Report’s recommendations and in response will introduce legislation:

• requiring applicants for licences to import or export under United Nations sanctions to provide information to the Government; criminal penalties will apply for giving false or misleading information;
• creating a new offence for breaching UN sanctions;
• giving Government agencies the power to obtain evidence about suspected evasion of sanctions so they can be referred to law enforcement agencies;
• strengthening laws aimed at bribery of foreign officials; and
• making tax laws consistent with foreign bribery laws.

The penalty for a breach will be up to three times the value of the offending transaction and up to 10 years’ jail for individuals.

On 30 November 2006 the Australian Government announced an inquiry by the Australian Law Reform Commission (ALRC) into legal professional privilege as it relates to the activities of Commonwealth investigatory agencies.

On 12 January 2007, the Australian Government announced the appointment of a Wheat Export Marketing Consultation Committee to undertake extensive consultation with the Australian wheat industry, particularly growers, about their wheat export marketing needs.

A Taskforce led by senior former Australian Federal Police officer Peter Donaldson is working on possible prosecutions arising from the Cole Inquiry.

UPDATE 15 June 2007: International Trade Integrity Bill introduced

AWB legal fallout: sued on 2 continents

Two legal actions against AWB are reported to have been commenced.

Shareholders class action

A group of AWB shareholders have commenced proceedings against AWB in the Federal Court in Sydney.

Since the commencement of the Royal Commission of Inquiry into AWB’s conduct under the UN’s Oil for Food Program on 16 January 2006, the share price of AWB Ltd. has fallen nearly 42% from $6.40 on 12 January 2006 to $3.70 as at 13 April 2007

The claim seeks compensation for those represented in the action of the difference between the amount that they paid for their shares and the amount that they would have paid had the true value of the shares been charged at the date of purchase.  Alternatively, the claim is for the difference between the price they paid for their shares and the price for which they sold their shares after the Cole Inquiry commenced.  The claim also seeks damages for the value of the opportunity lost by the AWB investment.

The action is funded by IMF (Australia) Ltd.

US farmers sue AWB

ABC News reports that US wheat farmers have launched legal action against AWB in Manhattan in the US and accuses AWB and its US subsidiary of breaching antitrust and racketeering laws.

"A lawyer for the farmers says they will be seeking at least $US10 million in damages because they say AWB locked them out of the Iraqi market by paying kickbacks to corrupt officials."

UPDATE 18 April: The Age says the action was filed by Washington law firm Cohen, Milstein, Hausfeld & Toll in the US District Court in New York.

AWB update 27 December 2006

• Australian Minister for Agriculture, Fisheries and Forestry, the Hon Peter McGauran MP, has announced that he has granted 2 bulk wheat export permits, to companies not associated with AWB.
• ABC News has reported that US lawyers had "filed a civil lawsuit seeking class-action status on behalf of citizens of the three northern governates of Iraq who were entitled to receive benefits under the UN oil-for-food program." The case was filed on Friday in US federal court, in Manhattan, Southern District of New York, against BNP Paribas and AWB Ltd, formerly known as the Australian Wheat Board.

AWB: payments to Iraq not bribes for tax purposes

According to AWB, the ATO accepts that payments made by AWB under the United Nations Oil-for-Food programme do not constitute bribes to foreign public officials for the purposes of the Income Tax Assessment Act 1997 and were therefore deductible.

See ATO guidelines on bribes.

Cole Inquiry: AWB aftermath

The release of the Cole Inquiry Report has had commercial, legal, economic and political consequences.

Here's a list of links so far:

• Attorney-General's referral of report to Taskforce to consider criminal charges;
• Class action by AWB shareholders;
• AWB response;
• BHP's response (including the results of its own internal review);
• wheat export monopoly implications (ABC News);
• referral of legal privilege issues to ALRC;
• political consequences and the release of a book: John Quiggin.

UPDATE 6 December: The Prime Minister has announced that AWB (International)'s veto power over wheat sales has been transferred to the Minister for Agriculture for 6 months and that there will be a 3 month review of marketing arrangements.

Oil-for-Food (Cole) Inquiry reports on AWB

The Attorney-General has tabled  the Report of the Inquiry into Certain Australian Companies in relation to the UN Oil-for-Food Programme in Parliament.

The 5 volume report sets out the Commission's findings of fact.

The Report concludes that breaches of the law might have been committed by AWB Limited and AWB (International) Limited and certain of its directors and officers (see summary of findings in Volume 1). No such findings were made in respect of Alkaloids of Australia, Rhine Ruhr, BHP or Tigris Petroleum. However the Commissioner was highly critical of Davidson Kelly, the President of Tigris and found that Kelly might have committed an offence.

In respect of AWB, the Commissioner did not find any basis for breaches of the law relating to bribery or corruption, money laundering or terrorism.

The Report also states that there is no evidence "that any of the Prime Minister, the Minister for Foreign Affairs, the Minister for Trade or the Minister for Agriculture, Fisheries and Forestry were ever informed about, or otherwise acquired knowledge of , the relevant activities of AWB".
The Commissioner found there was no evidence to support an inference that the Department of Foreign Affairs and Trade turned a blind eye to allegations.

The Report also concluded that the Wheat Export Authority did not have knowledge of the true arrangements between AWB and the Iraqi government (principally because of a lack of vigour in WEA's questioning and supervision of AWB). There was no evidence that AWB officers obstructed WEA.

The Oil-for-Food Programme was established by the United Nations in 1995 to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humanitarian needs for ordinary Iraqi citizens. The Programme modified the strict sanctions on Iraq imposed after its 1990 invasion of Kuwait.

If you were a director or manager of a company which traded with Iraq, what would you have done if you found that you could not keep trading with a long-standing (at least 55 years) significant customer of your country’s products without breaking the law?

When you decided what to do, how would you document your decision and archive records relating to it? How would you respond to a finding from the UN that your decision to keep trading most likely involved corrupt special payments?  And how would you respond to a decision by your own government to investigate the UN finding?

In the case of Australia’s AWB Limited a Commission of Inquiry  has concluded that rather than accept the sanctions and find alternative markets for Australian wheat, AWB decided to disguise the true nature of its transactions and pay fees not permitted under the sanctions to a company controlled by the Iraqi Government.

The Independent Inquiry Committee of the United Nations (‘IIC’) estimated that AWB accounted for more than 14% of the illicit payments made to Iraq in connection with humanitarian purchases under the Programme . Their report concluded that AWB paid 'trucking charges' of more than $US222 million to Alia, a Jordanian trucking company owned by the Iraqi Government. AWB was identified as one of the 5 largest food suppliers to Iraq under the Programme which collectively accounted for US$5billion in contracts.

In its final report, the IIC concluded that Alia was a front company for the Iraqi regime headed by Saddam Hussein and that Alia channelled these payments to Iraq in contravention of the United Nations’ sanctions. A key issue in the Cole Inquiry was whether AWB or any of its employees knew or suspected that this was the case.

Despite significant evidence in support of the IIC conclusions, AWB denied any wrongdoing to the UN, the United States Senate, the Australian Government and ultimately to the Cole Inquiry.

AWB conducted 2 internal inquiries, retained 3 external legal firms and obtained various counsels’ opinions and then claimed that it was vindicated but that the documents could not be used by the Commission as they were subject to legal professional privilege. The claim for privilege was largely unsuccessful. 

AWB's corporate reputation is in tatters. It has had to replace its Chair and CEO and other senior executives. The documents show a failure of culture, systems and procedures: a willingness to break international conventions, to pay bribes and then to cover up their activities.

Counsel assisting argued that there was "a policy of doing whatever it took to get the business done."

In the final analysis much will also be said about subsidiary issues: the function of in-house lawyers and the tension between commercial loyalty to their employer and professional ethics, the role of lawyers in internal investigations and the use of legal professional privilege to restrict access to incriminating documents, internal document management and systems for retrieving documents and emails and the appropriate corporate position to take when an investigation is launched.

Ultimately this inquiry will be about corporate culture and the harm that can be caused by a failure of board and management to show leadership.

LESSONS LEARNED

Organisations need to understand their risks and have in place systems to manage knowledge related to those risks. They need to know who does what in their organisation and how and where knowledge is stored. It should not take weeks or months to locate important information.

They need to have a corporate culture which frowns on “getting around” the law and which encourages telling the truth when problems have been identified.

UPDATE: For those who have an interest in what laws might have been breached, look at Appendix 26 , page 313 in Volume 5 of the Report.

AWB Inquiry Index
AWB Cole Inquiry Squidoo lens

Waiting for Cole Report

Commissioner Cole has handed his report to the Governor-General.

Who's waiting for the report to be tabled in Parliament and publicly released?

• AWB, its directors and managers, and shareholders;
• the 3 other Australian companies involved (BHP, Alkaloids of Australia, Rhine Ruhr);
• The Australian Government and the Department of Foreign Affairs and Trade;
• the United Nations;
• the Labor Party;
• Australian regulators: Tax Office, ASIC
• the US Congress;
• US litigators;
• Australian litigators;
• the Iraqi Government.

Comment: AWB's world of trouble (SMH)

AWB Inquiry Index
AWB Cole Inquiry Squidoo lens

 

Australia: third least likely to pay bribes

Australian companies rank third least likely of countries to pay bribes according to Transparency International's 2006 Bribe Payers' Index.

The BPI looks at the propensity of companies from 30 leading exporting countries to bribe abroad. Companies from the wealthiest countries generally rank in the top half of the Index, but still routinely pay bribes, particularly in developing economies. Companies from emerging export powers India, China and Russia rank among the worst. In the case of China and other emerging export powers, efforts to strengthen domestic anti-corruption activities have failed to extend abroad.

However in 2002, Australia was rated the least likely nation to be involved in corrupt business practices. No doubt the latest results were influenced by the AWB inquiry which has exposed information not previously available.

Coincidentally it has been reported that the ATO are requesting Australian companies to disclose in their tax returns "facilitation payments" made overseas.

Cole Inquiry AWB hearings conclude

The "Inquiry into certain Australian companies in relation to the UN Oil-For-Food Programme" concluded public hearings on 29 September 2006. Hearings commenced on 16 January. Its report is due on 24 November.

Although there were 3 other companies investigated, the Inquiry primarily focussed on the conduct of AWB in relation to its wheat sales to Iraq.

The last week  provided evidence of conduct worse than I foreshadowed in my post of 31 January: AWB's corporate reputation is in tatters. It has had to replace its Chair and CEO and other senior executives. The documents show a failure of culture, systems and procedures: a willingness to break international conventions, to pay bribes and then to cover up their activities.

Counsel assisting argues that there was "a policy of doing whatever it took to get the business done."

Commissions of Inquiry always look for "the smoking gun", that piece of evidence that plainly exposes the truth of what happened, but rarely find it. Commissioner Cole, in his last week, has finally obtained documents which contradict the denials of AWB witnesses.

At least one email discovered (relating to the building of bunkers by the Iraqis) has prompted the Commission to indicate that it is examining whether AWB and others might have committed an offence under the terrorism offences in the Criminal Code.

This exchange between the Commissioner and the former CEO on the last day is revealing:

THE COMMISSIONER: Q. Mr Lindberg, it does appear that large amounts of money did go from AWB to Iraq through Alia, and you've said to me that it happened and it shouldn't have happened. It's obviously been a disaster for AWB and, no doubt, for you personally. Are you able to give me any understanding as to how you think this came about, how it happened in a company like AWB?
A. I haven't followed all the evidence in this Commission, Commissioner, but it would appear that it was set up before I arrived by former employees and it continued under my stewardship, and it shouldn't have.

In the final analysis much will also be said about subsidiary issues: the function of in-house lawyers and the tension between commercial loyalty to their employer and professional ethics, the role of lawyers in internal investigations and the use of legal professional privilege to restrict access to incriminating documents, internal document management and systems for retrieving documents and emails and the appropriate corporate position to take when an investigation is launched.

Ultimately this inquiry will be about corporate culture and the harm that can be caused by a failure of board and management to show leadership.

Commissioner Cole will produce a report containing factual findings and recommendations about what legal offences may have been committed. Most likely it will become a valuable tool for training and case studies.

AWB Inquiry Index
AWB Cole Inquiry Squidoo lens

Cole Inquiry AWB hearings resume

Inquiry hearings resumed  on Tuesday 26 September 2006 (see transcript) and are expected to finish this week.

As a result of the Federal Court  judgment, approximately 350 documents which had been the subject of a claim for legal professional privilege have been released and have been made available to the inquiry by AWB.

The Commission has produced a folder entitled "Compilation of Legal Advices and Instructions" from that material which will be the basis for questioning witnesses this week (including some who previously gave evidence which may have been inconsistent with the documents).

Cole Inquiry reporting date extended

Attorney-General Philip Ruddock has announced the Government has agreed to give the UN Oil-for-Food Inquiry additional time to complete its proceedings and deliver its report.

The new reporting date is 24 November 2006.

Now that AWB's claim in the Federal Court that a large number of documents are subject to legal professional privilege and therefore not available to the Inquiry has been resolved it is expected the Inquiry will conclude its hearings.

AWB Index

Squidoo Lens

Federal Court decides on AWB's claim for privilege

In AWB Limited v Honourable Terence Rhoderic Hudson Cole (No 5) [2006] FCA 1234 (here on Austlii) AWB applied to the Federal Court to exclude approximately 900 documents occupying 28 lever arch folders from Commissioner Cole's inquiry. After a detailed analysis Judge Young found that about 55o documents are protected on the basis of legal professional privilege.

The documents at issue span a period of years from about 2002 to 2006. Over that period, AWB was involved in a number of investigations concerning its sales of wheat to Iraq under the United Nations’ Oil-For-Food Programme (‘OFF Programme’). AWB conducted two internal investigations, known as Project Rose and Project Water. In addition, AWB was exposed to investigations by the Permanent Investigations Committee of United States Senate (‘PSI’), the Independent Inquiry Committee of the United Nations (‘IIC’) and ultimately the Cole Inquiry.

AWB’s internal investigations also involved a review of matters concerning The Tigris Petroleum Corporation Limited.

The rest were not protected either because:

• the dominant purpose was not for giving or obtaining legal advice;
• AWB disclosed the gist or substance of legal advice that it obtained and therefore AWB waived any privilege that attached to those documents;
• the documents were brought into existence in furtherance of an improper and dishonest purpose – inflating the prices of contracts A1670 and A1680 so as to extract payments out of the United Nations’ escrow account that would then be utilised, in part, to satisfy a compensation claim by GBI for a rebate of approximately US$2 million on account of the fact that earlier shipments of wheat by AWB had been contaminated by iron filings (‘the iron filings claim’). 10 documents were not protected as they related to the iron filings claim. 

Judge Young decided that privilege has been waived over 316 documents falling within the following categories: documents which defined the scope of AWB’s internal reviews or which identify what investigations were carried out; summaries, chronologies and other documents which record or analyse the results of those investigations; witness statements and other notes or records of interviews of AWB personnel; records of meetings and periodical reports concerning the findings of the review; and documents seeking advice, or comprising or recording advice provided to AWB, as to whether AWB or any of its employees engaged in any wrongdoing in connection with wheat sales to Iraq under the OFF Programme, including any wrongdoing in connection with the Tigris transaction.

In his Explanatory Statement Judge Young said:

The cumulative effect of AWB’s disclosures is that, down to 17 January 2006 when Lindberg gave evidence to the Commission, AWB was openly claiming that its legal advice showed that there was no evidence that it had engaged in any wrongdoing in connection with its supply of wheat to Iraq under the OFF Programme.  Specifically, AWB claimed that there was no evidence of any corruption by AWB, any side payments or after sales payments by AWB to the former Iraqi regime, that AWB knew of any connection between Alia and the Iraqi regime or of any payments being channelled by Alia to that regime, or any conduct by AWB that resulted in breaches of the United Nations’ sanctions.  The disclosures by AWB were expressed in such broad terms that they encompassed advices that AWB had obtained concerning the Tigris transaction and the iron filings claim.

I am satisfied that AWB made a conscious and voluntary decision to deploy the gist or substance of this legal advice in its dealings with the Australian Government, the IIC and the Commission because it considered that it was in its commercial interests to do so.  These actions are inconsistent with the maintenance of confidentiality in the legal advice.

It is not yet known whether Commissioner Cole will seek a further extension of his existing reporting date of 29 September.

UPDATE 26 September: In response to AWB's application for an order for costs against the Commonwealth, Justice Young decided to make no order as to costs.

AWB Index

Squidoo Lens

AWB: Cole Inquiry hearings resume

The Cole Inquiry hearings resumed on 22 August (transcripts).

The hearings relate to documents to which a claim for privilege by AWB has been lost in the Federal Court (the apology or contrition statement) or for which the claimed privilege in relation to those documents had either been waived or was no longer claimed or had originally been claimed in error.

Even with reference to contemporaneous documents Counsel assisting is still having difficulty in ascertaining what AWB executives actually knew about the payments.

How would your organisation look if its day to day activity was minutely examined? At the least, AWB's record keeping was disorganised.

UPDATE: Hearings adjourned on 24 August and will resume on 30 August.

AWB Index

Squidoo Lens

AWB: case study in the difficulty of apologising

It's been known for a while that AWB retained a US risk management consultant (Peter Sandman) to help it draft an apology.

What has only just been revealed (in the package of documents known as Exhibit 1020) is why that apology was never issued. AWB couldn't make a proper apology, it kept drafting defences.

Sandman's comments on the drafts are insightful: see for example his emails of 1 January 2006 and 7 January 2006.

The Age says "Sorry is the hardest word for AWB".

AWB Index

Cole Inquiry and AWB update

As the new report date of 29 September gets closer, both the Commissioner and AWB are manoeuvring to resolve access to documents and information:

• the Inquiry has announced it will resume hearings on 22 August;
• AWB is continuing its Federal Court hearing on legal professional privilege over documents.

On 9 August AWB obtained a 24 hour injunction against the Commissioner publishing certain documents.

There is media speculation about further witnesses to be called to give evidence at the Inquiry.

UPDATE: On 10 August, the injunction against publication of certain documents by Cole was vacated. What will be released?

AWB Index
Squidoo Lens

AWB v Cole update

The finalisation of the Cole Inquiry has been stalled by AWB's success in having the availability of more than 1200 documents decided by the Federal Court rather than Commissioner Cole.

On 18 July, Justice Young ordered that Commissioner Cole not require production of any documents over which AWB claimed privilege.

The dispute is to head to a trial, with a date yet to be fixed.

UPDATE: The trial will commence on Monday 7 August 2006 for an estimated 5 days.

AWB Index

US class action against AWB

Australian media (including ABC News and The Age) are reporting that a group of US farmers have commenced action in the US against AWB.

I have not been able to find the originating proceedings online but the media reports say that the action is a class action under The Racketeer Influenced and Corrupt Organisations Act accusing the wheat exporter of engaging in racketeering, money laundering, fraud and bribery.

According to the reports, a Kansas wheat farmer, Veryl Switzer, 78, is the lead plaintiff in the lawsuit - filed in Washington at the weekend - which claims AWB's conduct in Iraq and other countries breached US laws and damaged the interests of up to 20,000 US farmers.

UPDATE 12 July: here's the Class Action Complaint via Sox First.

More: My Squidoo Lens on AWB and the Cole Inquiry
AWB Index

AWB Oil for Food Inquiry reporting date extended

The Attorney-General Philip Ruddock has announced that the Government has agreed to give the UN Oil-for-Food Inquiry an additional three months to complete its proceedings and deliver its report.

The new reporting date is 29 September 2006 as requested by the Hon Terence Cole AO RFD QC.

AWB Index

AWB obtains injunction against Cole

On 20 June, Justice Kenny of the Federal Court granted AWB an injunction against Commissioner Cole "from issuing any further notice under s.2(3A) or any notice under s.6AA(3) of the Royal Commissions Act 1902 (Cth) (as amended by the Royal Commissions Amendments Act 2006 (Cth)) to the Applicant, its officers, employees or former officers or employees to produce documents other than notices that expressly do not require production of documents for which the Applicant claims legal professional privilege."

AWB's claim for legal professional privilege over about 1200 documents held by the Commission will be heard on 17 July. In the meantime the Commissioner cannot exercise his new powers in the Royal Commissions Act.

AWB Index

Cole Inquiry: Royal Commissions Act amended

The Senate has passed the amendment to Royal Commissions Act allowing a Commissioner to decide on legal privilege of documents.

It is expected that Commissioner Cole will reconvene hearings once the status of  documents  over which AWB has claimed privilege is resolved.

AWB Index

Cole Inquiry:AWB goes back to court

Commissioner Cole held a directions hearing today (30 May) to establish a process for dealing with AWB's outstanding claims for legal privilege over thousands of documents so that a timetable for hearing from any further witnesses could be established.

AWB's counsel  said AWB would be applying to the Federal Court to decide privilege rather than wait for Parliament to pass a Bill giving the Commissioner that power.

AWB Index

Cole Inquiry: Royal Commissions Act to be amended

Attorney-General Philip Ruddock has announced that the Government will propose amendments to the Royal Commissions Act 1902 in response to a request on May 19 by the Hon Terence Cole AO RFD QC, who is conducting the Oil for Food Inquiry.

Judge Young identified limitations in the Act in his recent judgment.

"The amendments will assist Commissioner Cole, and any other Commission of Inquiry under the Royal Commissions Act, to deal effectively with privilege claims," Mr Ruddock said.

The Government will introduce the amendments as soon as possible with the intention that the amendments will have immediate effect in assisting Mr Cole with his Inquiry.

UPDATE 31 May: the Amendment Bill has been passed by the House of Representatives

AWB Index

Cole Oil for Food Inquiry publishes AWB document

The Cole Inquiry has published the AWB document (pdf) in dispute until yesterday's Federal Court decision.

The one page, 6 paragraph "draft statement of contrition"  states that "AWB accepts in paying money for inland transportation and after sales service, it paid money to the Iraq government in contravention of the UN sanctions."

The document also states that "even though there were warning signs to some employees that this may have been occurring, AWB did not challenge the payments..".

The statement says AWB should have had their own internal systems of checks and balances to not participate in any abuse of the oil-for-food program.

AWB Index

Cole Inquiry : Federal Court rules that AWB document not legally privileged

AWB's application to the Federal Court for an order that the document entitled ‘Cole Inquiry – Draft Statement of Contrition – Andrew Lindberg’ should not be published by the Commission of Inquiry on the grounds of legal professional privilege has been dismissed.

Judge Young analysed the grounds on which legal privilege could be claimed as well as the powers of a Royal Commission. The issue of the effect of mistaken production of the document was not argued.

The judgment did not set out the contents of the document but the summary described its origins as follows:

The major impetus for the creation of Exhibit 665 was advice that AWB obtained from Dr Peter Sandman, a crisis management expert and public relations consultant, to the effect that AWB should ‘over-apologise’, sooner rather than later and via a statement by its managing director, so as to deal with the reputational damage AWB had sustained and was likely to sustain in future in connection with the Inquiry. Exhibit 665 was drafted by Mr Lindberg, who was then the chief executive officer of AWB, following a telephone conference that took place on 21 December 2005. The participants in the telephone conference were Mr Lindberg, Dr Sandman, Mr Zwier from Arnold Bloch Leibler (the solicitors for AWB) and a number of employees of AWB.  After the telephone conference, Mr Zwier provided written advice to AWB in an email dated 23 December 2005.  Mr Lindberg based his draft very closely on the advice he had received from Mr Zwier.

After preparing the draft statement of contrition, Mr Lindberg gave instructions for it to be circulated by email to the persons who had participated in the telephone conference of 21 December 2005.  The draft was circulated in anticipation of another telephone conference scheduled for Monday 2 January 2006.

The Inquiry has not yet published the document. There has been no indication of the effect of the judgment on other claims for privilege by AWB.

AWB Index

AWB Inquiry update

Having adjourned on 27 April to prepare his report for delivery by 30 June, Commissioner Cole sat again on 12 May to hear further evidence.

Felicity Jane Johnston was examined by video link (and intermittent audio) to the Austrade office in  the Australian Embassy in Washington, with her referring to a CD containing the documents. Ms Johnston worked for the UN's Office of Legal Affairs in approving AWB's contracts and liaised with the Australian Mission in respect of contractual queries. She also investigated third-country complaints about "inland transportation costs". Her evidence diverges with that of Australian public servants at the Mission (in particular Bronte Moules who was re-examined today) and DFAT.

The Commissioner indicated he could not conclude the hearings until the result of the Federal Court decision about claims for legal privilege were decided.

Counsel assisting said he had requested a statement from Mr Ayyash of Alia (the trucking company) but had not yet received it.

AWB Index

What offences might AWB have committed?

As we come to the climax of the Cole Inquiry, speculation increases about possible findings. Already careers and reputations have been damaged but the final report will have both international and domestic implications.

Even though we are still waiting for the Federal Court's decision on legal professional privilege of some documents, the Inquiry has released 2 advices from RRS Tracey of Counsel to AWB dated
31 March 2005 (pdf) and 12 August 2005 (pdf). The advices give some insight as to the complexities and difficulties of AWB's own internal investigations.

AWB Index

AWB Index

This is an index of my postings on AWB and the Oil for Food Inquiry conducted by Commissioner Cole ("the Cole Inquiry"):

Australian companies and Iraq Oil For Food Inquiry (19 Jan)

Reputation risk: the AWB experience  (31 Jan)

Oil-for-Food Inquiry: expansion of terms of reference (3 Feb)

AWB and Oil for Food Inquiry: Managing Director resigns and corporate governance to be reviewed (9 Feb)

AWB and Oil for Food Inquiry: who knows what and where is it kept? (16 Feb)

AWB: monopoly and governance issues (22 Feb)

Cole Inquiry: what did the AWB Board know and when and why is it important? (11 March)

Cole Inquiry terms of reference amended (3) (20 March)

Cole Inquiry: isn't there a summary of AWB facts and where are the missing emails?  (25 March)

Cole Inquiry: AWB risk management advice is not legally privileged (6 April)

AWB challenges Cole (6 April)

Cole Inquiry : AWB corporate secretaries resign (12 April)

Cole Inquiry: what the Government knew about AWB contracts (14 April)

Cole Inquiry and AWB: corporate culture and criminal responsibility (25 April)

What offences might AWB have committed? (27 April)

Cole: no action over political comments  (28 April)

AWB Inquiry update (12 May)

Federal Court decision on AWB apology (17 May)

Cole publishes AWB document (18 May)

Royal Commissions Act to be amended (24 May)

Cole Inquiry: AWB goes back to court (30 May)

Royal Commissions Act amended (13 June)

AWB obtains injunction against Cole (21 June)

AWB Oil for Food Inquiry reporting date extended (22 June)

US class action against AWB (11 July)

AWB v Cole update (19 July)

Cole Inquiry and AWB update (10 August)

AWB: case study in the difficulty of apologising (17 August)

Cole Inquiry hearings resume (24 August)

Federal Court decides on AWB's claim for privilege (18 September)

Cole Inquiry reporting date extended (22 September)