November 28, 2006

US wheat industry plans legal attack on AWB

The US wheat industry has been considering taking legal action against Australian monopoly wheat exporter AWB after an inquiry found that AWB had misled the United Nations over payments to secure wheat deals in Iraq.

In a government inquiry, published on Monday, Nov 27, it became obvious that the organisation broke UN oil-for-food sanctions against Iraq with the payment of US$222 million in kickbacks to the former Iraqi regime of Saddam Hussein between 1999 and 2003.

The funds that came from the oil-for-food programme moved through US banks, informed Alan Tracy, president of US Wheat Associates adding the inquiry found possible violations of US law.

AWB has however, refused to comment at this stage.

Since AWB has been restricting entry of other players interested in exporting wheat from Australia, any damage to the company would come as a welcome news to all.

It would particularly benefit the US grains traders to engage in price discovery in the Australian export market, which has a good supply of wheat.

Australian PM John Howard said the government was considering the future of Australia's wheat export system.

The wheat export monopoly system, which most Australian farmers still support in the belief that it produces higher export prices, has been under attack for years by the world's largest wheat exporter, the US.

AWB has already faced a threatened, but withdrawn, lawsuit by US farmers claiming US$1 billion in damages.