AWB Limited

The AWB was founded in 1939 to regulate the wheat market after the excesses of the Great Depression. The single desk dates to this period. This type of arrangement was not unique to Australia, as the Canadian Wheat Board was created in 1935 in a similar fashion (but its history dates back to an earlier wheat marketing board created during World War I, and also includes the experience of cooperative wheat pools during the 1920s).

For much of its early history, it was a government-run and owned company. In July 1999, it was restructured as a private company. It offered "class A" shares to those who met its definition of growers and who had the ability to elect the majority of its board and chairperson,[http://www.abc.net.au/rural/wa/content/2006/s2138065.htm AWB Constitution]", ABC Rural, 14 January 2008. Retrieved 25 May 2010 and from August 2001, 'class B' were publicly traded on the Australian Securities Exchange.[https://www.asx.com.au/asx/v2/statistics/displayAnnouncement.do?display=text&issuerId=4710&announcementId=417688&documentDate=2001-08-22&documentNumber=180064 Admission to Official List] Australian Securities Exchange 22 August 2001[https://web.archive.org/web/20110310042504/http://www.awb.com.au/aboutawb/corporate/history/ Corporate History] AWB Limited In 2008, constitutional amendments were passed. Despite resistance from several wheat lobbies and industry groups, it consolidated ownership of AWB into one type of share, giving growers no special consideration. This change was proposed by the AWB management as necessarily to having a simpler, lower-risk business model."[http://www.awb.com.au/NR/rdonlyres/C38AADA3-48DE-430B-A05E-0291CDB647DE/0/2009_Annual_Review.pdf AWB Ltd 2009 Annual Review] {{webarchive|url=https://web.archive.org/web/20110706101901/http://www.awb.com.au/NR/rdonlyres/C38AADA3-48DE-430B-A05E-0291CDB647DE/0/2009_Annual_Review.pdf |date=2011-07-06 }}", AWB Limited. Retrieved 25 May 2010

After privatisation, AWB grew to incorporate a number of subsidiaries to diversify its income away from its wheat exports. Its subsidiary businesses include GrainFlow to manage collection of grain from farmers to ports, companies to ship the grain overseas to customers, and Landmark rural services.

AWB Limited was a holding company owning a number of subsidiaries. Its shares were freely traded on the Australian Securities Exchange.

AWB Limited had a number of subsidiaries. Some of these subsidiaries existed due to legislative requirements relating to the operation of the single desk; others exist for the purpose of controlling credit risk. As of early 2006, they were:

• AWB Limited - the holding company
• AWB (International) Limited - the corporation authorised by federal legislation to export wheat under the monopsony
• AWB (Australia) Limited - domestic wheat trading and export of non-wheat grains
• AWB Services Limited - provides services (e.g. financial services, IT services, asset management) to the rest of the AWB group
• AWB Harvest Finance Limited, AWB Commercial Funding Limited, and AWB Riskassist Limited - provide finance and financial risk management for wheat export transactions
• AWB GrainFlow Pty Ltd - provides bulk grain handling and transport facilities
• Landmark (comprised Landmark Operations Limited and Landmark (Qld) Limited) provides finance, insurance, real estate, commodities trading, farming equipment sales, etc. to Australian farmers (including other agricultural sectors such as wool and livestock)

AWB announced a new strategy in 2009 to simplify and de-risk the business. This resulted in the divestment of the financial services loan book to the ANZ Bank in December 2009.{{cite web|title=Completion of Landmark Financial Services sale to ANZ|url=http://www.awb.com.au/investors/companyannouncements/current/ASX_Completion_of_Landmark_Financial_Services_Sale_to_ANZ.htm |publisher=ASX |access-date=24 May 2010 |url-status=dead |archive-url=https://web.archive.org/web/20110312095710/http://www.awb.com.au/investors/companyannouncements/current/ASX_Completion_of_Landmark_Financial_Services_Sale_to_ANZ.htm |archive-date=12 March 2011 }}

In March 2010, AWB announced the signing of a memorandum of understanding to sell the Geneva business and to joint venture the local grain trading business.{{cite web|title=AWB and Gavilon sign MoU regarding Commodities Management |url=http://www.awb.com.au/investors/companyannouncements/current/ASX_AWB_and_Gavilon_sign_Memorandum_of_Understanding_regarding_Commodities_Management.htm |publisher=AWB |access-date=24 May 2010 |url-status=dead |archive-url=https://web.archive.org/web/20110312095043/http://www.awb.com.au/investors/companyannouncements/current/ASX_AWB_and_Gavilon_sign_Memorandum_of_Understanding_regarding_Commodities_Management.htm |archive-date=12 March 2011 }}

{{Main|AWB oil-for-wheat scandal}}

Previously a low profile organisation, the AWB made headlines in late 2005 when it was alleged that it had knowingly paid kickbacks to the Iraq Government, in violation of United Nations sanctions and Australian law. Following the Iraqi invasion of Kuwait in 1990, the United Nations had imposed a financial and trade embargo on Iraq. However, after facing criticism over the humanitarian impacts of the sanctions, the UN from 1995 until late 2003 allowed Iraq to trade oil on the world market in exchange for food, medicine and other humanitarian needs.{{cn|date=June 2024}}

Despite this, at the insistence of the Iraq government of dictator Saddam Hussein, the AWB agreed to pay "transportation fees" of around $A$290 million.{{cn|date=June 2024}} This money was paid to a Jordanian transportation company, Alia. Alia kept a small percentage of the fees, and paid the remainder onto Saddam's government.{{cn|date=June 2024}} This breached the sanctions placed on the Iraqi regime.

The government-sanctioned Cole Inquiry into the company's role in the scandal has been completed and was tabled by Attorney-General Philip Ruddock on 27 November 2006."[https://archive.today/20121230202003/http://www.news.com.au/story/0,23599,20828605-2,00.html Cole Recommends Criminal Probe]", News Limited, 2006. Retrieved 27/11/06 The report found that, from mid-1999, AWB had knowingly entered into an arrangement that involved paying kickbacks to the Iraqi government, in order to retain its business.{{cite web|title=Summary, Recommendations and Background |url=http://www.ag.gov.au/agd/WWW/unoilforfoodinquiry.nsf/Page/RWP2A85EEC3CD2DFAF0CA257264000046AE#SummaryRecommendations |work=Cole Inquiry |publisher=Australian Department of the Attorney-General |access-date=24 May 2010 |url-status=dead |archive-url=https://web.archive.org/web/20110323160931/http://www.ag.gov.au/agd/WWW/unoilforfoodinquiry.nsf/Page/RWP2A85EEC3CD2DFAF0CA257264000046AE |archive-date=23 March 2011 }} The Inquiry recommended that 12 people be investigated for possible criminal and corporations offences over the scandal.

At the height of the investigation, the single-desk arrangement from which AWB benefits came under criticism. In 2006, the Australian Grain Exporters Association asked the Government to remove AWB's monopoly export powers.{{cite news|last=Clifford|first=Catherine|title=Grain exporters wants AWB monopoly removed|url=http://www.abc.net.au/rural/tas/content/2006/s1555197.htm|access-date=25 May 2010|newspaper=ABC Rural News|date=25 January 2006}} The oil-for-wheat scandal cast doubt among some grain exporters over the trust placed in the company, especially as they lost the ability to export to Iraq during the length of the Cole Inquiry, losing one of their biggest markets.{{cite news|last=McCutcheon|first=Peter|title=Wheat farmers consider the future of single desk policy|url=http://www.abc.net.au/7.30/content/2006/s1571832.htm|access-date=25 May 2010|newspaper=7.30 Report|date=16 February 2006|archive-url=https://web.archive.org/web/20090113170319/http://www.abc.net.au/7.30/content/2006/s1571832.htm|archive-date=13 January 2009|url-status=dead|df=dmy-all}}

The scandal resulted in international condemnation and litigation. On 11 July 2006, North American farmers claimed $1 billion in damages from AWB at Washington DC, alleging the Australian wheat exporter used bribery and other corrupt activities to corner grain markets. The growers claimed that AWB used the same techniques to secure grain sales in other markets in Asia and other countries in the Middle East.{{cite news|title=US wheat farmers sue AWB|url=http://www.abc.net.au/news/newsitems/200607/s1683396.htm|access-date=24 May 2010|newspaper=ABC News|date=11 July 2006|archive-url=https://web.archive.org/web/20080418113537/http://www.abc.net.au/news/newsitems/200607/s1683396.htm|archive-date=18 April 2008|url-status=dead|df=dmy-all}} The lawsuit was dismissed in March 2007.{{cite news|title=US court dismisses AWB lawsuit|url=http://www.theage.com.au/business/us-court-dismisses-awb-lawsuit-20080327-21sv.html|access-date=24 May 2010|newspaper=The Age|date=27 March 2008}}

In August 2009, the Australian Federal Police dropped their investigation into any criminal actions undertaken by AWB and others in this matter. This decision came after Paul Hastings QC declared the prospect of convictions was limited and "not in the public interest".{{cite news|last=Overington|first=Caroline|author-link=Caroline Overington|title=Federal police drop AWB investigation|url=http://www.theaustralian.com.au/business/news/federal-police-drop-awb-investigation/story-e6frg90f-1225767255737|access-date=24 May 2010|newspaper=The Australian|publisher=News Limited|date=29 August 2009}} The Australian Securities & Investments Commission then proceeded with several civil cases against six former directors and officers of AWB.{{cite web |title=ASIC launches civil penalty action against former officers of AWB |url=http://www.asic.gov.au/asic/asic.nsf/byheadline/07-332+ASIC+launches+civil+penalty+action+against+former+officers+of+AWB?openDocument|publisher=Australian Securities & Investments Commission |access-date=24 May 2010 |archive-url=https://web.archive.org/web/20100510115536/http://www.asic.gov.au/asic/asic.nsf/byheadline/07-332%2BASIC%2Blaunches%2Bcivil%2Bpenalty%2Baction%2Bagainst%2Bformer%2Bofficers%2Bof%2BAWB?openDocument |archive-date=2010-05-10 |url-status=dead }} AWB's former managing director Andrew Lindberg and former chief financial officer Paul Ingleby were ultimately fined and banned from managing a company for one year.{{Cite news |date=2012-08-09 |title=Former AWB boss fined over Iraqi bribes |url=https://www.abc.net.au/news/2012-08-09/former-awb-boss-fined-over-oil-scandal/4187632 |access-date=2024-01-14 |work=ABC News |language=en-AU}}{{Cite web |last=Durkin |first=Patrick |date=2016-12-14 |title=ASIC loses AWB case against Trevor Flugge a decade after Oil-for-Food |url=https://www.afr.com/companies/agriculture/asic-loses-awb-case-against-trevor-flugge-a-decade-after-oilforfood-20161215-gtbi1f |access-date=2024-01-14 |website=Australian Financial Review |language=en}} Former chairman Trevor Flugge was also fined, and banned from managing a company for five years.{{Cite web |last=Lee |first=Jane |date=2017-04-10 |title=Former AWB Chairman Trevor Flugge banned for five years over oil-for-food scandal |url=https://www.smh.com.au/business/former-awb-chairman-trevor-flugge-banned-for-five-years-over-oilforfood-scandal-20170410-gvhisp.html |access-date=2024-01-14 |website=The Sydney Morning Herald |language=en}} A civil suit brought by shareholders of AWB was settled out of court for $39.5 million in February 2010.{{cite news|last=Casben|first=Liv|title=AWB to pay shareholders $40m|url=http://www.abc.net.au/news/stories/2010/02/15/2820113.htm|archive-url=https://web.archive.org/web/20100216181513/http://www.abc.net.au/news/stories/2010/02/15/2820113.htm|url-status=dead|archive-date=16 February 2010|access-date=24 May 2010|newspaper=ABC News|date=15 Feb 2010}}

Australia's government has distanced itself from the payments to Saddam Hussein's regime, given Australia's contribution to military action against Hussein in the 2003 invasion of Iraq. Andrew Lindberg resigned as managing director on 9 February 2006 and from the board of directors on 22 February 2006 under intense public and media pressure.{{cite news|last=AAP|title=Kickbacks: AWB boss quits|url=http://www.smh.com.au/news/business/kickbacks-awb-boss-quits/2006/02/09/1139379621332.html|access-date=24 May 2010|newspaper=Sydney Morning Herald|date=9 February 2006}}

In the years immediately following the Cole Inquiry, AWB continued to be dogged by bad performance.{{cite news|last=Leyonhjelm|first=David|title=Was the old AWB better?|url=http://www.businessspectator.com.au/bs.nsf/Article/AWBs-dull-new-leaf-pd20100318-3N3NR?opendocument&src=rss|access-date=24 May 2010|newspaper=Business Spectator|date=19 March 2010}}

Following the publication of the Cole Inquiry, a new management team was installed under the leadership of Gordon Davis who was recruited from Orica in August 2006. Davis successfully reformed the constitution and the shareholder structure to consolidate into 1 class of shareholder.

This new management team has not been entirely without controversy. On 26 April 2007, Yahoo News reported that AWB also breached US sanctions on Iran. These sanctions prohibit American citizens and companies using American currency from trading with Iran. In 2006, AWB's US subsidiary attempted to pay an Iranian transport company approximately $1 million, in clear breach of the US sanctions.{{cite news|title=AWB 'breaches UN sanctions on Iran|url=http://news.smh.com.au/national/awb-breaches-un-sanctions-on-iran-20070426-9k7.html|access-date=24 May 2010|newspaper=Sydney Morning Herald|date=26 April 2007}}

In 2009, the company faced difficulties in another new market, when it was forced to recapitalise the balance sheet after the company produced significant losses from the expansion of trading activities into Brazil under Davis.{{cite news|last=Hopkins|first=Philip|title=AWB closes Brazil ops after $65m loss|url=http://www.smh.com.au/business/awb-closes-brazil-ops-after-65m-loss-20090722-dtk2.html|access-date=24 May 2010|newspaper=Sydney Morning Herald|date=23 July 2009}}

Despite making a small profit in 2009,{{cite news|last=Brindal|first=Ray|title=AWB still paying a high price for Iraq kickbacks|url=http://www.theaustralian.com.au/business/awb-still-paying-a-high-price-for-iraq-kickbacks/story-e6frg8zx-1225868886899|access-date=20 May 2010|newspaper=The Australian|date=17 March 2010}} in March 2010, the company announced a profit downgrade from domestic trading activities.{{cite news|last=Brindal|first=Ray|title=AWB falls sharply on profit downgrade|url=http://www.theaustralian.com.au/business/industry-sectors/awb-falls-sharply-on-profit-downgrade/story-e6frg95o-1225841925516|access-date=24 May 2010|newspaper=The Australian|date=17 March 2010}} In May 2010, it reported a half-year loss of $64.8 million, which it claimed due to the cost of settling the shareholder class action for $39.5m, and a loss of $65.4m on restructuring costs associated with its sale of the Landmark Financial Services loan and deposit books.

In July 2010, AWB entered into an agreement to merge with GrainCorp.[https://www.asx.com.au/asxpdf/20100730/pdf/31rlzyc0y8rl23.pdf GrainCorp and AWB Enter into Merger Implementation Deed] GrainCorp 30 July 2010 This did not proceed, after Agrium made a successful takeover offer that was completed in December 2010, with the company delisted from the Australian Securities Exchange.[https://web.archive.org/web/20201124153144/https://www.world-grain.com/articles/232-agrium-makes-proposal-to-acquire-awb Agrium makes proposal to acquire AWB] World Grain 15 August 2010[https://web.archive.org/web/20111005103926/http://www.weeklytimesnow.com.au/article/2010/11/01/251781_business-news.html Backing for AWB takeover] Weekly Times 1 November 2010[https://www.asx.com.au/asxpdf/20101117/pdf/31tymjw4kw8kln.pdf AWB Limited: Removal from Official List] Australian Securities Exchange 10 December 2010 In 2011, Cargill acquired the AWB Commodity Management business from Agrium.[https://web.archive.org/web/20201127114709/https://www.world-grain.com/articles/132-agrium-sells-awb-commodity-management-business-to-cargill Agrium sells AWB commodity management business to Cargill] World Grain 15 December 2010

{{Reflist}}

• {{cite news|url=http://www.abc.net.au/pm/content/2006/s1670642.htm|title=AWB halts Iraq wheat trade|publisher=ABC News|year=2006|access-date=2006-06-24| archive-url= https://web.archive.org/web/20060626192602/http://www.abc.net.au/pm/content/2006/s1670642.htm| archive-date= 26 June 2006 | url-status= live}}
• {{cite web|url=http://www.awb.com.au/NR/rdonlyres/A334991E-70E7-4096-AD74-0FCF7C4C48AD/0/Your_single_desk_overview.pdf |title=AWB: Single Desk – Fact Sheet 1 |work=Australian Wheat Board International |year=2006 |access-date=2006-06-10 |url-status=dead |archive-url=https://web.archive.org/web/20060820081019/http://www.awb.com.au/NR/rdonlyres/A334991E-70E7-4096-AD74-0FCF7C4C48AD/0/Your_single_desk_overview.pdf |archive-date=2006-08-20 }}
• {{cite news|url=http://www.news.com.au/story/0,10117,19753083-421,00.html# |title=AWB faces $1 billion damages lawsuit|publisher=News Limited|year=2006|access-date=2006-07-12}} {{Dead link|date=October 2010|bot=H3llBot}}
• {{cite web|url=http://www.cargill.com.au/news130400.pdf |title=Perspectives on Single Desk Marketing|author=Sims, F.|year=2006|access-date=2006-06-12 |archive-url = https://web.archive.org/web/20071128011411/http://www.cargill.com.au/news130400.pdf |archive-date = 2007-11-28}}
• {{cite news|url=http://www.theage.com.au/news/national/the-pros-and-cons-of-the-single-desk/2006/02/22/1140563859766.html|title=The pros and cons of the single desk|publisher=The Age|year=2006|access-date=2006-06-10}}
• {{cite web|url=http://www.trademinister.gov.au/speeches/2006/060301_abare_conf.html|title=The Single Desk in the Doha Round|author=Mark Vaile|author-link=Mark Vaile|year=2006|access-date=2006-06-23|archive-url=https://web.archive.org/web/20060615175138/http://www.trademinister.gov.au/speeches/2006/060301_abare_conf.html|archive-date=15 June 2006|url-status=dead}}

• [https://web.archive.org/web/20050825212800/http://www.awb.com.au/ AWB website]
• [http://www.landmark.com.au/ Landmark rural services]
• [https://www.un.org/Depts/oip/background/ UN Oil-for-Food program]
• [https://web.archive.org/web/20100602222931/http://www.ag.gov.au/agd/www/UNOilForFoodInquiry.nsf Inquiry into certain Australian companies in relation to the UN Oil-For-Food Programme] (Cole Inquiry)
• [http://www.livexports.com/cowgun.html Claims of AWB involvement in the live export trade]
• [http://www.news.com.au/feature/0,,37435,00.html/ The Australian Wheat Board scandal]

{{Wheat}}

{{Authority control}}

Category:Agriculture companies of Australia

Category:Companies based in Melbourne

Category:Companies formerly listed on the Australian Securities Exchange

Category:Former Commonwealth Government-owned companies of Australia

Category:Grain industry of Australia

Category:Monopsonies

Category:Wheat organizations

Category:1939 establishments in Australia

Category:2011 disestablishments in Australia

Category:Australian food and drink organisations