Former Australian Wheat Board chairman Trevor Flugge has been fined $50,000 and barred from managing corporations for five years, after he was convicted in December of breaching his duties as a director while the company was making questionable payments to the government of Iraq.
The Supreme Court of Victoria handed down the penalties to the Bussleton-based company director and farmer today, after it ruled in December that he had failed to make adequate enquiries about the propriety of the payment of $223 million in inland transportation fees and, as a consequence, failed to stop AWB from engaging in improper conduct by paying the fees to the Iraq government.
Mr Flugge’s disqualification from managing companies will be chalked up by the Australian Securities and Investments Commission as a win, as it had been seeking declarations by the court that he had contravened the Corporations Act.
“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.
“It also demonstrates that if necessary Asic will pursue difficult, complex cases over a lengthy period of time to bring poor corporate conduct to account.”
At the conclusion of the 12-year scandal, Mr Flugge was cleared of more serious charges concerning his knowledge of the payments by AWB to Iraq due to a lack of evidence.
The scandal erupted in 2004 when the UN established an investigation into AWB, a year after the invasion of Iraq by the US.
When AWB began transporting wheat inland to Iraq, it was paying the Iraqi government $US12 per tonne.
About $223 million was paid by AWB under that arrangement, while Mr Flugge was chairman.
