U.S. Wheat Farmers Sue Australia's AWB

The Associated Press
Friday, April 20, 2007; 4:10 AM

WICHITA, Kan. -- U.S. wheat farmers have filed a class-action lawsuit against Australian wheat exporter AWB Ltd., alleging it paid bribes and kickbacks to the Saddam Hussein regime that cost wheat growers in America millions of dollars in lost sales.

The lawsuit, filed Monday in federal district court in New York City, contends AWB and its subsidiary AWB (U.S.A.) Ltd. were involved in a bribery and money laundering conspiracy that included various agencies of the Iraqi government, a Jordanian trucking company and international shipping companies. It also alleges violations of U.S. antitrust laws.

The complaint contends the companies illegally funneled money from the United Nations' oil-for-food program through bank accounts in the United States.

The suit, which seeks more than $100 million in damages, alleges violations of the Racketeering Influenced Corrupt Organizations Act, or RICO.

Benjamin Brown, a lawyer for the plaintiffs, said AWB participated in the scheme in exchange for the Iraqis excluding the company's American competitors, which depressed prices for American farmers.

"AWB knew by participating in this scheme they would be profiting really at the expense of American farmers," Brown said.

AWB, the exclusive marketeer of bulk wheat exports from Australia, did not immediately return a call for comment. But a news release posted on its Web site noted that the complaint had not been served, adding that, if it is, AWB will vigorously defend itself.

The lawsuit filed on behalf of six named plaintiffs seeks class-action status, which if granted would bring in about 100,000 U.S. growers of hard red winter wheat.

It is based on findings of an investigation by the United Nations in October 2005 that found AWB was the largest source of kickbacks, Brown said.

An Australian government investigation last year determined AWB paid $220 million in kickbacks to Hussein's regime from 1999 to 2003 to secure wheat contracts under the oil-for-food scheme. In response to the report, AWB said in November it accepted responsibility for its role in the scandal and announced a corporate restructuring plan. Iraq no longer permits AWB to send wheat there.

Iraq once was a top buyer of U.S.-grown hard red winter wheat. During the 1980s, U.S. wheat accounted for 29 percent of the Iraqi market _ second only to Australia with a 38 percent share.

But that was lost because of U.S. sanctions on Iraq between 1990 and 1997, a period in which Australia gained a monopoly with 73 percent of that market.

In 1997, U.S. wheat was allowed under the UN oil-for-food program. By 1998, U.S. wheat had regained a 6 percent market share in Iraq.

A lawsuit seeking $220 million from AWB was filed in the same court in December on behalf of seven Iraqi citizens. The lawsuit, which also sought class-action status, claimed the company cheated Iraqi citizens out of humanitarian goods through its role in the oil-for-food scandal.


On the Net:

Law firm of Cohen, Milstein, Hausfeld & Toll: http://cmht.com/

AWB Ltd.: http://www.awb.com.au/growers/

© 2007 The Associated Press