July 11, 2006

 

US growers file US$1 billion lawsuit against AWB

 

 

A US law used to outlaw the mafia would now be used against Australian wheat exporter AWB as US farmers filed a class action lawsuit seeking US$1 billion in damages.

 

North American farmers alleged AWB used bribery and other corrupt activities to manipulate the grain markets.

 

Evidence would be drawn from the Cole inquiry probing AWB's US$300 million in kickbacks to the former Iraqi regime of Saddam Hussein. Documents from an UN investigation into the oil-for-food programme under which AWB says it made payments would also be called upon as evidence.

 

US and Canadian farmers accuse the former Australian Wheat Board of using illegal means to exclude North American producers from certain markets.

 

The lawsuit also alleged that AWB used similar methods in Asia and the Middle East.

 

US producers aim to base their lawsuit on the Racketeer Influence and Corrupt Organisations (RICO) Act, which was previously used to criminalise the mafia and bike gangs.

 

The claim alleges AWB's activities hurt thousands of American and Canadian farmers.

 

A spokesman for growers involved in the suit, Bill Fletcher, said what the AWB inflated global wheat prices, adding that there could literally be damages in excess of US$1 billion.

 

The lawsuit is also borrowing evidence from the Cole inquiry that AWB recovered a US$8 million debt for BHP-related company Tigris Petroleum by artificially inflating wheat prices through oil-for-food contracts.

 

Fletcher said the RICO Act is effective in such a way that convictions are possible just by the fact that there is an organised effort to break the law.

 

The lawsuit also accuses AWB of bribing officials in Pakistan and Yemen to secure wheat contracts and manipulating the Indonesian market to shut out US rivals.

 

The documents filed with the court accuse AWB of conspiring to use tactics including bank fraud, bribery and money laundering. The lawsuit only names six farmers but allows for more than 20,000 to join in.

 

Lobby group US Wheat Associates, which alerted the public in 2003 with AWB's activities in Iraq has said it would consider joining the action if it was approached.

 

AWB said the lawsuit is ill-conceived and the company would vigorously defend itself if any action is brought against it, spokesman Peter McBride said.