Australia wheat board chairman punished over Iraq 'kickback'

Former chairman of the Australian Wheat Board Trevor Flugge (C) has long-denied any wrongdoing over the payment of kickbacks to Saddam Hussein's government in Iraq

The former chairman of an Australian wheat firm was fined Aus$50,000 (US$37,500) Monday and banned from managing a corporation for five years over the payment of huge kickbacks to Saddam Hussein's government in Iraq.

Trevor Flugge was found by the Victorian Supreme Court in December to have breached his duties as a director of the Australian Wheat Board (AWB), after corporate regulator the Australian Security and Investment Commission (ASIC) filed a civil case against him.

The court ruled Flugge failed to properly investigate the payments, disguised as transportation fees, but ASIC was unable to prove that he deliberately flouted United Nations sanctions.

The AWB, formerly Australia's monopoly wheat exporter, paid Saddam's regime some US$225 million in bribes to secure lucrative grain deals with Iraq between 1999-2003 under a UN oil-for-food scheme, an Australian government inquiry found.

"The case highlights that company directors and senior management have a positive duty to chase down allegations of misconduct by their company," ASIC Commissioner John Price said after the hearing.

Iraq's government suspended business with AWB in 2006 following the Australian probe that saw the then prime minister John Howard called as a witness.

Two former AWB executives were previously fined over their role in the scandal but police dropped a criminal investigation in 2009 after an independent review of the evidence found there was little prospect of a successful prosecution.

Flugge has long-denied any wrongdoing and said in December he was vindicated by the court's ruling that he was unaware of breaching any UN sanctions.