U.S. News

Australian Wheat Board May Face Legal Charges in U.S.

By Insert Byline

  The Australian Wheat Board, the country's monopoly wheat
exporter, could face legal action in the U.S. after an inquiry found that AWB
had misled the United Nations over payments to secure wheat deals in Iraq,
U.S. Wheat Associates said.
    The Australian government on Monday found that AWB broke U.N. oil-for-food
sanctions against Iraq with $222 million in kickbacks to
the government of Saddam Hussein between 1999 and 2003.
    The U.S. Wheat Associates represent American wheat
growers who have long complained that AWB's monopoly in Australia inhibits
     The Wheat Associates said on Tuesday that AWB's subsidiary in the
U.S. could be liable under U.S. law.
    "The funds that came from the oil-for-food program moved
through U.S. banks," Alan Tracy, president of U.S. Wheat
Associates, told ABC radio. "There are a lot of connections
here and possible violations of U.S. law."
    AWB spokesman Peter McBride said AWB had no comment.
    Prime Minister John Howard said after the release of the
report on Monday that the Australian government was considering the future of
Australia's wheat export system.
      Australia is the second-largest exporter and competes
fiercely with the U.S. on world markets.
    Large U.S. grain traders would welcome the opportunity to export from the
Australian market.  So would the global grain trading giants, including Cargill Inc.,
Louis Dreyfus, Noble Group, Bunge Ltd.,  Toepfer and Glencore.
    In an attempt to keep its export monopoly, AWB has proposed separating
the scandal-tainted export arm  from the main company.
    "The split proposal will enable AWB Ltd. to become a more
efficient and commercially focused organization with a standard
commercial constitution that will facilitate the transition to
a more competitive environment," AWB Chairman Brendan Stewart
said in a statement to the Australian Stock Exchange.
    AWB's shares fell over 4 percent on the Sydney exchange to A$2.70 after the
announcement, which confirmed earlier newspaper reports. The
shares later recovered to lose around 2 percent, but they have
still lost over 60 percent of their value since January.
    Stewart said he will resign when shareholders approve the
split, expected in 2007. Farmer directors will also resign.

Group of Securities