Plaintiff v ANDREW ALEXANDER LINDBERG

1 ASIC seeks to further amend its statement of claim. I attach, as annexure 1, the proposed further amended statement of claim dated 1 May 2009, attached to its interlocutory process of 1 May 2009.

2 Mr Lindberg opposes the amendments and relies on his outline of argument of 7 May 2009 and the submissions of Mr Collins SC made on 4 June 2009. The summary of the amendments is attached as annexure 2. I have numbered the objections 1 to19 for convenience.

3 ASIC relies on the submissions of Mr N J O'Bryan SC of 4 June 2009 and ASIC's written response of 18 June 2009. The submissions of 18 June 2009 seek to withdraw some of the proposed amendments and to make further proposed amendments. Where the amendment is withdrawn, I will treat it as such. As to the proposed further amendments, I will deal with them where they are minor. Mr Lindberg opposes ASIC application for leave to file the further proposed amendments but has made no further submissions on them. In the circumstances, I will not rule on the further proposed amendments but will await any further application by ASIC to make any amendments that may arise from these reasons.

4 Since preparing these reasons and shortly prior to delivering them, I received further written submissions from Mr Lindberg dated 24 June 2009. I have taken these into account. The structure of my reasons may reflect the amendments made to accommodate the submissions of 24 June 2009.

5 For the following reasons, I give leave to ASIC to further amend its amended statement of claim, substantially in the form proposed in the draft of 1 May 2009, save for those amendments disallowed which are set out below. I direct that the Further Amended Statement of Claim ("FASOC") be filed and served by 24 July 2009. I order that ASIC pay the costs thrown away by reason of the amendments and the costs of the application of 1 May 2009. I direct that the defendant file and serve his defence to the FASOC, in the form previously adopted, by 14 August 2009.

7 ASIC's case against Mr Lindberg may be summarised as follows.[1]

8 Between 1996 and 2003, the United Nations operated the Oil-for-Food Program (OFFP) whereby proceeds from Iraq's oil imports were held in an UN Escrow Account and, where authorised by the UN, used by Iraq to buy humanitarian goods. During this period, relevant UN resolutions otherwise prohibited the provision of any financial or economic benefit to Iraq , including hard currency.

9 Between 1996 and 2003, AWB sold bulk wheat to the Iraqi Grain Board (IGB) under the Oil-for-Food Program.

10 Between 1999 and 2003, Iraq imposed, and AWB paid, a purported inland transportation fee in connection with all AWB shipments of wheat to Iraq. The fee was paid by AWB in hard currency to the IGB, via a Jordanian company, Alia, which was part-owned by the government of Iraq.

11 From 1999, each AWB contract with Iraq was inflated by the amount of the purported inland transportation fee, and this amount, having been paid to Alia by AWB, was later obtained by AWB from the UN Escrow Account.

12 The inland transportation fee was a sham. Neither AWB nor Alia in fact organised or provided transportation of wheat inside Iraq. The purpose of the sham fee was to provide the government of Iraq with a flow of hard currency, which the UN resolutions establishing the Oil-for-Food Program had forbidden. In an effort to evade detection of AWB's payment of the sham fees and their recovery from the UN Escrow account:

(a) the sham fees were not referred to in the contracts submitted by AWB to the UN for approval. Instead, the sham fees were incorporated into the total sale price per tonne of wheat;

(b) contracts submitted to the UN by AWB referred to meaningless or sham trade terms (for example, "CIF Free in Truck to All Governates of Iraq"); and

13 Each payment to Alia was contrary to relevant UN sanctions because it resulted in the government of Iraq obtaining hard currency. The recovery of each payment from the UN Escrow Account was not made for legitimate humanitarian purposes and accordingly, was contrary to relevant UN sanctions.

14 Further allegations are made about the misuse of the UN Escrow Account in relation to what is called "the Tigris debt" and the iron filings claim. These transactions also allegedly involved inflating the sale price of wheat in a similar manner to the inland transportation fees.

15 All these matters were well known to AWB. By virtue of his position as managing director of AWB, his personal involvement in some of these matters, and his receipt of key communications, each of these matters became known to Mr Lindberg at various times between 2000 and 2003.

16 The revelation of these matters caused substantial damage to AWB.

17 Mr Lindberg knew or ought to have known that the revelation of AWB's conduct was likely to cause substantial and irreparable harm to AWB, including the loss of the single desk, which was of great financial and commercial value to AWB.

18 Mr Lindberg, as managing director, was responsible for reporting these matters to the board and for taking reasonable steps to investigate and prevent AWB from engaging in conduct contrary to UN resolutions.

19 Mr Lindberg is alleged to have breached his duties under ss 180(1) and s 181(1) of the Corporations Act by failing to take adequate steps to:

(a) follow up serious matters of concern in relation to the payment of purported inland transportation fees, raised with Mr Lindberg in late 2000 or early 2001 by Arthur Andersen;

(b) prevent AWB from entering into wheat contracts which provided for the payment and recovery of sham fees;

(c) ensure that payments or proposed payments in respect of the sham fees were disclosed to and approved by the UN;

(d) make enquiries with relevant AWB employees concerning the true commercial characteristics of certain wheat contracts;

(f) ensure that AWB complied with relevant UN Resolutions;

and by permitting AWB to enter into the contracts including the sham fees.

20 The critical issue in these proceedings is Mr Lindberg's knowledge of the sham fees, particularly that the payment of these sham fees was contrary to UN resolutions and that disclosure of these payments would have been likely to cause substantial and irreparable damage to AWB.

21 The amended statement of claim alleges that Mr Lindberg knew or ought to have known of these matters.[2] The proposed FASOC seeks to further amend the allegation of his knowledge to include that he "knew facts that ought to have put him on a train of inquiry that would have disclosed" the sham payments.[3]

22 As can be seen from this general summary, the scheme of the pleading is to first allege that certain things happened and then to allege that, by reason of matters alleged, Mr Lindberg knew or ought to have known of certain relevant matters including that the inland transport fees were a sham.[4]

23 ASIC contends that it is necessary to keep in mind several factors when considering the proposed amendments.

24 ASIC submits that its case against Mr Lindberg alleges breaches by him of ss 180 and 181 of the Corporations Act 2001 (Cth). ASIC submits that s 180 of the Corporations Act requires that the circumstances of AWB be taken into consideration, along with the characteristics of the office which Mr Lindberg held in AWB and Mr Lindberg's duties and responsibilities arising out of holding that office.

25 ASIC contends that the relevant circumstances of AWB and the characteristics of Mr Lindberg's office include matters such as AWB's corporate structure, its management arrangements, the size and nature of its business, the composition of its board, Mr Lindberg's position and responsibilities within AWB, the particular management functions which Mr Lindberg performed, his experience and skills, the manner in which responsibility for the business was distributed between directors and employees and the circumstances of the specific case.[5] ASIC contends that these matters are alleged and particularised in paragraphs 3, 12F - 12R, 18 - 35, 88A - 90B and 96 - 96B of the FASOC. ASIC submits that all these matters affect the content of the duty owed by Mr Lindberg pursuant to s 180 of the Act.[6]

26 ASIC contends that similarly, s 181 of the Corporations Act, in requiring an assessment of whether a director has acted in good faith in the best interests of the company and for a proper purpose in the performance of the functions attaching to the office of director,[7] necessarily requires that the nature of the director's office, the responsibilities of the director and the circumstances of the company be considered.

27 ASIC contends that the structure of the FASOC is to first set out the background facts and circumstances concerning AWB which are relevant when considering the nature of the office which Mr Lindberg held and the duties and responsibilities to AWB that ASIC alleges he had while he was in that office. It submits that the background facts and circumstances include the matters which are enumerated in the headings of the table of contents on page 2 of the FASOC, which was included, for ease of reference, to identify the key subjects in respect of which ASIC contends Mr Lindberg owed duties and had responsibilities arising out of his office.

28 ASIC submits, generally, that many of the criticisms made by Mr Lindberg of the amendments sought to be included in the proposed FASOC proceed upon the basis that the allegations are irrelevant because they are not material to any cause of action alleged.

29 ASIC contends that, on the contrary, the question of whether Mr Lindberg has breached ss 180 and 181 of the Corporations Act in the manner alleged can only be determined after the Court has made relevant findings about the nature and scope of his role, his duties and responsibilities, the characteristics of AWB,[8] the circumstances in which AWB found itself in connection with the subject matter of this proceeding (namely AWB's substantial export wheat trade with Iraq, which was subject to stringent UN sanctions and trade regulations in the relevant period) and Mr Lindberg's actual or imputed knowledge. ASIC asserts that all of these background facts and circumstances are relevant to the issues in the case.

Content of Pleading

13.02 (1) Every pleading shall -

(a) contain in a summary form a statement of all the material facts on which the party relies, but not the evidence by which those facts are to be proved;

....

Documents or conversations

13.03 The effect of any document or the purport of any conversation, if material, shall be pleaded as briefly as possible, and the precise words of the document or conversation shall not be pleaded unless those words are themselves material.

Particulars of Pleading

13.10 (1) Every pleading shall contain necessary particulars of any fact or matter pleaded.

....

(3) Without limiting paragraph (1), every pleading shall contain particulars of any -

....

(b) disorder or disability of the mind, malice, fraudulent intention or other condition of the mind, including knowledge or notice-

which is alleged

34 Paras 12F to 12H allege that Mr Lindberg was aware of certain demurrage and delay problems, was told about them and attended meetings about the issue. Mr Lindberg submits that these paragraphs are irrelevant and not material to any cause of action alleged.

35 ASIC submits that these paragraphs are relevant to ASIC's case against Mr Lindberg. ASIC contends that Mr Lindberg's involvement in and knowledge of inland transportation fees, changes to AWB's contracts with Iraq, shipping issues (including demurrage) and insurance problems which had been experienced by AWB are of critical relevance in assessing:

(a) his role, duties and responsibilities and the circumstances of AWB at the relevant time within the meaning of s 180;

(b) Mr Lindberg's interest and involvement in the Iraq wheat trade and the importance of the Iraq trade to AWB; and

(c) whether Mr Lindberg was aware or should have been aware of impropriety by AWB with respect to the Oil-for-Food Program.

ASIC contends that these matters will define the content of the duty under s 180. ASIC submits that they are therefore material to the causes of action alleged against Mr Lindberg.

36 ASIC alleges that paragraph 12G pleads a circumstance relevant to AWB, namely the limited appointment of Alia as protective agent, where Alia's appointment did not extend or relate to the inland transportation of wheat and where Alia's appointment (unlike the purported inland transportation arrangements) was formally recorded in writing.

37 Mr Lindberg does not accept that these paragraphs are relevant to: (a) the causes of action alleged; or (b) assessing the matters ASIC refers to. Mr Lindberg alleges that the allegations are vague, referring in general terms to "demurrage" and "chartering" issues. Mr Lindberg contends that the new paragraph 12F asserts that the defendant became aware of "significant demurrage costs" and "the details of AWB arrangements for the shipment of wheat". Mr Lindberg submits that the pleading does not identify those demurrage costs or the details of those arrangements. As a result, he submits that the pleading fails to disclose or define the issues to be raised at trial.

38 Mr Lindberg submits that in any event, the particulars do not support the allegations in paragraph 12F.

39 Mr Lindberg submits that paragraph 12J remains embarrassing. He contends that there is a complete absence of any particulars to support the allegation or to disclose or define the issues to be raised at trial.

40 Paras 12F to 12N relate to demurrage and Mr Lindberg allegedly being informed of issues concerning "contractual performance." Paragraph 12F alleges, in substance, that Mr Lindberg knew that AWB had significant demurrage costs as a result of delays in the discharge of AWB shipments to Iraq. Paragraph 12G deals with the appointment of Alia as a protective agent. Paragraph 12H alleges a meeting which discussed demurrage. Paragraphs 12I, 12J, 12K and 12L deal with meetings that Mr Lindberg allegedly attended. Paragraphs 12M and 12N deal with communications received by Mr Lindberg.

41 ASIC asserts that paragraphs 12F to 12N are relevant in assessing Mr Lindberg's role, duties and responsibilities at the relevant time. Mr Lindberg's responsibilities and duties are pleaded in paragraphs 96A, 96B and 96C. None of those paragraphs seek to rely on paragraphs 12F to 12N in defining his responsibilities and duties.

42 Paragraphs 12F to 12N appear to have two functions in the claim. First, the pleas are in the nature of particulars to support the allegations of knowledge in paragraph 35. Secondly, the pleas are relied on in alleging the conduct said to constitute the breach of duty by Mr Lindberg in paragraph 97.

43 As to the issue of knowledge, paragraph 35 alleges that by reason of the matters alleged in paragraphs 12 to 34N, including 12F to 12N, Mr Lindberg knew or ought or ought to have known of certain matters or knew facts that ought to have put him on a train of enquiry that would have disclosed certain matters.

44 It is not clear to me what particular facts alleged in paragraph 12F to 12N are relied on to establish knowledge of which particular matters referred to in paragraph 35. Further, it is not clear whether a particular fact is relied on to establish actual knowledge or that Mr Lindberg ought to have known of the particular fact alleged or facts otherwise known to him ought to have put him on a train of enquiry that would have disclosed the particular fact alleged. As to the latter, it is not clear what these other facts are.

45 For example, is the allegation in paragraph 12F relied on to establish that Mr Lindberg had actual knowledge that AWB was continuing to make purported inland transportation payments in connection with its trade with the IGB notwithstanding the concerns that had been raised in the Arthur Andersen Report in December 2000 and the trip report in February 2001 as alleged in paragraph 35(a)?

46 As to the issue of the contravention of Mr Lindberg's alleged duties, paragraph 97 does seek to rely on paragraphs 12F to 12N although it is not clear to what extent it does so. The paragraph is not easy to understand. I shall seek to take an example to explain its role in the pleading.

(a) that Mr Lindberg had a responsibility to take reasonable steps to prevent AWB from entering into contracts which included the inland transportation fee;[9]

(b) that Mr Lindberg owed a duty to AWB to exercise his powers and discharge his duties with the degree of care and diligence a reasonable person would exercise;[10]

(c) that Mr Lindberg failed to take steps to prevent AWB from entering into contracts which included the inland transportation fee;[11] and

(d) by doing so Mr Lindberg breached his duty as aforesaid.[12]

48 In that context, ASIC seek to rely, inter alia, on paragraphs 12F to 12N in making out the allegation that Mr Lindberg failed to take steps to prevent AWB from entering into contracts which included the inland transportation fee. Further, paragraph 97 contains some twenty plus instances of Mr Lindberg failing to do something that he allegedly ought to have done if he exercised the required degree of care and diligence.

49 By rolling up the plea in this fashion, it is not clear what relevance, if any, paragraphs 12F to 12N have and which of the twenty odd paragraphs allege failures to act.

50 In my opinion, Mr Lindberg is entitled to know precisely what matters he is alleged to have known that give rise to each of his alleged failures to act. The pleading is vague and too general.

51 In my opinion the pleadings in paragraph 12F to 12N are embarrassing.

53 Mr Lindberg complains that this paragraph is "vague, general and unintelligible."

54 ASIC submits that this criticism is unjustified. ASIC contends that paragraph 12I is simply and clearly expressed in its terms and readily understood as a material allegation in support of Mr Lindberg's actual or constructive knowledge of Iraqi wheat contracts at the relevant time.

55 However, to address this criticism, ASIC proposes to give additional particulars of paragraph 12I, which are contained in the amended version of the FASOC filed with their submissions in order to make the allegation clearer and more complete.

56 I agree that the pleading is too vague, general and unintelligible. The allegation does not plead the material effect of what Mr Officer said. Rule 13.03 provides:

The effect of any document or the purport of any conversation, if material, shall be pleaded as briefly as possible, and the precise words of the document or conversation shall not be pleaded unless those words are themselves material.

58 The same criticism Mr Lindberg made in respect of paragraph 12I is made by Mr Lindberg of paragraph 12J. Again, ASIC submits that this criticism is unjustified for the same reasons as those provided in response to paragraph 12I.

59 Further, ASIC submits that this paragraph is material and relevant to allegations of a breach of s 180 of the Corporations Act.

60 ASIC contends that Mr Lindberg's involvement in the meetings of AWB's corporate risk committee is of critical significance in assessing:

(a) the nature of his role, duties and responsibilities in connection with the OFFP; and

(b) whether Lindberg was aware or should have been aware of impropriety by AWB with respect to the OFFP.

61 ASIC refers to para 96(d) of the FASOC and contends that the corporate risk committee was responsible for formulating risk minimisation strategies, including those relevant to the contractual terms on which AWB supplied wheat to Iraq. As far as I am aware, the FASOC does not contain a para 96(d).

62 ASIC submits that Mr Lindberg's attendances at the meetings provides one of the factual bases for alleging that his responsibilities included the formulation of the risk minimisation strategies referred to in para 96(d) of the FASOC. ASIC contends that these allegations are therefore highly material to the causes of action alleged.

63 I agree that the allegation is too vague and general. The committee's function is not pleaded. With greater particularity, the allegation may have been a material allegation. Leave to amend is disallowed.

64 Mr Lindberg complains that these paragraphs are vague and are not material to any cause of action alleged against him.[13]

65 ASIC submits that these paragraphs, and in particular the issue of the significance of AWB's wheat trade with Iraq and Mr Lindberg's recognition of this, are relevant to:

(a) assessing Mr Lindberg's role, duties and responsibilities in connection with this part of AWB's business;

(b) whether Lindberg was aware or should have been aware of impropriety by AWB with respect to the OFFP; and

(c) the balancing of the commercial importance of Iraq to AWB and the political and reputational risks that the country posed to AWB;

and are therefore material to those causes of action alleged against him.

66 ASIC submits that it will contend that the wheat market in Iraq was so important to AWB's revenue (a circumstance relevant to AWB) that Mr Lindberg's responsibilities included taking reasonable steps to protect that market by ensuring that AWB complied with the international sanctions applicable to that market (e.g. paras 96A(f), (fa), (fg)[sic] and (i) FASOC) and by preventing or halting impropriety by AWB with respect to the OFFP.

67 For reasons discussed under objection 1, I do not accept that these allegations are relied on in alleging Mr Lindberg's responsibilities or duties.

68 ASIC contends that Mr Lindberg's recognition of the matters alleged in paragraph 12O and 12P is relevant to the balancing of the commercial importance of Iraq to AWB and the political and reputational risks that the country posed to AWB. I put aside the issue that paragraph 12P may be an allegation of evidence rather than of a material fact. In my opinion, it does support the allegation in paragraph 35(c).

69 I fail to see how the fact alleged in paragraph 12O supports the allegation in paragraph 35(c).

71 Mr Lindberg complains that these paragraphs raise a new cause of action and are vague and embarrassing. He asks: what is it that he should have informed the board of? Mr Lindberg submits that the court ought not allow the amendments in the absence of any explanation of: (a) why they were not pursued earlier; or (b) how they will effect the trial.

72 ASIC contends that the substance of these new allegations is that Mr Lindberg, as Managing Director of AWB, improperly executed deeds of release by and on behalf of the AWB Board in favour of Messrs Officer and Emons when they ceased their employment with AWB in mid-2000. ASIC contends that these deeds acknowledged that AWB had made "agency payments" to overseas agents for wheat sales in 1999 and 2000.

73 ASIC submits that these allegations are relevant to:

(a) Mr Lindberg's knowledge of the payments that AWB was making to overseas agents in respect of such sales, which may tend to support actual or constructive knowledge of similar payments in Iraq; and

(b) the question whether it was appropriate for Mr Lindberg and AWB to be giving releases of this sort, in respect of matters which were of such significance to the company, without informing or advising the AWB Board of either the subject matter of the releases or the fact that the releases had the effect contended in paragraph 12R, or seeking approval from the AWB Board with respect to the releases.

74 ASIC says that in response to Mr Lindberg's criticism of these paragraphs, the paragraphs have been redrafted to make these points clearer.

75 As far as I am aware, no issue has been raised in these proceedings or allegation made that Mr Lindberg "improperly executed" the deeds.

76 In those circumstances, leave to amend is disallowed.

77 Mr Lindberg's criticism is that these paragraphs introduce a new cause of action and are vague and general.[14] Mr Lindberg submits that the particulars to paragraph 21 (which form the basis of paragraph 21A and 97(n)) do not give details of what was discussed about "the purported inland transportation fee" or the "concern" that some (and if so what) funds were being paid to Iraq. Mr Lindberg contends that it is stated that further particulars to paragraph 21 may be provided prior to trial. He submits that the court ought not to allow amendments in this form at this stage of the proceeding.

78 Further, Mr Lindberg submits that these paragraphs constitute a new cause of action and the court ought not to allow the amendments at this time in the absence of any explanation of: (a) why they were not pursued earlier; or (b) how they will effect the trial.

79 ASIC submits that paragraphs 21A and 21B support both an existing alleged breach of duty, namely, paragraph 97(a) and a new but related alleged breach of duty in connection with the Arthur Andersen report, namely paragraph 97(n).

80 ASIC contends that paragraphs 21A and 21B relate to material facts which support ASIC's allegation that Mr Lindberg had knowledge of that report and the key matters which were found in it and what Mr Lindberg did following receipt of the report and its findings.

81 ASIC contends that paragraph 97(n) complains that Mr Lindberg failed to inform or advise the AWB board of the existence of and/or the findings contained in the Arthur Andersen report.

82 ASIC contends that this is a new breach of duty alleged but is inextricably related to an existing breach of duty alleged in paragraph 97(a). ASIC submits that each of the sub-paragraphs of paragraph 97 constitutes an alleged breach of duty of s 180.

83 Para 19 alleges the existence of the Arthur Andersen report and the effect of it. Para 21 alleges that Mr Lindberg provided a copy of the report to Mr Fuller. I do not understand how that purports to be a material fact to the cause of action pleaded. I would have thought that the material allegation is that Mr Lindberg received a copy of the report but did not inform the board of what is alleged to be the material effect of the report. Para 21B does not plead the material effect of the report. Para 97(n) does not plead precisely what purport of the report Mr Lindberg did not inform the board of.

84 In those circumstances, leave to amend is disallowed.

85 Mr Lindberg complains that paragraph 22A is not a material allegation of fact and is vague and general.

86 ASIC submits that this paragraph relates to the internal audit services fraud risk assessment undertaken by Ernst & Young on behalf of AWB in early 2002. ASIC submits that it is alleged that Mr Lindberg received a copy of this important report concerning fraud risks which AWB faced in or around July 2002.

87 ASIC submits that this paragraph is material and relevant for the following reasons:

(a) the Ernst & Young fraud risk assessment is relevant to the question of whether Mr Lindberg knew or ought to have known that AWB sold wheat in countries where bribery and corruption, including kickbacks and agency payments, were common business practices raising a high risk of fraud or other improprieties as alleged in paragraph 35(n);

(b) the allegations in paragraphs 22A and 35(n) taken together, it is submitted, are of critical significance in assessing Mr Lindberg's role, duties and responsibilities having regard to the circumstances of AWB as disclosed to Mr Lindberg in 2002 by the Ernst & Young fraud assessment report; and

(c) the circumstances of AWB, as disclosed by the Ernst & Young fraud assessment report, are relevant to whether Mr Lindberg was aware of or should have been aware of, or should have availed him of the means of becoming aware of, impropriety by AWB with respect to the OFFP.

88 ASIC contends that paragraph 22A is therefore material to the causes of action alleged against Mr Lindberg.

89 Paragraph 22A is not relied on in supporting the allegations of responsibilities and duties.

90 Paragraph 22A is relied on to support the allegations made in paragraph 35. For the reasons given to objection 1, I consider the pleading of 22A and 35 embarrassing. ASIC submits that paragraph 22A is relevant to the allegation in 35(n). That link is not made clear in the pleading.

91 I refer to and repeat my observations under objection 1 on the reliance of paragraph 22A in paragraph 97.

93 Mr Lindberg complains that these are not material allegations of fact and notes that paragraph 29C relates to an email which is particularised under paragraphs 26 and 31.

94 ASIC accepts the objection in respect of paragraph 29C and will remove this paragraph as it is adequately addressed in the other particulars referred to.

95 With respect to the remaining paragraphs 29A and 29B, ASIC submits that these paragraphs are relevant to the breaches of duty alleged in respect of the Tigris debt (paragraph 29A) and the iron filings claim (paragraph 29B), both of which are important incidents in respect of which it is alleged that Mr Lindberg breached his duties to AWB.

96 Under this claim, ASIC alleges that Mr Lindberg knew that IGB's iron filing claim was to be paid using the sham inland transportation fees (para 35B(i)).

97 Para 29B alleges that Mr Lindberg attended a meeting at which he was handed a document that referred to a proposal to offset the Iron Filings claim against the Tigris Debt.

98 ASIC submits that para 29B is material to the Tigris debt allegation and the iron filings claim. ASIC alleges that Mr Lindberg knew that the Tigris debt was to be recovered by "loading up" the AWB contracts with IGB.

99 In my view, para 29A does not allege a material fact. In my opinion, para 29B does not properly plead the relevant effect of the document it seeks to rely on: see r 13.03.

101 Mr Lindberg complains that particular HA (page 33) is not a particular of what Mr Lindberg was told.

102 ASIC submits that it is a particular of what Mr Lindberg was told at the meeting which occurred on or about 10 June 2003.

103 To avoid any possible confusion, ASIC seeks to further amend the particular.

104 The particular does not allege that he was told anything. It says certain things were referred to. If it is alleged that Mr Lindberg was told something, then the particular should allege the effect of what was said: r 13.03.

OBJECTION 10 - 34B TO 34I, PARTICULARS C & D, 96A (k) & (l), 97(p),(s) & (u)

106 These amendments seek to introduce allegations concerning Project Rose.

107 Mr Lindberg complains that these paragraphs introduce a new cause of action in relation to Project Rose which he says are vague, general and embarrassing.

108 Mr Lindberg maintains that these paragraphs are vague and general and ought not to be allowed at this stage of the proceeding. Mr Lindberg submits that, for example, paragraph 34E is now drafted in the widest possible terms: that the defendant "knew, ought to have known or knew facts which ought to have put him on a train of enquiry". He submits that the particulars do not identify how Mr Lindberg had such knowledge.

109 The essence of the "Project Rose" allegations is that:

(a) Mr Lindberg was responsible for the establishment,[15] supervision[16] and operation[17] of an inquiry into the allegations made by US Wheat Associates that AWB was inflating its contracts for the sale of wheat to Iraq under the OFFP and some of the excess had gone into the accounts of Saddam Hussein's family.[18] The inquiry was known as Project Rose;[19]

(b) Mr Lindberg reported to the AWB Board that Project Rose was a thorough, detailed and genuine investigation of the allegations;[20]

(c) Mr Lindberg knew that Project Rose was not a thorough, detailed and a genuine investigation of the allegations;[21]

(d) Mr Lindberg reported to the AWB Board that the investigation had found no impropriety on AWB's part and absolved AWB from any responsibility [the pleading is ambiguous as to whether or not the inquiry had found impropriety or whether or not he knew that it had];[22] and

(e) Mr Lindberg failed to ensure the investigation was thorough and bona fide.[23]

110 ASIC submits that these allegations are relevant to:

(a) Mr Lindberg's actual or constructive knowledge as to Project Rose as alleged in paragraphs 35(q), (r) and (s) of the FASOC;

(b) Mr Lindberg's alleged responsibilities with respect to Project Rose as alleged in paragraphs 96A(k) and (l) of the FASOC; and

(c) the breaches of duty alleged in paragraphs 97(p), (s) and (u), where they are alleged to constitute breaches of s 180 of the Corporations Act.

111 ASIC submits that these allegations with respect to Project Rose are clear and simply expressed and form an important part of the Plaintiff's case against Mr Lindberg.

112 ASIC accepts that these allegations relate to new alleged breaches of duty under ss 180 and 181 of the Corporations Act.

113 The pleadings are unsatisfactory. In paragraph 35(r), it is alleged that Mr Lindberg knew or ought to have known that the Board of AWB had been misinformed by Mr Lindberg and others that Project Rose involved a rigorous and detailed review of the facts surrounding AWB's OFFP contracts with Iraq and uncovered no evidence of wrongdoing by AWB or its officers despite that rigorous and detailed review. It is unclear whether the allegation includes an allegation that the board was misinformed because Project Rose did uncover evidence of wrong doing. If so, what was the wrongdoing that was uncovered? If not, then what is the relevance of this allegation?

114 In paragraph 97(p), it is alleged that Mr Lindberg misinformed the Board that the review had found no evidence that AWB had knowledge that monies paid to Alia were passed on to the former government of Iraq. As far as I can see, there is no allegation that the review did find such evidence. Rather, I took the allegation to be that the review did not find such evidence as it was not thorough.

115 In my opinion, the allegations are embarrassing. "A pleading is embarrassing when it places the opposite party in the position that he or she does not know what is alleged against him or her."[24] ASIC does not precisely state what it is Mr Lindberg is alleged to have known and how precisely he misinformed the board. Is it alleged that he knowingly did so? When it alleges that he allowed others to misinform the board, is that allegation that he knowingly did so?

116 Paragraph 97(s) alleges that Mr Lindberg failed to take any reasonable steps to properly investigate the allegations made in the US Wheat Associates complaint. It is not clear whether it is alleged that Mr Lindberg knew that the complaints were well-founded and deliberately set about ensuring that Project Rose would not ascertain what he knew to be the true state of affairs. What does ASIC mean, in para 35(q), when it alleges that Mr Lindberg knew that the inquiry was not a bona fide or thorough investigation into wrongdoing by AWB? Is it alleging that, although he did not know of the wrongdoing, he knew that those conducting the inquiry did not seek to ascertain whether AWB was engaged in wrongdoing? Or is it alleging that, he did not know of the wrong doing, but knew the inquiry was not seeking to uncover the true state of affairs? What is the alleged wrongdoing?

117 If it is alleged that Mr Lindberg knew that the complaints were well founded, then it would follow that if the investigations did not disclose that the complaints were well founded, that Mr Lindberg would know that the report was not thorough and if he permitted the report to be presented to the board, he would have allowed the board to be misled. These allegations are not pleaded and what is left is vague and embarrassing.

118 In my opinion, the allegations ought to have an appropriate degree of particularity such that Mr Lindberg knows precisely what is alleged against him.

119 I disallow the amendments relating to Project Rose.

120 Mr Lindberg contends that para 34E is unintelligible, vague and embarrassing.

121 ASIC contends that this paragraph alleges in clear and unambiguous terms that Project Rose did not constitute a bona fide attempt to investigate whether AWB and its officers, agents or employees had engaged in any impropriety in relation to the OFFP. ASIC says that further, detailed particulars of that allegation are given in the FASOC.

122 I have already ruled that the proposed amendment in para 34E is not allowed. The allegation is ambiguous, vague and embarrassing. It is not clear whether it is alleging that those conducting the inquiry deliberately did not interview Hogan, Whitwell and Long, when those conducting the inquiry otherwise knew they ought to if the inquiry was to ascertain the true state of affairs. Project Rose did not conduct the inquiry. The inquiry was conducted by people. The pleading alleges that Project Rose did not constitute a bona fide attempt to investigate. It is not clear what this means. The pleading is embarrassing.

OBJECTION 12 - PARAS 34J-34N, PARTICULAR 35 E AND PARAS 97(q),(r), (t) & (u)

124 Mr Lindberg contends that these paragraphs raise a new cause of action based on his reporting to the AWB board on the inquiry by the Independent Inquiry Committee ("IIC") into the OFFP. Mr Lindberg submits that the allegations are too general and unparticularised. He also submits that the amendments should not be permitted as they introduce a new cause of action at this late stage of the proceeding.

125 ASIC contends that as with the Project Rose allegations, these paragraphs set out important allegations of fact in respect of which it is alleged that Mr Lindberg failed to adequately inform the AWB Board as to:

(b) the nature of the allegations which had been put to Mr Lindberg by IIC investigators and the seriousness of the subject matter which Mr Lindberg was called upon to address; and

(c) the full extent of the findings and proposed findings of the IIC with respect to AWB's involvement in the OFFP and the factual basis for these findings.

126 ASIC contends that the facts which were or should have been known to Mr Lindberg are alleged in paragraphs 34J - 34N. The non-disclosure to the AWB Board of those facts, and other relevant matters within Mr Lindberg's knowledge, is alleged in paragraphs 97(q), (r), (t) and (u). ASIC submits that these allegations are clear and unambiguous and appropriately pleaded.

127 In substance the "IIC" allegations is as follows:

(a) In April 2004, the United Nations established a committee known as the Independent Inquiry Committee into the United Nations Oil-for-Food Program (IIC) to investigate and determine whether established procedures under the OFFP were violated and whether contractors engaged in any illicit or corrupt practices.[25]

(b) In February 2005, IIC investigators interviewed Mr Lindberg. During the interview, the investigators informed Mr Lindberg that they had been informed by various sources that Alia had been used to channel funds to the former government of Iraq under the guise of transportation costs, that it was not possible to contract with the Iraq government without making "a side payment" to the Hussein regime, and no company had been exempt from paying a 10 per cent kick back to the Iraq government.[26]

(c) On 8 September 2005, Mr Lindberg informed the boards of AWB and AWB International that:

(i) the IIC had issued a major report in September 2005;

(ii) the relevant issues discussed in the report were the use of Alia, the purported inland transportation fee and the size of AWB's exports to Iraq; and

(iii) AWB had not paid sham or purported inland transportation fees for non-existent trucking services, but there was a risk that AWB's "legitimate trucking operations" in relation to Australian wheat could be misinterpreted as purported inland transportation fees.[27]

(d) the IIC report described the purported service fees paid by contractors under the OFFP as a source of kick backs; and

(e) the report indicated that the service fees amounted to double the amount of purported inland transportation fees paid by contractors.[28]

(f) on or about 26 September 2005, Mr Lindberg was informed by the IIC of what the ICC intended to report and Mr Lindberg responded to the ICC by saying he was concerned about the IIC's proposed findings on AWB's participation in the OFFP and that AWB had believed that Alia was a bona fide company providing a genuine service.[29]

(g) Mr Lindberg knew or ought to have known that IIC's investigation was not limited to purported inland transportation fees but extended to purported service fees.[30]

(h) Mr Lindberg failed to adequately inform or advise the AWB board of the allegations raised by the IIC investigators in February 2005, including that the IIC's allegations included the payment of the purported service fees.[31]

(i) Mr Lindberg failed to inform the AWB board of the true nature and extent of the allegations raised by the IIC in its September report, including allegations concerning the payment of the purported service fees.[32]

(j) Mr Lindberg failed to take any reasonable steps to properly investigate the allegations made by the IIC investigators or the findings of the IIC.[33]

(k) Mr Lindberg failed to inform or advise the board of his knowledge of the matters set out in para 35.[34]

128 In my opinion, these allegations do seek to raise a new cause of action and the pleading of this cause of action is unsatisfactory.

129 Paragraph 34K does not plead that the investigators made any allegations. If it is assumed that the matters they informed Mr Lindberg of are allegations, then it is pleaded that on 2 September 2005, he did advise the board of several matters relating to the IIC inquiry. I do not see the relevance of pleading these matters when the allegation is that he did not advise the board of certain allegations. The matters he advised the board of do appear to include some of the allegations made by the investigators in February 2005. This pleading lacks precision and includes irrelevant allegations. In my opinion, it is embarrassing.

130 Paragraph 97(r) does not allege what constituted the "true nature" of the allegations that were made in the September 2005 report. As far as I am aware, they are not pleaded elsewhere. In my opinion, this pleading is vague and embarrassing.

131 Paragraph 35 does not distinguish between those matters Mr Lindberg is alleged to have known, those matters he ought to have known or those matters that would have been disclosed to him by enquiry. In my opinion, para 37(u) requires the pleader to plead precisely those matters Mr Lindberg knew, as opposed to matters he ought to have known or would have been disclosed to him on enquiry. Is Mr Lindberg accused of not telling the board matters he did know? Or is Mr Lindberg accused of not telling the board matters he did not know himself? Or is Mr Lindberg accused of not telling the board matters he did not know but ought to have known or would have known if he make certain inquires that he did not make?

132 Mr Lindberg submits that I should disallow the amendments as they raise a new cause of action. I do not propose to disallow the amendments for that reason. I do, however, disallow the amendments in their present form for the above reasons.

133 Mr Lindberg maintains that these paragraphs are unintelligible and embarrassing and ought not to be allowed in this form at this stage of the proceeding. Mr Lindberg contends that ASIC now appears to concede that AWB cannot breach UN Resolutions: see paragraph 66 of the 18 June submissions. As a result, it is meaningless to allege that AWB acted "contrary to or inconsistent with" resolutions which it was not bound to comply with. Mr Lindberg notes that, notwithstanding its concession, ASIC maintains its plea that AWB acted "in contravention" of the UN Resolutions.

134 Mr Lindberg complains that para 35(c) does not allege a material fact to any cause of action alleged.

135 The paragraphs are not relied on in establishing Mr Lindberg's duties or responsibilities.

136 For the reasons given under objection 1, I consider paragraph 35(c) should not be allowed. As I said earlier, it is not clear which paragraphs support this allegation. It is not clear whether it is alleged that he knew of the matter or ought to have known of the matter, and if so why he ought to have known, or that the matter would have been disclosed to him on inquiry. It is not clear what facts it is alleged he knew that should have put him on a train of enquiry that would have disclosed the matter alleged in paragraph (c).

137 The same observations may be made as to paragraph 35(n).

138 Mr Lindberg alleges that the amendment concerning AWB's conduct as "otherwise contrary to or inconsistent with" the UN sanctions is meaningless and unintelligible. This complaint relates to the amendments to paragraphs 35(f), 35(j), 35(l) and 35(o).

139 ASIC contends that the objection that the wording "otherwise contrary to or inconsistent with" the UN sanctions is vague, general or embarrassing is without justification.

140 ASIC accepts that the UN resolutions and arrangements did not bind AWB directly as a matter of law. However, ASIC submits that a participating supplier in the OFFP, as AWB was, can act consistently or inconsistently with the purposes and procedures of the OFFP as codified in the UN resolutions. What is alleged is that:

(a) AWB acted contrary to or inconsistently with the stated purposes and procedures of the OFFP as set out in the UN resolutions;

(b) if AWB behaved in a manner which was contrary to or inconsistent with the UN resolutions concerning the international wheat trade with Iraq, the revelation of that fact would be likely to expose AWB to international and domestic criticism, and harm its business and therefore the company itself; and

(c) Mr Lindberg knew or ought to have known of the consequences of any revelation that AWB acted contrary to or inconsistently with the UN resolutions.

141 Accordingly, ASIC submits that even though AWB cannot be directly prosecuted for breaches of the UN resolutions, that any impropriety with respect to OFFP and any flouting of UN resolutions exposed AWB to the risk of harm which AWB ultimately experienced after it was discovered that it had acted in a manner contrary to or inconsistent with the UN resolutions. ASIC also alleges that Mr Lindberg knew or ought to have known that this would occur.

142 I refer to paragraphs 4-11 where allegations are made concerning the United Nations Security Council resolutions 661, 687, 986 and 1472 and a Commonwealth regulation.

143 Paragraph 4 alleges that, by resolution 661, the Security Council decided that member states should prevent the sale of supply by their nationals or from their territories of any commodities or products to any person or body in Iraq ... but not including supplies ... in humanitarian circumstances, foodstuffs.

144 As far as I am aware, no allegation is made as to the affect of that resolution on Australian nationals. In fact it does not call on Australian nationals to do or not do anything. It is directed to member states and decides that they should prevent certain activities by their nationals and from their territories.

145 As far as I am aware, no allegation is made that the Australian Government did or did not comply with that decision of the United Nations Security Council. Para 11 does allege that a Commonwealth regulation prohibited the exportation of wheat to Iraq unless it received permission for the export of wheat from the Minister of Foreign Affairs and Trade or his authorised representative. As far as I can ascertain, this allegation is not material to any cause of action pleaded.

146 Can the conduct of AWB, which is not alleged to contravene any domestic or international law, be conduct which is "contrary to or inconsistent" with the United Nations Security Council decision as to what its member states should do? In my opinion, it might be alleged to be conduct that the United Nations called on the Commonwealth of Australia to prevent.

147 Mr Lindberg alleges that the allegation is meaningless and unintelligible. Mr Lindberg asks, 'What does it mean to say they acted inconsistently with UN resolutions?' He asks rhetorically, 'Is it alleged AWB made a payment it was not authorised to make? Did AWB make a supply it was not authorised to make? What did it do that it was not entitled to do?'[35]

148 ASIC currently alleges that the conduct of AWB was or was likely to be in contravention of UN sanctions. In view of the concession made by ASIC, that allegation is ambiguous and vague. What does ASIC mean when it alleges that the conduct was in contravention of UN sanctions, particularly when it concedes that AWB was not obliged to observe the sanctions? It is not alleged that AWB was in contravention of any law of the Commonwealth of Australia made in response to the United Nations request.

149 Paragraph 35(l) says "or otherwise contrary to or inconsistent with United Nations sanctions in that they resulted either directly or indirectly in the illegitimate payment of funds to Iraq or its instrumentalities." Why are the payments illegitimate?

150 In my opinion, this pleading is not open to be made.

151 On the current pleadings, the status of UN resolutions is not made clear. Do they bind the Australian government, and if so, in what way? Is it alleged, for example, that the Australian government did or did not comply with the decision?

152 Mr Lindberg should know precisely what it is alleged against him and what relevance the UN sanctions are alleged to have to his alleged conduct.

153 Accordingly, I disallow the amendments in their current form.

154 These fall under the heading of "Entry into Tigris agreement and approval of payment to Tigris."

155 Mr Lindberg complains that these paragraphs raise new causes of action, are vague, general and embarrassing. Mr Lindberg concedes that the existing amended statement of claim makes allegations about the Tigris transaction. He says that the amendments seek to add a further element that an agreement between Tigris and AWB did not reflect the true position and that Mr Lindberg should have so informed the board.

156 ASIC submits that these allegations all relate to the Tigris transaction, pursuant to which it is alleged that AWB collected an amount of money on behalf of Tigris, deducted a commission from the payment received in respect of that money and then remitted the balance to Tigris.

157 The essence of these allegations is that AWB entered into the Tigris transaction in circumstances where:

(a) Mr Lindberg knew or ought to have known that the form and content of the Tigris agreement did not reflect the true factual circumstances and AWB had engaged in impropriety with respect to recovering the Tigris debt under the OFFP;

(b) Mr Lindberg did not inform the AWB Board of these important matters in connection with the Tigris transaction; and

(c) this conduct gives rise to alleged breaches of duty on Mr Lindberg's part.

158 ASIC submits that these allegations are clearly expressed and easily understood. ASIC accepts that these allegations introduce new alleged breaches of duty but are related to existing alleged breaches of duty in connection with contracts A1670 and A1680 and the Tigris transaction. ASIC submits that the trial will not be delayed and the Defendant is not otherwise prejudiced by these amendments.

159 Mr Lindberg maintains that these paragraphs are vague and general and ought not to be allowed at this stage of the proceeding. He contends that in paragraph 70 of the 19 June submissions, ASIC asserts that these paragraphs demonstrate that the defendant knew or ought to have known that the Tigris Agreement did not reflect the true factual circumstances and the defendant did not inform the AWB board of these matters.

160 Mr Lindberg notes that paragraph 90B goes much further than this, alleging that Lindberg knew, ought to have known or knew facts that ought to have put him on enquiry that would have disclosed, among other things, that the Tigris debt had been recovered by inflating the price of wheat: see paragraph 90B(a).

161 Mr Lindberg contends that the paragraphs referred to in support of paragraph 90B do not establish any knowledge on his part: see paragraphs 16, 17, 29C (which has been deleted), 34A, 35 and 90B itself. Mr Lindberg submits that there is no duty or breach alleged based on paragraph 90B(a): see paragraphs 96A(fb) and 97(da).

162 In this instance, paragraph 90B alleges that Mr Lindberg knew or ought to have known or knew facts that ought to have put him on a train of enquiry that would have disclosed three specific matters.

163 The relevant reasonability and duty it is alleged Mr Lindberg owed are as follows.

164 It is alleged that he was responsible to take reasonable steps to inquire into the facts and to ensure that the Tigris Agreement accurately reflected the true circumstances in which the Tigris Debt was recovered, and to inform AWB's Board that the Tigris Agreement, as concluded, did not do so.[36]

(a) table the Tigris Agreement at any AWB Board meeting;

(b) inform or advise the Board that the rate of commission for assisting Tigris to recover a debt was not reflected in the Tigris Agreement;

(c) inform or advise the Board of the nature or contents of the Tigris Agreement;

(d) inform or advise the Board as to how Tigris was entitled to commission; and

(e) discuss or explain to the Board how the Tigris Debt was collected.

166 There is no allegation that Mr Lindberg failed to take reasonable steps to inquire into the facts as it was alleged he was obliged to do.

167 Mr Lindberg allegedly failed to inform AWB's Board that the Tigris Agreement, as concluded, did not accurately reflect the true circumstances in which the Tigris Debt was recovered.

168 In my opinion, it is not clear whether it is alleged that Mr Lindberg knew the relevant facts but failed to tell the board or that for some reason or other he ought to have known of the relevant facts and did not tell the board or that the relevant facts would have been disclosed to him on inquiry he failed to make and did not tell the board. In my opinion, the pleading is vague and unintelligible. In my opinion, the pleading is embarrassing.

170 Mr Lindberg complains that these paragraphs are vague and unintelligible and not material to any cause of action. Mr Lindberg submits that these allegations relate to alleged contraventions of the UN resolutions and appear under the heading "Contraventions of and actions otherwise contrary to or inconsistent with United Nations Resolutions."

171 Mr Lindberg contends that he is not alleged to know of the matters pleaded and, in particular, of the agreement alleged between Alia and ISCWT. Mr Lindberg says that this is not alleged to be conduct by AWB.[37] Further, Mr Lindberg contends that the allegation that certain payments were made contrary to or inconsistent with resolution 661 is embarrassing for the reasons addressed earlier. He contends that these allegations seem to be at the core of the case as to what was wrong with what happened.[38]

172 ASIC submits that this criticism is without justification. ASIC contends that paragraphs 90C, 90F and 91 are existing pleadings. The proposed amendments to these paragraphs (which are minor) merely clarify existing allegations.

173 ASIC submits that paragraphs 90D and 90E relate to Alia's practice of receiving payments in respect of purported inland transportation and purported service and remitting them to the Iraqi regime, and therefore support existing allegations that AWB made payments of inland transportation fees and purported service fees in a manner which was contrary to or inconsistent with the UN sanctions.

174 ASIC contends that these allegations are clearly expressed, easily understood and adequately particularised. ASIC submits that these allegations concerning Alia are highly material to the allegations of breach of duty made against Mr Lindberg, in particular paragraphs 97(b) to 97(d), 97(k), 97(l), 97(m) of the FASOC.

175 As far as I am aware, it is not alleged that Mr Lindberg knew or ought to have known of the matters now sought to be alleged. In my view, they are irrelevant to any allegation against him.

OBJECTION 16 - 95 & PARTICULARS DA, F(e), GA, HA, I & IA

177 Mr Lindberg complains that paragraph 95 and some of the particulars included in it are vague and unintelligible and introduce matters which will delay the trial.

178 As to para 95, the purpose of the amendment is to delete the allegation of breaches of and failure to comply with UN resolutions and instead, allege actions contravening, failing to comply with or which were otherwise contrary to or inconsistent with UN resolutions. This raises the same issue as that discussed earlier, which is: what is the material allegation against AWB in relation to UN resolutions it was not bound by?

179 It may be that what is alleged is no more than that Mr Lindberg knew or ought to have known that, by AWB engaging in the alleged conduct that the Commonwealth of Australia had been called on by the United Nations Security Council to prevent its nationals from doing, it was likely that AWB would suffer loss and damage.

180 As to para 95DA, Mr Lindberg contends that he does not understand what this is a particular of.

181 As to para 95(F)(e), Mr Lindberg contends that the mere reference to a case, without any further allegation as to its merits, means nothing.

182 As to para 95(GA), Mr Lindberg submits that there is no allegation that the fall in the share price was the result or any cause or connected to the matters alleged.[39]

183 As to para 95(HA), Mr Lindberg alleges that introducing allegations about the Cole Inquiry opens up a huge scope of additional material to the trial. He says that no explanation has been provided of why these allegations should be introduced at this stage. Mr Lindberg says that this criticism also applies to paragraphs 97(I) and (IA) which deal with the alleged damage caused by the Wheat Export Marketing Act 2008.

184 ASIC submits that these criticisms are without justification. ASIC contends that, first, paragraph 95 is an existing pleading and until 7 May 2009, Lindberg did not criticise this paragraph. Secondly, ASIC submits that paragraph 95 is a clearly and simply expressed allegation that the revelation of AWB's actions in contravening, failing to comply with or otherwise acting contrary to or inconsistently with the UN resolutions caused substantial and enduring harm to AWB. Thirdly, ASIC contends that detailed particulars of each alleged instance of harm are given. Fourthly, ASIC submits that the trial will not be delayed, and Mr Lindberg is not otherwise prejudiced, by these amended instances of harm.

185 In my opinion, to introduce allegations of alleged foreseeable harm arising out of the Cole Inquiry and the amending Act are unfair at this stage. ASIC has known of the Cole Inquiry since the proceeding commenced. The amending Act has been known of since 2008. I am not prepared to allow these amendments.

186 I disallow the amendments that seek to allege "otherwise contrary to or inconsistent with" UN resolutions in their present form.

187 I disallow particulars 97(F)(e) and (GA). I accept the submissions of Mr Lindberg in relation to these particulars. They open up multiple issues at this late stage and it would be unfair for Mr Lindberg to meet them.

189 Mr Lindberg complains that the expression "otherwise contrary to or inconsistent with" is unintelligible and embarrassing.

190 ASIC submits that these amended paragraphs are neither unintelligible nor embarrassing. It contends that these are important allegations in connection with Mr Lindberg's state of knowledge of the wrongdoing by AWB, revelation of which caused AWB substantial harm.

191 For the reasons expressed above, in dealing with the allegation of AWB acting inconsistently with the UN resolutions, I do not allow these amendments in their present form.

OBJECTIONS 18 - ALL AMENDMENTS ADDING "OTHERWISE CONTRARY TO OR INCONSIST WITH"

192 For the reasons given above, I agree that the allegations concerning conduct being contrary to UN resolutions are embarrassing to plead to in their present form.

193 Mr Lindberg objects to the addition of new causes of action and he alleges that they will delay the trial. Insofar as I have formed the view that the new cause of action would delay the trial, I have not allowed the amendment.

I certify that this and the 1-1 preceding pages are a true copy of the reasons for Judgment of Robson of the Supreme Court of Victoria delivered on 17 July 2009.

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

AWB's sales of wheat to Iraq, its importance to AWB and the introduction of purported inland transportation fees and purported service fees

Approval of Deeds of Release acknowledging payments of commissions and fees to overseas agents for wheat sales

Negotiations Relating to The Iron Filings Claim and the Tigris Debt

Independent Inquiry Committee into the United Nations Oil-for-Food Programme

Entry into Tigris agreement and approval of payment to Tigris

Contraventions of, and actions otherwise contrary to or inconsistent with, United Nations Resolutions

established by s.7 of the Australian Securities and Investments Commission Act 1989 (Cth);

continued by s.261 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act);

able to sue in its corporate name by reason of s. 8 of the ASIC Act.

AWB Limited (AWB) is and was at all material times a corporation duly incorporated.

The Defendant (Lindberg) was at all material times from April 2000 to February 2006:

a regular attendee at meetings of the audit committee established by the Board of AWB and, from around 2002, a member of the audit and investment committees established by the Board of AWB;

a member of an executive committee of AWB known as the Executive Leadership Group (ELG) that comprised the managing director and senior executives of AWB, and which was responsible for implementing the Board's decisions concerning, and monitoring, the operational and strategic direction of AWB;

a member of an executive committee of AWB known as the Corporate Risk Review Committee (CRRC);

from 20 March 2003, the Chair of a sub-committee of the ELG known as the Iraq Emergency Response Team (IERT), which he established by him.

3A. Further, in addition to his employment at AWB as alleged in paragraph 3 above, Lindberg had extensive experience in senior management including the following:

(a) Lindberg was the managing director of the Victorian WorkCover Authority for approximately 7 years;

(b) Lindberg was the managing director of the Victorian Accident Compensation Commission for approximately 5 years;

(c) Lindberg was an executive officer of the Australian Manufacturing Council;

(d) Lindberg was awarded a Masters of Business Administration by the University of Melbourne; and

(e) Lindberg completed a senior executive programme at Stanford University in the United Stated and was a life member of the Stanford Business School.

By resolution 661 of the United Nations Security Council adopted on 6 August 1990, (Resolution 661) the Security Council, inter alia:

decided that member states should prevent the sale or supply by their nationals or from their territories of any commodities or products to any person or body in Iraq or to any person or body for the purposes of any business carried on in or operated from Iraq, but not including supplies intended for strictly medical purposes and, in humanitarian circumstances, foodstuffs;

decided that all member states should not make available to the Government of Iraq any funds or any other financial or economic resources and should prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to the Government of Iraq any such funds or resources, except payments exclusively for strictly medical or humanitarian purposes and, in humanitarian circumstances, foodstuffs;

established a Committee of the Security Council that became known as the 661 Committee (661 Committee).

Resolution 661 is in writing and is available for inspection on reasonable notice.

By resolution 687 of the United Nations Security Council adopted on 3 April 1991, the Security Council determined, inter alia, that the prohibitions on the sale of commodities or products and prohibitions on financial transactions related thereto contained in Resolution 661 should not apply to foodstuffs notified to the 661 Committee.

Resolution 687 is in writing and is available for inspection on reasonable notice.

By resolution 986 of the United Nations Security Council adopted on 14 April 1995 (Resolution 986), the Security Council, inter alia:

authorised member states to permit the importation of petroleum and petroleum products originating in Iraq, notwithstanding Resolution 661, of a value not exceeding one billion US dollars every 90 days;

required the funds paid for the purchase of Iraqi petroleum and petroleum products to be paid into an escrow account to be established for the purposes of Resolution 986 (the UN Escrow Account);

decided that the funds in the UN Escrow Account should be used to meet the humanitarian needs of the Iraqi population, including to finance the export to Iraq of foodstuffs in accordance with the procedures established by the 661 Committee.

Resolution 986 is in writing and is available for inspection on reasonable notice. The initiative established by Resolution 986 became known and is hereafter referred to as the "Oil-for-Food Programme".

Resolution 986 authorised the operation of the Oil-for-Food Programme for an initial period of 180 days. Subsequent resolutions of the United Nations Security Council extended the operation of the Oil-for-Food Programme for further periods of 180 days.

The initial period of 180 days was referred to as Phase I of the Oil-for-Food Programme. Subsequent resolutions adopted by the United Nations Security Council extending the operation of the programme were as follows:

The resolutions are in writing and are available for inspection on reasonable notice.

On or about 20 March 2003, coalition forces commenced an invasion of Iraq.

By resolution 1472 of the United Nations Security Council adopted on 28 March 2003 (Resolution 1472), the Security Council, inter alia approved adjustments to the Oil-for-Food Programme and authorised:

the review of the approved funded and non-funded contracts concluded by the Government of Iraq to determine the relative priorities of the contracts;

the negotiation and agreement on necessary adjustments in the terms or conditions of these contracts and their respective letters of credit.

Resolution 1472 is in writing and is available for inspection on reasonable notice. Subsequent resolutions of the United Nations Security Council extended the operation of Resolution 1472 as follows. Resolution 1476 was adopted on 24 April 2003 that extended the operation of Resolution 1472 until 3 June 2003. Resolution 1483 was adopted on 22 May 2003 which and extended the operation of Resolution 1472 for a further 6 months from 3 June 2003, transferred responsibility for the Oil-for-Food Programme to the Coalition Provision Authority and required the termination of the Oil-for-Food Programme at the end of that period. The Oil-for-Food Programme was terminated on 21 November 2003. Copies of these resolutions may be inspected upon reasonable notice.

At all material times from November 2001 to 21 November 2003:

in order to obtain payment from the UN Escrow Account, exporters of foodstuffs to Iraq were required to submit to the United Nations Office of the Iraq Programme (the OIP) the concluded contract for each transaction in respect of which payment was sought;

each concluded contract was required to be submitted through the exporter's United Nations embassy;

the contracts were examined by the OIP for, inter alia, price and value;

if the OIP approved the relevant contract, the exporter became eligible for payment from the UN Escrow Account.

The procedures for obtaining payment from the UN Escrow Account were initially established by the 661 Committee on or about 8 August 1996 and are contained in a letter from the Chairman of the 661 Committee to the President of the United Nations Security Council of that date. A copy of the letter is available for inspection on reasonable notice.

The OIP was established by the United Nations Secretary General on or about 15 October 1997 and was responsible for, inter alia, managing the activities of the United Nations Secretariat pursuant to Resolution 986 and Resolution 661.

The procedures were varied by the United Nations Security Council resolution 1284 (adopted on 17 December 1999), resolution 1382 (adopted on 29 November 2001), resolution 1409 (adopted on 14 May 2002) effective 30 May 2002 and resolution 1454 (adopted on 30 December 2002). Copies of these resolutions are available for inspection on reasonable notice.

As a matter of practice, at all times from October 1997 until the termination of the Oil-for-Food Programme on 21 November 2003 the OIP reviewed contracts for price and value, and payments were not made from the UN Escrow Account without the relevant contract having received approval from the OIP.

Pursuant to Reg. 13CA of the Customs (Prohibited Exports) Regulations 1958 (Cth) (the Customs Regulations), at all material times prior to 9 May 2003, AWB was prohibited from exporting wheat to Iraq unless it received permission for the export of wheat from the Minister of Foreign Affairs and Trade or his authorised representative.

AWB's Sales of wheat to Iraq, its importance to AWB and the introduction of purported inland transportation fees and purported service fees

During the period 1996 to 21 November 2003, AWB entered into various contracts with the Grain Board of Iraq ("IGB") for the sale of wheat in accordance with the procedures established by the Oil-for-Food Programme.

12A. In the period between 1996 and June 1999, the usual contractual basis on which AWB sold wheat to the IGB was "CIF Umm Qasr" or "CIF Free Out Umm Qasr" which meant that the price per tonne for which the wheat was sold included:

(a) the price of the wheat;

(b) the cost of the carriage of the wheat from Australia to Umm Qasr, Iraq; and

(c) the cost of insuring the shipment against the risk of the loss of or damage to the wheat during its carriage to Iraq.

Copies of wheat contracts entered into between AWB and the IGB in this period are available for inspection upon reasonable notice.

12B. In the period between June 1999 and March 2003, all Wheat Tenders issued by the IGB to AWB for the supply of Australian hard wheat to be shipped to Iraq included a requirement that AWB pay a specified amount on account of the purported "cost of discharge at Umm Quser and land transport", which amount was fixed by Iraq in US dollars, Euros or other internationally traded currency, and which was payable to an entity nominated by Iraq (purported inland transportation fee).

Copies of the Wheat Tenders are available for inspection upon reasonable notice. Clause 10 of the Wheat Tender issued in June 1999 was expressed to be: "CIF FREE ON TRUCK TO SILO AT ALL GOVERNARATE. COST OF DISCHARGE AT UMM QUSER AND LAND TRANSPORT WILL BE U.S.D. 12 PER METRIC TON. TO BE PAID TO THE LAND TRANSPORT CO. FOR MORE DETAILS CONTACT IRAQI MARTIN IN BASRAH."

12C. In the period between November 2000 and March 2003, the IGB also imposed a purported "service fee" at the rate of 10% of the total price per tonne of all wheat shipped to Iraq by AWB (the purported service fee). The purported service fee was paid by AWB between November 2000 and March 2003 as an increase in the purported inland transportation fee.

The purported service fee, and the fact that it would be incorporated into the purported inland transportation fee, is referred to in an email from Dominic Hogan to various AWB employees dated 2 November 2000. A copy of the email is available for inspection upon reasonable notice.

12D. On or around 19 October 1999, AWB received a facsimile from Alia for Transportation & General Trade (Alia) stating that Alia was the agent of the State Company for Iraqi Land Transport, and offering to provide its purported inland transportation services.

A copy of the facsimile is available for inspection upon reasonable notice.

12E. In the period between 2000 and March 2003, AWB made payments to Alia in respect of purported inland transportation fees (including purported service fees which were incorporated into the purported inland transportation fees) in connection with contracts with the IGB for the sale of wheat.

The payments made in respect of Contracts A1111, A1112 and A1441 are referred to in paragraphs 44, 53 and 63 below.

12F. In around mid 2000, Lindberg became aware that in early 2000 to mid 2000, AWB had incurred significant demurrage costs as a result of delays in the discharge of AWB shipments of wheat to Iraq.

Lindberg's awareness is to be inferred from the matters alleged in paragraphs 12H and 12K to 12N below.

12G. On or around 17 April 2000, AWB appointed Alia as its protective agent to look after the interests of vessels carrying AWB wheat upon their arrival at Umm Qasr and to assist in reducing the delays in the discharge of AWB shipments.

The appointment was in writing and is constituted by a letter of appointment dated 17 April 2000. A copy of the appointment is available for inspection upon reasonable notice.

12H. On or around 23 May 2000, Lindberg attended a meeting of AWB's Small Executive Management Group in which the following matters were discussed:

(a) chartering, demurrage and insurance risks of supplying wheat to Iraq;

(b) delays in AWB receiving payment for wheat supplied to Iraq, due to such payments having to be processed through the United Nations.

A copy of the minutes is available for inspection upon reasonable notice.

12I. In or around mid 2000, Lindberg received an oral briefing from Nigel Officer of AWB in which Officer explained to Lindberg the general operation of the Oil-for-Food Program and the important changes that had occurred to AWB's contracts with Iraq as a result of the Oil-for-Food Programme.

12J. Throughout 2000, Lindberg attended a number of meetings of the CRRC in which the Oil-for-Food Program and purported inland transportation fees were discussed.

Further particulars may be provided following discovery by AWB.

12K. On or around 19 July 2000, Lindberg attended a meeting of the Executive Management Group in which the following matters were discussed:

(a) chartering and the risks concerning AWB's wheat trade with Iraq;

(b) the possibility of commissioning Arthur Andersen to review AWB's chartering practices.

A copy of the minutes is available for inspection upon reasonable notice.

12L. On or about 28 July 2000, Lindberg attended a meeting of the Executive Management Group in which the following matters were discussed:

(a) demurrage and contract execution issues arising from supplying wheat to Iraq;

(b) AWB's internal auditors would be thoroughly checking AWB's systems concerning trade with Iraq.

A copy of the minutes is available for inspection upon reasonable notice.

12M. On or about 8 August 2000, Lindberg received a memorandum entitled "Iraq Demurrage" from Sarah Scales which referred to demurrage issues and the quality of wheat being a key reason for the demurrage issues.

A copy of the memorandum is available for inspection on reasonable notice.

12N. On or about 23 October 2000, Lindberg received an email from Charles Stott which attached a document entitled "Iraq Update October 2000" which referred to the following matters:

(a) demurrage and the delays in the discharge of wheat at Iraqi ports;

(b) demurrage other costs were being factored into the contract price;

(c) AWB representatives had visited Iraq in October 2000 and discussed with the IGB how contractual performance could be improved;

(d) The UN procedures under the Oil-for-Food program for approval of contracts; and

(e) Australia was Iraq's largest wheat supplying country.

A copy of the email and attached document are available for inspection on reasonable notice. Lindberg's receipt of the email and attachment is to be inferred from the following facts:

(a) the email is addressed to Lindberg;

(b) Dianne Sharpe, Lindberg's secretary, had access to all emails sent to Lindberg;

(c) it was Dianne Sharpe's practice, as Lindberg's secretary, to print off all emails sent to Lindberg and either hand them to Lindberg or place them in his in-tray for him to read.

Note: wherever in this Further Amended Statement of Claim it is alleged that Lindberg received or read an email, or an attachment to an email, the above particulars are relied upon.

12O. In the period from 1999 to 2003, AWB's wheat sales to Iraq constituted a substantial part of AWB's overall wheat sales and revenue.

The Iraq market accounted for sales of approximately 1 million tonnes of wheat every 6 months and constituted a major part of AWB's overall sales.

In 1999/2000, AWB sold 2.4 million tonnes of wheat to Iraq. In 2000/2001, Iraq was the largest export destination for Australian wheat, which enjoyed 90 percent share of the Iraqi wheat market. This fact is recorded in a letter dated 1 July 2002 from Lindberg to Prime Minister Howard, a copy of which is available for inspection on reasonable notice.

In 2001 AWB supplied 2.35 million tonnes of wheat to Iraq with a CIF value of approximately US$400 million. In 2002, AWB supplied 2.5 million tonnes of hard wheat to Iraq accounting for approximately 45% of the national hard wheat pool sold by AWB. At this time, Iraq was AWB's largest export customer, accounting for approximately one fifth of AWB's total exports.

As at March 2003, the Iraq market was worth approximately A$800 million per annum to AWB and Australian wheat farmers. This fact is recorded in an AWB media release dated 20 March 2003, a copy of which is available for inspection on reasonable notice.

Further particulars may be provided prior to trial.

12P. On or about 1 July 2002, Lindberg prepared and sent a letter to Prime Minister Howard advising inter alia that:

(a) Iraq was an extremely important market to Australian wheat growers with annual sales of around 2.5 million tonnes or approximately 15 percent of the total Australian wheat export program;

(b) In 2000 to 2001, Iraq was the largest export destination for Australian wheat, which comprised 90 percent of Iraq's wheat market;

(c) Such sales to Iraq were carried out under the Oil-for-Food Program in accordance with UN resolutions;

(d) AWB representatives had met with the Iraqi Minister for Trade with a view to concluding a 1 million tonne wheat contract; and

(e) the Australian government's aggressive attitude toward Iraq jeopardised AWB's wheat trade with Iraq and that the reduction of even half a million tonnes would significantly impact on returns to growers.

A copy of the letter is available for inspection on reasonable notice.

Approval of Deeds of Release acknowledging payments of

commissions and fees to overseas agents for wheat sales

12Q. In or around mid 2000, Nigel Officer and Mark Emons ceased employment with AWB.

12R. In late June and early July 2000, Lindberg on behalf of AWB executed Deeds of Release with Nigel Officer and Mark Emons pursuant to which AWB acknowledged that, by its Managing Director and the Board, AWB authorised agency payments during the period between December 1999 and mid 2000 to overseas agents for wheat sales.

Copies of the Deeds of Release are available for inspection upon reasonable notice.

On or about 13 September 2000, BHP Petroleum Pty Ltd (BHP) assigned to the Tigris Petroleum Corporation Ltd (Tigris) all its rights, title and interests in all its Iraqi assets and liabilities, including all its rights to receive value from the IGB, or its assignee, in relation to the cargo of grain delivered by AWB to the IGB in January 1996 on the MV Ikan Sepat.

The assignment is in writing and is contained in a letter from BHP dated 13 September 2000 and in an agreement between BHP and Tigris executed on 13 September 2000. A copy of the letter and agreement are available for inspection on reasonable notice.

On 28 September 2000, Tigris requested AWB to assist it in recovering the sum of US$8,052,550 (the Tigris Debt) that was the amount due to BHP in relation to the delivery of wheat referred to in paragraph 16 above together with interest calculated at the rate of 10 per cent per annum compounded.

The request is in writing and is contained in a letter from Tigris to AWB dated 28 September 2000. A copy of the request is available for inspection on reasonable notice.

In or around September late 2000, Lindberg became aware of the engagement of Arthur AndersonArthur Andersen to investigate the integrity of transactions conducted by the International Sales & Marketing group of AWB, including transactions relating to the sale of wheat to the IGB.

The engagement is in writing and is set out in a letter from Arthur Andersen dated 5 September 2000. A copy of the letter is available for inspection on reasonable notice.

Lindberg's awareness of the engagement of Arthur AndersonArthur Andersen in or around September 2000 is to be inferred from the following:

(a) In around mid 2000, Tim Goodacre and Charles Stott of AWB met with Lindberg to discuss concerns about transactions conducted by the International Marketing group. During this meeting Lindberg recommended that Goodacre and Stott retain Arthur Andersen to undertake a review of the International Marketing group;

(b) [deleted]

(c) [deleted]

(d) in or around November 2000, Lindberg met with Tim Goodacre to discuss the progress of the Arthur Andersen review;

(e) the Plaintiff refers to and repeats the matters set out in paragraphs 20 to 21 B and 21 below;

(f) [deleted]

(g) [deleted]

(h) [deleted]

(i) [deleted]

Further particulars may be provided prior to trial.

In or around December 2000, Arthur Andersen reported to AWB that:

integrity risks or "red flags" had been identified in connection with the payment by AWB of purported inland transportation fees arising out of AWB's trade with the IGB;

the purported inland transportation fees were being paid by AWB to a Jordanian trucking company;

AWB had received information that the United Nations was making enquiries in relation to the payment of the purported inland transportation fees;

there was pressure from AWB management to maintain sales of wheat to Iraq;

Mark Emons and Nigel Officer, employees of AWB in the International Sales and Marketing group, wanted to find ways to avoid attracting the attention of the United Nations;

concerns were raised by shipping companies retained by AWB that the payment of the purported inland transportation fees may break United Nations' laws;

AWB had made payments of purported inland transportation fees to Ronly Holdings Ltd ("Ronly") that would then make payments on AWB's behalf to the Jordanian trucking company. The payments were made by a Lichtenstein company because there was a concern that the payments would attract United Nations interest;

Ronly had received funds from AWB to effect these payments;

the payments could be construed as a money laundering process and potentially damage the reputation of AWB;

there had been a recent increases in the payment of the purported inland transportation fees which appeared to be high;

there was a risk that the money paid on account of the purported inland transportation fees was being diverted to other purposes; and

there was a risk that AWB was paying purported inland transportation fees which that were excessive.

The report is in writing and is entitled "Integrity Risk Review of the International Marketing Group" ("the Arthur Andersen Report") and is dated December 2000. A copy of the report is available for inspection on reasonable notice.

Lindberg received a copy of the Arthur Andersen Report in or about February 2001 and knew or ought to have known each of the matters set out in paragraph 19 hereof.

On 23 February 2001, Lindberg received a briefing from Arthur Andersen in relation to the Arthur AndersonArthur Andersen Report. During the briefing the payment by AWB of purported inland transportation fees was discussed and Lindberg was advised that there was a concern that some of the funds were being paid to Iraq.

(a) The briefing on 23 February 2001 was attended by at least Lindberg, Charles Stott and Tim Goodacre of AWB and Andrew Tuohy of Arthur Andersen and was held in Lindberg's office.

(b) Andrew Tuohy on behalf of Arthur Andersen provided the briefing. Anne Jackson and Paul McKellar of Arthur Andersen were also present.

(c) There was discussion of the payment by AWB of purported inland transportation fees during and following a power point presentation entitled "Integrity Risk Review - International Marketing Group" given by Andrew Tuohy on behalf of Arthur Andersen at this briefing. A copy of the power point presentation containing Lindberg's handwriting may be inspected upon reasonable notice.

(d) The advice that there was a concern that some of the funds were being paid to Iraq at the Arthur Andersen briefing in Lindberg's offices on 23 February 2001 was partly oral and partly written.

Insofar as it was oral, it comprised statements made by Andrew Tuohy to the effect alleged.

Insofar as the advice was written it was contained in a power point presentation given by Andrew Tuohy on behalf of Arthur Andersen at this briefing and the Arthur Andersen report Report dated 1 December 2000, a copy of which Lindberg received and reviewed at the briefing. Copies of the power point presentation and the Arthur Andersen report may be inspected upon reasonable notice.

Further particulars may be provided prior to trial.

21A In or around late February 2001, following the briefing referred to in paragraph 21 above, Lindberg provided a copy of the Arthur Andersen Report to Dr Richard Fuller of AWB for safe keeping, but otherwise did not prior to 2006 provide a copy of the Arthur Andersen Report to, or discuss its findings (particularly in relation to purported inland transportation fees and the concern that some of the funds were being paid to Iraq) with, the AWB Board or any member of the AWB Board.

21B On or around 17 September 2001, Lindberg received a letter from Arthur Andersen which attached a report dated June 2001 from Arthur Andersen entitled "Review of International Sales Contract Execution". The report referred to the following matters:

(a) the Arthur Andersen Report; and

(b) the significant further work necessary to address all high risk matters arising from the Arthur Andersen Report.

A copy of the letter and report are available for inspection on reasonable notice. Lindberg's receipt of the letter and enclosed report are to be inferred from the fact that that letter was addressed to Lindberg, and from Lindberg's prior involvement with Arthur Andersen as alleged in paragraphs 18 to 21 above.

In or about February 2001, Lindberg received a copy of an Iraq Trip Report which advised, inter alia, that:

the purported inland transportation fee was then US$25.00 per metric tonne;

a 10 per cent service fee the purported service fee of 10 per cent was also applied by the IGB to the entire "Free-in-Truck" (FIT) value of each AWB wheat sale contract; and

the authors of the report believed that the increase in the purported inland transportation fee and addition of the purported service fee were both mechanisms for extracting money illegitimately from the UN Escrow Account.

A copy of the trip report is available for inspection on reasonable notice. Lindberg's receipt of the Iraq Trip Report is to be inferred from the following facts:

(a) the email dated 7 February 2001 and attached Iraq Trip Report was received by Dianne Sharpe, Lindberg's secretary and executive assistant at the relevant time;

(b) Lindberg initialled a copy of the email dated 7 February 2001, a copy of which is available for inspection on reasonable notice;

(c) given the importance of the Iraq market to AWB, Iraq Trip reports were commonly sent to members of the AWB Executive Group which included Lindberg.

Further particulars may be provided prior to trial.

22A. In or around July 2002, Lindberg received a copy of a report dated March 2002 prepared by Ernst & Young entitled "Internal Audit Services Fraud Risk Assessment" which advised that:

(a) there were reputation risks to AWB from any fraud case and media coverage of incidents;

(b) the types of fraud risk of potential concern to AWB included corruption, bribery and kickbacks;

(c) the international sales and marketing division of AWB was a high risk area for fraud;

(d) AWB operated in countries where bribery and corruption were common business practices and the majority of these countries were key AWB clients and a major source of profit for AWB; and

(e) the process for selecting agents, monitoring facilitation payments and monitoring ongoing performance was not transparent.

Lindberg's receipt of the report is to be inferred from the following facts:

(i) The report was provided to Lindberg by Ernst and Young under cover of a letter addressed to Lindberg and dated 24 July 2002;

(ii) Lindberg made handwritten annotations on a copy of the report;

(iii) Lindberg was present at the meeting of the AWB audit committee on 24 September 2002, during which the report was discussed; and

(iv) Lindberg signed a "committee paper" of the AWB audit committee dated 24 September 2002 that referred to and attached the report.

A copy of each of Ernst and Young's letter, the report with Lindberg's annotations, the minutes of the audit committee meeting, and the committee paper are available for inspection on reasonable notice.

In or about July 2002, the IGB asserted that certain wheat shipments delivered by AWB had been contaminated with iron filings and sought compensation from AWB in relation to these shipments ("the Iron Filings Claim").

The complaint was in writing and constituted by an email dated 25 July 2002 from the IGB to Dominic Hogan of AWB. A copy of the email may be inspected upon reasonable notice.

In August 2002, Lindberg led an AWB delegation to Iraq at least partly for the purposes of meeting with representatives of the IGB to discuss the Iron Filings Claim.

Prior to the August 2002 trip to Iraq, Lindberg received a general briefing regarding issues in the Iraq market and discussed with Michael Long and Trevor Flugge the purported inland transportation fees which that were a component of AWB contracts with the IGB and the IGB's demands for compensation in relation to the Iron Filings Claim.

(a) Lindberg received both an oral and a written briefing.

Insofar as the briefing was oral, it was given by Michael Long to Lindberg regarding issues in the Iraq market prior to the August 2002 trip or on the way to Iraq.

Insofar as the briefing was written, it was constituted by an email dated 7 August 2002 from David Johnson of AWB to Lindberg and others and an executive brief which described the contamination claim and noted that the IGB had requested financial compensation of US $7 per metric tonne to remove the iron powder. Copies of these documents may be inspected upon reasonable notice.

Further particulars may be provided prior to trial.

(b) There were oral discussions in early August 2002 between Lindberg, Michael Long and Trevor Flugge regarding the purported inland transportation fees prior to or on the way to Iraq in preparation for the August 2002 trip. Further particulars may be provided prior to trial.

(c) There were oral discussions in early August 2002 between Lindberg, Michael Long and Trevor Flugge regarding the IGB's demands for compensation in relation to the Iron Filings Claim prior to or on the way to Iraq in preparation for the August 2002 trip. Further particulars may be provided prior to trial.

discussed with Mr Yousif of the IGB the Iron Filings Claim;

The discussions between Lindberg and Mr Yousif of the IGB were oral and were held in the IGB Building in Baghdad, Iraq. Also in attendance were Trevor Flugge and Michael Long of AWB and Ms Moona and Dr Obeidy on behalf of the IGB. Further particulars may be provided prior to trial.

was a party to negotiations with the IGB which resulted in an agreement being reached pursuant to which AWB agreed to pay to the IGB the sum of US$6.00 per tonne for wheat that was the subject of the iron filings claim Iron Filings Claim by using same payment mechanism used to pay the purported inland transportation fees.

(A) Lindberg's participation in negotiations with the IGB which resulted in agreement being reached pursuant to which AWB agreed to pay to the IGB the sum of $6 per tonne for wheat that was the subject of the iron filings claim Iron Filings Claim by using the same payment mechanism used to pay the purported inland transportation is evidenced by the following:

On 7 August 2002, David Johnson of AWB sent an email to Lindberg and other AWB employees, which referred to the Iron Filings Claim. A copy of the email may be inspected upon reasonable notice;

On 11 December 2002, Chris Whitwell's of AWB sent a memorandum to senior management of AWB, including Lindberg, which is referred to at paragraph 33 below referred to the Iron Filings Claim. A copy of the memorandum may be inspected upon reasonable notice;

Lindberg was chairman of the AWB Corporate Risk Review Committee;

AWB risked losing future wheat contracts with the IGB if the iron filings claim Iron Filings Claim was not paid.

Further particulars may be provided prior to trial.

(AA) The agreement was made orally in a face-to-face meeting in August 2002 between Andrew Lindberg of AWB and the Iraq Minister of Trade in Baghdad, Iraq, to the effect alleged. Michael Long of AWB was present at this meeting. This agreement was recorded in a memorandum dated 7 August 2003 7 February 2003 signed as recommended by Long and referred to at paragraph 33 below. A copy of the memorandum and the report may be inspected upon reasonable notice.

Further, the agreement is to be inferred from the following:

(B) Email dated 22 August 2002 from the IGB to Hogan;

(C) Email dated 26 August 2002 from Whitwell to the IGB;

(D) Email dated 6 September 2002 from Mr Yousif to Hogan;

(DA) Meeting of the CRRC on 12 September 2002 in which the Iron Filings Claim and the proposed means of settling the claim were discussed, including that the amount of USD 6 per tonne was payable.

(E) Memorandum dated 16 September 2002 from Long to the CRRC;

(F) Briefing paper entitled "Iraq Brief - DH and CW visit 27 - 29 October 2002" prepared by Hogan and Whitwell;

(G) Email dated 6 November 2002 from Whitwell to Long, and forwarded to the 'Executive';

(H) Email dated 7 November 2002 and attached trip report from Whitwell to various AWB employees including Lindberg referred to at paragraph 29C below;

(I) Email dated 7 November 2002 from Whitwell to Long noting that the Minister of Trade clarified that the purported inland transportation payment mechanism was the expected method of paying the iron filings claim;

(J) File note of Whitwell entitled "Delegation - ML and CW - 19th - 21st November";

(K) Email dated 28 November 2002 from Whitwell to the IGB;

(L) Email dated 9 December 2002 from Whitwell to the IGB;

(M) Email dated 17 December 2002 from the IGB to Hogan, subsequently initialled by Long of AWB;

(N) [deleted]; and

(O) The fact that in around March 2003, AWB (International) Ltd had made provision in its accounts for payment of the iron filings claim. This provision is referred to in an email dated 20 March 2003 from Long to Lindberg and other AWB employees.

Copies of the above documents may be inspected upon reasonable notice.

In or about August 2002, Lindberg received an "Executive brief" which advised that AWB paid a fee to the Iraq Ministry of Transport for purported inland transportation fees and discharge costs.

A copy of the Executive brief is available for inspection on reasonable notice. Lindberg's receipt of the Executive Brief is to be inferred from the following:

(a) the particulars to paragraph 25 above;

(b) in around late July 2002, Lindberg discussed with Brendan Stewart of AWB the Iron Filings Claim and said it was serious enough to warrant Lindberg personally travelling to Iraq to resolve it (which Lindberg did);

(c) the Executive Brief of four pages in length was prepared prior to, and in order to inform the members of, the AWB delegation comprising Michael Long, Lindberg, Trevor Flugge and Bob Cracknell departing to Iraq for the August 2002 trip;

(d) the Executive Brief was prepared for the purposes of assisting and preparing the AWB delegation for the August 2002 trip to Iraq;

(e) one of the purposes of the August 2002 trip was to have the ships the subject of the Iron Filings Claim unloaded and a contract for 500,000 tonnes of AWB wheat re-instated.

(f) [deleted]

(fa) It was standard procedure for all AWB delegates travelling to Iraq to receive a written briefing; and

(g) Lindberg was travelling to Iraq for the first time.

Further particulars may be provided prior to trial.

On 16 September 2002, as a member of the CRRC, Lindberg received a copy of a memorandum entitled "Iraq debt/BHP/Tigris Petroleum" which advised that:

AWB had agreed to pay to the IGB US$ 6 per tonne for approximately 300,000 tonnes of wheat delivered under AWB contracts A1111 and A1112 as settlement of the Iron Filings Claim;

United Nations regulations prohibited the direct payment of funds to Iraq whilst Iraq was under United Nations sanctions.

The memorandum is in writing and is available for inspection on reasonable notice. The fact that Lindberg received this memorandum is to be inferred from the following:

(a) Lindberg was a member of the CRRC;

(b) Lindberg made handwritten notations on a copy of the memorandum which copy was filed by Dianne Sharpe, Lindberg's secretary, after the notations were made by him;

(c) Lindberg's handwritten name appears on a copy of the memorandum; and

(d) the fact that David Johnstone of AWB was also an addressee on the memorandum, and he received the memorandum.

29A. On or about 20 September 2002, Lindberg prepared and sent a letter to the Iraq Minister for Trade in which it was stated that AWB agreed that the Tigris Debt totalled approximately US$8.8 million.

A copy of the letter is available for inspection on reasonable notice.

29B. On or about 1 October 2002, Lindberg attended a meeting of the Executive Leadership Group during which the Iron Filings Claim was discussed and in which he received a paper entitled "Iraq ELG Brief - 1st October 2002" which referred to a proposal to offset the Iron Filings Claim against the Tigris Debt.

A copy of the ELG agenda and the paper are available for inspection on reasonable notice.

29C. On or about 7 November 2002, Lindberg received an email from Whitwell that referred to the Iron Filings Claim and the Tigris Debt, and attached a report entitled "Delegation: D Hogan and C. Whitwell - Baghdad - 28-29 October", wherein:

the report referred to a proposal that AWB pay the Iron Filings Claim by offsetting the same against the Tigris Debt, and the Tigris Debt being recovered by "loading up" AWB contracts with the IGB; and

The email and the report each referred to the fact that the government of Iraq insisted that the Iron Filings Claim be repaid through the same mechanism used to pay the purported inland transportation fees.

A copy of the email and attached report is available for inspection on reasonable notice. Lindberg's receipt of the email and attached report is to be inferred from the fact that Lindberg initialed a copy of the email.

On or about 6 November 2002, Lindberg received an email from Michael Long which advised that the IGB wanted to repay the Tigris Debt by "loading up" contracts with AWB.

A copy of the email is available for inspection on reasonable notice. Lindberg's receipt of an email from Michael Long on or about 6 November 2002the email is to be inferred from the following:

(a) Long sent the email to the Executive email group, which included Lindberg. This is evidenced by:

• (A) a memorandum dated 17 July 2000 prepared by Lindberg entitled "Executive Arrangements & Review of Decision Making Forums" in which Lindberg is described as Chair of the Executive Group. A copy of the memorandum is available for inspection on reasonable notice;

• (B) a response from AWB dated 28 January 2008 to a s.19(2) notice from ASIC dated 30 November 2007. A copy of the response and notice are available for inspection on reasonable notice.

(b) The email discussed matters arising from the August 2002 Iraq trip which Lindberg had attended;

(c) Lindberg received an email dated 7 November 2002 from Chris Whitwell which also discussed matters arising from the August 2002 Iraq trip; and

(d) The email of 6 November 2002 provided an update on an important issue, namely to have the ships the subject of the Iron Filings Claim unloaded and a contract for 500,000 tonnes of AWB wheat re-instated in respect of an important wheat market for AWB.

Further particulars may be provided prior to trial.

On or about 7 November 2002, Lindberg received an email and an attached trip report from Chris Whitwell that referred to a proposal put by the AWB to the IGB that AWB pay the Iron Filings Claim by offsetting the same against the Tigris Debt with the balance of the Tigris Debt to be recovered by "loading up" AWB contracts with the IGB.

A copyCopies of the email and trip report isare available for inspection on reasonable notice. Lindberg's receipt of the email and trip report is to be inferred from the fact that Lindberg initialled a copy of the email with attached trip report.

On or around 10 February 2003, Lindberg received a copy of a memorandum dated 7 February 2003 prepared by Chris Whitwell and signed by Michael Long which advised, inter alia, that:

the delegation led by Lindberg to Iraq agreed to settle the Iron Filings Claim by paying the IGB US$6.00 per metric tonne for each vessel affected by the claim, which was amounted to a total of US$2,016,133;

the Minister of Trade for Iraq had insisted on payment of the Iron Filings Claim to the IGB by adding the amount of the claim to the purported inland transportation fees and had advised AWB that this was the Minister's understanding of the agreement reached with Lindberg in August 2002;

there were possible corporate governance implications for AWB arising from the direct payment by AWB to a company with links to the Iraq regime which could be construed as a contravention of United Nations sanctions;

the Department of Foreign Affairs and Trade (DFAT) had advised that any repayment of a quality rebate (being the Iron Filings Claim) should be made by either making payment to the UN Escrow Account or by way of a contract price reduction;

AWB had agreed to allow a new contract with the IGB to be a conduit for a repayment of the Tigris Debt; and

AWB's International Sales and Marketing division insisted that Lindberg be personally apprised of the situation.

A copy of the memorandum is available for inspection on reasonable notice. Lindberg's receipt of a copy of a memorandum dated 7 February 2003 on or about 10 February 2003 is to be inferred from the following:

(a) Lindberg was at that time the Managing Director of AWB;

(b) The memorandum was approved by both Michael Long and Peter Geary of AWB, both senior AWB executives who reported to Lindberg;

(c) The memorandum states under the heading "Actions" inter alia "Managing Director only to convey our intentions to the Australian Government at the appropriate time prior to Shipment..."

(d) Page three of the memorandum of 7 February 2003 states inter alia "They [AWBI] do however insist that the Managing Director is appraised [sic] of the situation."

(e) The Plaintiff refers to and repeats the matters set out in paragraph 34 below;

(f) One version of the memorandum of 7 February 2003 contains the following handwritten notation "Diane, original was signed by ML, and PAG. PAG advised it was with Andrew."

(g) On 20 February 2003, Peter Geary told Jessica Lyons of AWB that Lindberg had cleared the proposal for payment as set out in the memorandum. This conversation is recorded in a file note of Jessica Lyons dated 20 February 2003;

(h) On 20 February 2003, Michael Long sent an email to Peter Geary which stated, inter alia: "Understand you signed the memo that Chris brought down (and it has gone upstairs)..."

(i) On 20 February 2003, Peter Geary sent an email to Michael Long which stated, inter alia: "I did sign a covering note to Andrew. We need to sit down face to face with Andrew and tell him all the implications before we move forward...".

Copies of the above documents may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

On or about 10 February 2003, Lindberg received a file note from Peter Geary which enclosed the memorandum referred to in paragraph 33 above and which advised that DFAT and the United Nations would have major problems with the proposals set out in the said memorandum.

A copy of the file note is available for inspection on reasonable notice. The Plaintiff refers to and repeats the matters set out in paragraph 33 above. Further particulars may be provided prior to trial.

34A. Further, during the period February 2001 to September 2003, Lindberg received numerous other communications that referred to the fact that AWB continued to pay the purported inland transportation fees and the purported service fees and was proposing to make payments relating to the Iron Filings Claim and the Tigris Debt.

(a) The communications include the following:

• (A) email dated 5 February 2001 from Charles Stott to Lindberg and other AWB employees;
• (B) email dated 21 December 2001 from Hogan to Lindberg and other AWB employees;
• (C) email dated 5 December 2002 from Christopher Whitwell to Lindberg and other AWB employees;
• (D) email dated 20 March 2003 from Long to Lindberg and other AWB employees;
• (E) Iraq Situation Reports dated 20 March 2003, 21 March 2003, 22 March 2003 and 25 March 2003
• (F) email dated 28 May 2003 from Christopher Whitwell to Lindberg and other AWB employees
• (G) on 6 May 2003, Lindberg attended an Executive Leadership Group meeting of AWB during which the repayment of the Tigris Debt was discussed. A copy of the agenda and the report of to the Group relating to Iraq may be inspected upon reasonable notice;
• (H) [deleted];

(HA) On or about 10 June 2003, Lindberg attended a meeting of senior managers of AWB to discuss the US Wheat Associates complaint described at paragraph 34B below. A copy of notes of the meeting prepared by James Cooper of AWB is available for inspection upon reasonable notice. During the meeting, reference was made to:

• the purported inland transportation fees;
• the purported service fees;
• Alia's role as a "channel" only;
• the fact that the purported inland transportation fees were not described as a component of the CIF price; and
• the contents of the Arthur Andersen Report.

(I) on or about 12 June 2003, Lindberg, as a member of the Executive Leadership Group, attended a meeting where a Powerpoint presentation was made by Christopher Quennell of Blake Dawson Waldron to discuss the content of a complaint made by the US Wheat Associates complaint described at paragraph 34B below dated 6 June 2003. A copy of the presentation is available for inspection on reasonable notice. During that presentation, reference was made to:

• allegations that AWB contracts with the IGB were inflated;
• allegations that some of the funds from these contracts may have gone to Saddam Hussein's family;
• legal issues arising from post-October 1999 contracts; and
• UN Resolutions 661 and 986.

(J) email dated 12 June 2003 from Long to Lindberg that included the contents of a document entitled "Memorandum of Instruction" dated 10 June 2003 from CPT Blake Puckett.

(K) email dated 17 June 2003 from Kate Robertson to Lindberg attaching a document titled "Jordanian/Iran Trip Report";

(KA) email dated 12 September 2003 from Whitwell to Lindberg and others, indicating that the price of wheat under contract A1670 would be reduced by 10% but that the delivery terms would otherwise remain substantially the same;

(L) email dated 22 September 2003 from Whitwell to Lindberg attaching a memorandum titled "Iraq Update".

Copies of the above documents may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

(b) Lindberg's receipt of the emails referred to in paragraphs (A) to (D), (F), (H), and (J), (K), (KA) and (L) of the particulars provided under paragraph 34A is to be inferred from the following:

• (i) In relation to the email dated 5 February 2001, Lindberg is listed as an email recipient and a copy of the email contains the following handwritten notation of Lindberg "Charles Great result! Well done AL". A copy of this email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

• (ii) In relation to the email dated 21 December 2001, Lindberg is listed as an email recipient and a copy of the email contains the following handwritten notation of Lindberg "Dominic A great result! Andrew". A copy of this email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

• (iii) In relation to the email dated 5 December 2002, Lindberg is listed as the first of many email recipients. A copy of the email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

• (iv) In relation to the email dated 20 March 2003, Lindberg is listed as the first of many email recipients. A copy of the email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

• (v) In relation to the email dated 28 May 2003, Lindberg is listed as being carbon copied as an email recipient. A copy of the email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

• (vi) In relation to the email dated 12 June 2003, Lindberg is listed as an email recipient. A copy of the email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

• (vii) In relation to the email dated 17 June 2003, Lindberg is listed as an email recipient. A copy of the email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

• (viii) In relation to the email dated 12 September 2003, Lindberg is listed as an email recipient. A copy of the email may be inspected upon reasonable notice. Further particulars may be provided prior to trial

• (ix) In relation to the email dated 22 September 2002, Lindberg is listed as an email recipient. A copy of the email may be inspected upon reasonable notice. Further particulars may be provided prior to trial.

(c) Lindberg's receipt of the Iraq situation reports dated 20 March 2003, 21 March 2003, 22 March 2003 and 25 March 2003 referred to in paragraph (E) of the particulars is to be inferred from the following:

• (i) Lindberg established and chaired the Iraq Emergency Response Team to deal with the consequences of the invasion of Iraq by coalition forces on 20 March 2003;

(ia) The fact that Lindberg attended and actively participated in IERT meetings;

(ib) The fact that Iraq situation reports were handed out on a daily basis to members of IERT;

(ii) The purpose of the Iraq situation reports was partly to inform and update the Iraq Emergency Response Team as to the impact of the invasion of Iraq on AWB's wheat trade with Iraq;

(iii) The minutes of meeting dated 25 March 2003 of the Iraq Emergency Response Team refers to one of the items on the Iraq situation report dated 25 March 2003. A copy of the minutes may be inspected upon reasonable notice.

The US Wheat Associates Complaint and Project Rose

34B. On or about 3 June 2003, Mr Alan Tracy, President of US Wheat Associates, a lobby group for the United States' wheat industry, wrote a letter to the Honourable Colin Powell, the Secretary of State of the United States, which alleged, amongst other things, that:

AWB's contracts for the sale of wheat to Iraq under the Oil-for-Food Programme were "undoubtedly inflated... by millions of dollars per shipload"; and

"Some of the excess may have gone into accounts of Saddam's Hussein's family" (the US Wheat Associates complaint).

Lindberg's receipt of a copy of the letter is to be inferred from the fact that he specifically refers to it in a letter to Alan Tracy, signed by Lindberg and dated 12 June 2003. A copy of each of Tracy's letter of 3 June 2003 and Lindberg's letter of 12 June 2003 is available for inspection on reasonable notice.

34C Following the US Wheat Associates complaint, Lindberg directed Cooper to establish an internal AWB inquiry (Project Rose) into the allegations in the US Wheat Associates complaint. The purposes of Project Rose were:

(a) To "effectively issue-manage AWB's response" to the US Wheat Associates complaint, and later, the various inquiries underway into the UN Oil-for-Food program in Iraq;

(b) To protect AWB's reputation in Australia and abroad;

(c) To prevent any interruption to AWB's business in Iraq; and

(d) To mitigate any impact of AWB's conduct during the Oil-for-Food Programme on AWB's statutory wheat export monopoly, commonly known as the "single desk".

The purposes of Project Rose are set out in a document dated 4 August 2004 entitled "Team Charter Summary - Project Rose" and in an undated draft board paper entitled "Project Rose - Board Information Paper". A copy of each of these documents is available for inspection on reasonable notice. The purpose described at paragraph (a) above may be further inferred from the meeting notes prepared by James Cooper of AWB referred to at paragraph (HA) of the particulars to paragraph 34A above.

34D. Lindberg attended or chaired numerous Project Rose meetings, and was responsible for the overall direction of Project Rose.

Lindberg's responsibility for the overall direction of Project Rose is to be inferred from the following:

(a) The fact that Project Rose was established at Lindberg's direction.

(b) Lindberg's frequent attendance at Project Rose management meetings.

(e) Lindberg was the most senior AWB employee or officer involved in Project Rose and in attendance at any Project Rose meeting.

(f) Lindberg provided verbal updates on the progress of Project Rose to the Board of AWB from time to time.

(g) Lindberg was a member of the Project Rose Joint Board Committee, which comprised members of the Boards of AWB and AWB (International) Ltd and was established in April 2005 as a forum to discuss and receive advice in relation to Project Rose. Lindberg was responsible for reporting to the Project Rose Joint Board Committee on the progress of Project Rose.

(h) An email dated 30 July 2004 from Rosalyn Santen to Lindberg and others, indicating that Lindberg had requested that the recipients of the email attend a meeting in relation to Project Rose.

(i) The matters alleged at paragraph 34H below, and the particulars thereto.

34E. Project Rose did not constitute a bona fide attempt to investigate whether AWB, its officers, agents or employees had engaged in any improper conduct in relation to the Oil-for-Food Programme.

The allegation in paragraph 34E is to be inferred from the following:

(a) The purposes of Project Rose as described at paragraph 34C and the particulars thereto.

(b) The failure of Project Rose to interview the three AWB employees or officers who were most closely involved in AWB's day-to-day trade with Iraq under the Oil-for-Food programme, namely Hogan, Whitwell and Long.

(c) The failure of Project Rose to interview the AWB employees or officers who had been responsible most frequently for authorising payments to Alia of purported inland transportation fees, namely Hogan, Whitwell, Long, Edmonds-Wilson and Ingleby.

(d) The failure of Project Rose to interview, or seek to interview, former AWB employees or officers who were closely involved in AWB's trade with Iraq under the Oil-for-Food programme, including Mark Emons, Nigel Officer, Michael Watson and Ted Laskie.

(e) The fact that AWB's Chief Risk Officer was not informed of the establishment or existence of Project Rose until February 2005.

34F. On or about 6 May 2004, Lindberg provided a memorandum to the Board of AWB in relation to Project Rose, which stated that:

(a) Project Rose had undertaken a detailed review of the facts surrounding AWB's Oil-for-Food contracts with Iraq.

(b) The detailed review had involved a review of over 30,000 emails and many files, and interviews of AWB management.

(c) The Project Rose enquiry had been rigorous and very detailed.

(d) The Project Rose enquiry was substantially complete, but would require a further few weeks to fully complete.

(e) A report on Project Rose's factual findings would be provided to AWB management, and the Board would be briefed the following week.

Lindberg's provision of the memorandum to the Board of AWB is recorded in the minutes of the Board Meeting held on 26 May 2004. A copy of each of the memorandum and the minutes is available for inspection on reasonable notice.

34G. On or about 25 May 2004, Lindberg attended a "joint information session" of the Boards of AWB and AWB (International) Ltd (AWBI) during which a PowerPoint presentation was given by Quennell. During the joint information session, the Board was informed that Project Rose:

(a) involved a comprehensive review of all contract arrangements - including inland transportation arrangements - in relation to AWB's sales of wheat to Iraq in the period 1999 to 2002;

(b) had found no evidence that AWB had any knowledge that monies paid to Alia were passed on to the former government of Iraq;

(c) had found no evidence that AWB had made payments to any other person in relation to shipments of wheat under the Oil-for-Food Programme.

A copy of the PowerPoint presentation is available for inspection upon reasonable notice. The matters communicated to the Board during the joint information session are set out in AWB's Board Minutes dated 26 May 2004, a copy of which is available for inspection upon reasonable notice.

(a) reviewed the proposed slides of a PowerPoint presentation entitled "Project Rose AWB Limited Board Meeting 28 July 2004" to be conducted by James Cooper of AWB to the Board; and

(b) asked Cooper to remove the final slide from the proposed Board presentation, which slide referred to Alia's links to Iraq.

Copies of the PowerPoint presentation and the final slide containing a handwritten notation by Cooper stating "remove from pack" are available for inspection upon reasonable notice.

34I. On or about 10 September 2004, Lindberg received an oral briefing from James Cooper of AWB in which Cooper advised Lindberg that AWB had recouped the Tigris Debt by inflating, or loading up, the contract price for wheat.

34J. On 21 April 2004, the Secretary General of the United Nations established the Independent Inquiry Committee into the United Nations Oil-for-Food Programme (the IIC) to investigate and determine, amongst other things:

"whether procedures established by the [661 Committee] for the processing and approval of contracts under the [Oil-for-Food] Programme... and the purchase and delivery of humanitarian goods, were violated"; and

"whether any ...contractors [being entities that entered into contracts with the United Nations or with Iraq under the Oil-for-Food Programme] engaged in any illicit or corrupt activities ... including, for example... illicit payments in regard to purchases of humanitarian goods."

The Plaintiff refers to and relies upon the full terms of the Terms of Reference of the IIC. A copy of those Terms of Reference is available for inspection upon reasonable notice.

34K. On 28 February 2005, IIC investigators interviewed Lindberg. During that interview, the IIC investigators informed Lindberg, inter alia, that:

(a) "many officials from the Hussein regime in Iraq... had informed the IIC that Alia had been used to channel funds to the former government of Iraq under the guise of transportation costs";

(b) "many companies... had told the IIC that, beginning in Phase 8 of the [Oil-for-Food] Programme, it was not possible to enter into a contract with the Government of Iraq without making a 'side payment' to the Hussein regime"; and

(c) a representative of the Iraqi Ministry of Transport had informed the IIC that "no company had been exempt from paying a 10 per cent kick back to the Government of Iraq".

A copy of a summary of the IIC interview with Lindberg is available for inspection on reasonable notice.

34L. On or about 27 September 2005, Lindberg informed a joint information session of the Boards of AWB and AWB (International) Ltd that:

(a) the IIC had issued a major report on 7 September 2005;

(b) "the issues" for AWB were the use of Alia, the purported inland transportation fees and the size of AWB's exports to Iraq; and

(c) AWB had not paid sham or purported inland transportation fees for non-existent trucking services, but there was a risk that AWB's "legitimate trucking operations" in relation to Australian wheat could be misinterpreted as purported inland transportation fees;

but did not inform the respective Boards, whether at the joint information session or otherwise, that:

(d) in addition to purported inland transportation fees, the IIC report dated 7 September 2005 described purported service fees paid by contractors under the Oil-for-Food Programme as a source of kick-backs to the former government of Iraq; and

(e) the IIC report indicated that the purported service fees paid by contractors under the Oil-for-Food Programme amounted to approximately double the amount of purported inland transportation fees paid by contractors.

Lindberg's report to the joint information session is available for inspection on reasonable notice.

34M. On or about 26 September 2005, Lindberg received a letter from Reid Morden, the Executive Director of the IIC, stating that, based upon its investigations, the IIC intended to report, inter alia, that:

(a) AWB had since 1999 paid purported inland transportation fees to the Government of Iraq;

On instruction from the IGB, AWB's payments of purported inland transportation fees had been paid to the Government of Iraq via Alia;

Between October 1999 and March 2003, AWB had paid to Alia approximately US$212 million in purported inland transportation fees, and Alia had passed those fees on to the Iraq State Company for Water Transport (ISCWT), described as a state-owned agency within the Iraqi Ministry for Transport and Communications;

Alia did not provide any transportation services for AWB;

AWB's payments to Alia were kickback payments for the benefit of the Government of Iraq, and did not pay for any transportation costs;

The illegitimate fees paid by AWB to the Government of Iraq comprised purported inland transportation fees and purported service fees;

AWB's documents and the circumstances of AWB's sales of wheat to Iraq reflected that AWB knew, or ought to have known, that the fees paid were paid to the Government of Iraq in breach of UN sanctions;

Communications between AWB and Alia regarding demands by the ISCWT for AWB to pay purported inland transportation fees into the "ISCWT account";

Communications between AWB and the IGB and the ISCWT regarding payments of purported inland transportation fees made by AWB and received by the IGB or ISCWT;

The fact that Alia provided no transportation services to AWB;

The absence of any AWB documentation reflecting transportation services provided by Alia;

That the IGB had nominated Alia and had not permitted AWB to select an alternative transport provider; and

The steep rise in purported inland transportation fees following the introduction of the purported service fees during Phase VIII of the Oil-for-Food Programme, and AWB's failure to question this rise.

A copy of the letter is available for inspection on reasonable notice.

34N. On or about 6 October 2005, Lindberg sent a letter to Paul Volcker, the Chairman of the IIC, in response to the letter from Reid Morden of 26 September 2005. Lindberg's letter stated, inter alia, that:

(a) He was very concerned about the IIC's proposed findings regarding AWB's participation in the Oil-for-Food Programme; and

(b) AWB had believed that "Alia was a bona fide company providing a genuine service", but that "it now seems that this may not be the case and that AWB has been implicated as an unwitting participant in a sophisticated scheme engineered by officials of the former government of Iraq."

A copy of the letter is available for inspection on reasonable notice.

By reason of the matters pleaded alleged in paragraphs 16 to 34A 12 to 34N above, from at least the dates alleged below, Lindberg knew or, ought to have known, or knew facts that ought to have put him on a train of enquiry that would have disclosed that:

(a) AWB was continuing to make purported inland transportation payments in connection with its trade with the IGB notwithstanding the concerns that had been raised in the Arthur Andersen Report in December 2000 and the trip report in February 2001;

(b) AWB was continuing to make payments of purported service fees in connection with its trade with the IGB notwithstanding the concerns that had been raised in the trip report in February 2001;

(c) AWB's wheat sales to Iraq constituted a substantial part of AWB's overall annual wheat sales and were highly profitable for AWB;

(d) (b) the purported inland transportation fees and the purported service fees payments were a methods used by the IGB to obtain funds illegitimately from the UN Escrow Account;

(e) (f) United Nations sanctions prohibited the direct payment of funds to Iraq or its instrumentalities;

(f) (g) the payment of purported inland transportation fees and purported service fees were or were likely to be a contravention of, or otherwise contrary to or inconsistent with, United Nations sanctions in that they resulted, either directly or indirectly, in the illegitimate payment of funds to Iraq or its instrumentalities;

(g) (i) United Nations resolutions provided that the funds in the UN Escrow Account should only be used only to meet the humanitarian needs of the Iraqi population;

(h) the purported inland transportation fees (incorporating the purported service fees) were being paid to Alia; and

(i) (c) AWB was proposing and had subsequently agreed to make payments to the IGB in relation to the Iron Filings Claim by using the same mechanism used to make payments of the purported inland transportation paymentsfees;

(j) (d) accordingly, the funds paidpayments made on account of the purported inland transportation fees and the purported service fees, and proposed to be paid made on account of the Iron Filings Claim were, or were likely to be, funds being paid illegitimately to the IGB in contravention of, or otherwise in a manner contrary to or inconsistent with, United Nations sanctions;

(k) (e) AWB was proposing and had subsequently agreed with the IGB to recover for Tigris the Tigris Debt by "loading up" AWB contracts with the IGB;

(l) (gg) the proposed payment on account of the Iron Filings Claim if actually made, would be or would likely be a contravention of, or otherwise contrary to or inconsistent with, United Nations sanctions in that it would have resulted, either directly or indirectly, in the illegitimate payment of funds to Iraq or its instrumentalities;

(m) (h) DFAT and the United Nations would require the payment of the Iron Filings Claim to be made by payment to via the UN Escrow Account or by a price reduction for contracts between AWB and the IGB;

(n) AWB sold wheat in countries where bribery and corruption including kickbacks and agency payments were common business practices, raising a high risk of fraud or other improprieties;

(o) (j) the payments obtained from the UN Escrow Account of funds in respect of purported inland transportation fees, purported service fees and the Tigris debt were not intended made to meet the humanitarian needs of the Iraqi population and were therefore contrary to or otherwise inconsistent with United Nations resolutions; and

(p) the matters set out in paragraphs 90C and 90F below;

(q) Project Rose was not a bona fide or thorough investigation into wrongdoing by AWB; and

(r) The Board of AWB had been misinformed, by Lindberg and others, that Project Rose involved a rigorous and detailed review of the facts surrounding AWB's Oil-for-Food contracts with Iraq, and had uncovered no evidence of wrongdoing by AWB or its officers or employees despite that rigorous and detailed review; and

(s) The IIC's investigation of AWB was not limited to purported inland transportation fees paid in respect of wheat sold to Iraq under the Oil-for-Food Programme, but extended to the purported service fee, which were not referable in any way to trucking arrangements.

On or about 20 December 2001, AWB entered into contract number A1111 with the Grain Board of Iraq (the IGB) for the supply by AWB to the IGB of 500,000 tonnes of wheat (Contract A1111).

Contract A1111 is in writing and is constituted by:

(A) a document entitled "AWB Limited - Australian Wheat CIF Contract" dated 20 December 2001; and

(B) a document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 17 January 2002.

Copies of the documents are available for inspection on reasonable notice.

Contract A1111 contained terms including the following:

AWB agreed to sell and the IGB agreed to buy 500,000 tonnes of Australian wheat (and 5 per cent more or less at AWB's option);

the CIF Free in Truck price for the wheat was €263.08 per tonne;

the wheat was to be discharged Free into Truck to all silos within all governorates of Iraq;

AWB agreed to ship the wheat during the period 1 March 2002 to 31 July 2002, subject to receipt of appropriate UN approval;

payment was to be made by a procedure which involved the Central Bank of Iraq requesting the bank holding the UN Escrow Account to open an irrevocable, non-transferable letter of credit in favour of AWB for payment from the UN Escrow Account;

a copy of the 661 Committee letter stating that AWB was eligible for payment from the UN Escrow Account was required to effect payment.

The terms are in writing and are contained in the document entitled "AWB Limited - Australian Wheat CIF Contract" dated 20 December 2001 and the document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 17 January 2002.

The per tonne price of €263.08 agreed in Contract A1111 included the sum of €55.17 on account of a purported inland transportation fee (which incorporated a purported service fee).

The purported inland transportation fee is recorded in the following documents:

(A) the summary sheet for the file relating to Contract A1111;

(B) a fax from the IGB to AWB dated 20 December 2001;

(C) an email from Dominic Hogan to Mr Yousif of the IGB dated 20 December 2001; and

(D) an email from Dominic Hogan to Andrew Lindberg and other AWB employees dated 21 December 2001.

Copies of the above documents are available for inspection on reasonable notice.

On or about 22 January 2002, AWB submitted Contract A1111 to DFAT for on forwarding to the OIP for examination as to price and value in accordance with the procedures set out in paragraph 10 above which submitted documents did not refer to the purported inland transportation fee or the purported service fee.

The submission was in writing and is constituted by a facsimile dated 22 January 2002 from Dominic Hogan to Don Cuddihy of DFAT together with 1 copy of each of the documents referred to in the particulars to paragraph 36 above and a copy of a document entitled "Notification or Request to Ship Goods to Iraq". Copies of these documents are available for inspection on reasonable notice.

On 5 February 2002, the OIP determined that AWB was eligible for payment from the UN Escrow Account in relation to the sale of wheat pursuant to Contract A1111.

The determination is evidenced by a document dated 4 February 2002 issued by Benon V Sevan (Executive Director) on behalf of the OIP on 5 February 2002 to the Permanent Representative of Australia to the United Nations. Provisional approval was given by a document dated 4 February 2002 from Farid Zarif on behalf of the OIP to the Australian Mission. Copies of these documents are available for inspection on reasonable notice.

On or about the dates set out below, in accordance with Reg. 13CA of the Customs Regulations, AWB received from DFAT permission to export the wheat sold under Contract A1111.

The permissions to export are contained in several certificates issued by DFAT on or about the following dates:

AWB received payment from the UN Escrow Account in the sum of €137,288,314.85 pursuant to Contract A1111.

AWB received the following payments from the UN Escrow Account pursuant to Contract A1111:

AWB paid to the Alia Transportation and General Trade Co of Jordan (Alia) the sum of €28,919,133.08 in respect of the purported inland transportation fees (incorporating purported service fees) in relation to the wheat delivered pursuant to Contract A1111.

The following amounts were paid by AWB to Alia in relation to Contract A1111:

On or about 20 December 2001, AWB entered into Contract Number A1112 with the IGB for the supply by AWB to the IGB of 500,000 tonnes of wheat (Contract A1112).

Contract A1112 is in writing and is constituted by:

(A) a document entitled "AWB Limited - Australian Wheat CIF Contract" dated 20 December 2001; and

(B) a document entitled "Ministry of Trade Grain Board of Iraq - Contract of the Supply of 500,000 MT Australian Wheat" dated 17 January 2002.

Copies of the documents are available for inspection on reasonable notice.

Contract A1112 contained terms including the following:

AWB agreed to sell and the IGB agreed to buy 500,000 tonnes of Australian wheat (and 5 per cent more or less at AWB's option);

the CIF Free in Truck price for the wheat was €265.68 per tonne;

the wheat was to be discharged Free into Truck to all silos within all governorates of Iraq;

AWB agreed to ship the wheat during the period 1 March 2002 to 31 July 2002, subject to receipt of appropriate UN approval;

payment was to be made by a procedure that involved the Central Bank of Iraq requesting the bank holding the UN Escrow Account to open an irrevocable, non-transferable letter of credit in favour of AWB for payment from the UN Escrow Account;

a copy of the 661 Committee letter stating that AWB was eligible for payment from the UN Escrow Account was required to effect payment.

The terms are in writing and are contained in the document entitled "AWB Limited - Australian Wheat CIF Contract" dated 20 December 2001 and the document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 17 January 2002.

The per tonne price of €265.68 agreed in Contract A1112 included the sum of €55.40 on account of a purported inland transportation fee (which incorporated a purported service fee).

The purported inland transportation fee is recorded in the following documents:

(A) the summary sheet for the file relating to Contract A1112;

(B) a fax from the IGB to AWB dated 20 December 2001;

(C) an email from Dominic Hogan to Mr Yousif of the IGB dated 20 December 2001; and

(D) an email from Dominic Hogan to Andrew Lindberg and other AWB employees dated 21 December 2001.

Copies of the above documents are available for inspection on reasonable notice.

On or about 22 January 2002, AWB submitted Contract A1112 to DFAT for on forwarding to the OIP for examination as to price and value in accordance with the procedures set out in paragraph 10 above which submitted documents did not refer to the purported inland transportation fee or the purported service fee.

The submission was in writing and is constituted by a facsimile dated 22 January 2002 from Dominic Hogan to Don Cuddihy of DFAT together with 1 copy of each of the documents referred to in the particulars to paragraph 45 above and 1 copy of a document entitled "Notification or Request to Ship Goods to Iraq". Copies of these documents are available for inspection on reasonable notice.

On or about 5 February 2002 the OIP determined that AWB was eligible for payment from the UN Escrow Account in relation to the shipment of wheat pursuant to Contract A1112.

The determination is evidenced by a document dated 4 February 2002 issued by Benon V Sevan (Executive Director) on behalf of the OIP on 5 February 2002 to the Permanent Representative of Australia to the United Nations. Provisional approval was given by a document dated 4 February 2002 from Farid Zarif on behalf of the OIP to the Australian Mission. Copies of these documents are available for inspection on reasonable notice.

On or about the dates set out below, in accordance with Reg. 13CA of the Customs Regulations, AWB received from DFAT permission to export the wheat the subject of Contract A1112.

The permissions to export are contained in several certificates issued by DFAT on or about the following dates:

AWB received payment from the UN Escrow Account in the sum of €134,661,040.93 pursuant to Contract A1112.

AWB received the following payments from the UN Escrow Account pursuant to Contract A1112:

AWB paid to Alia the sum of €28,238,139.53 in respect of the purported inland transportation fees (incorporating purported service fees) in relation to the wheat delivered pursuant to Contract A1112.

The following amounts were paid by AWB to Alia in relation to Contract A1112:

On or about 23 June 2002, AWB entered into Contract Number A1441 with the IGB for the supply by AWB to the IGB of 500,000 tonnes of wheat (Contract A1441).

Contract A1441 is in writing and is constituted by:

(A) a document entitled "AWB Limited - Australian Wheat CIF Contract" dated 23 June 2002; and

(B) a document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 15 July 2002.

Copies of the documents are available for inspection on reasonable notice.

Contract A1441 contained terms including the following:

AWB agreed to sell and the IGB agreed to buy 500,000 tonnes of Australian wheat (and 5 per cent more or less at AWB's option);

the CIF Free in Truck price for the wheat was €237.55 per tonne;

the wheat was to be discharged Free into Truck to all silos within all governorates of Iraq;

AWB agreed to ship the wheat during the period 1 August 2002 to 31 October 2002, subject to receipt of appropriate UN approval;

payment was to be made by a procedure which involved the Central Bank of Iraq requesting the bank holding the UN Escrow Account to open an irrevocable, non-transferable letter of credit in favour of AWB for payment from the UN Escrow Account;

a copy of the 661 Committee letter stating that AWB was eligible for payment from the UN Escrow Account was required to effect payment.

The terms are in writing and are contained in the document entitled "AWB Limited - Australian Wheat CIF Contract" dated 23 June 2002 and the document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 15 July 2002.

The per tonne price of €237.55 agreed in Contract A1441 included the sum of €48.53 on account of a purported inland transportation fee (which incorporated a purported service fee).

The purported inland transportation fee is recorded in the following documents:

(A) the summary sheet for the file relating to Contract A1441;

(B) an email from Nigel Edmonds-Wilson dated 27 June 2002;

(C) a fax from Dominic Hogan of AWB to Mr Yousif of the IGB dated 2 July 2002.

Copies of the above documents are available for inspection on reasonable notice.

On or about 24 July 2002, AWB submitted Contract A1441 to DFAT for on forwarding to the OIP for examination as to price and value in accordance with the procedures set out in paragraph 10 above which submitted documents did not refer to the purported inland transportation fee or the purported service fee.

The submission was in writing and is constituted by a facsimile dated 24 July 2002 from Nigel Edmonds-Wilson to Don Cuddihy of DFAT together with 1 copy of each of the documents referred to in the particulars to paragraph 54 above and 1 copy of a document entitled "Notification or Request to Ship Goods to Iraq". Copies of these documents may be inspected upon reasonable notice.

On 8 October 2002 the OIP determined that AWB was eligible for payment from the UN Escrow Account in relation to the sale of wheat pursuant to Contract A1441.

The determination is evidenced by a document dated 13 August 2002 and issued on 8 October 2002 by Benon V Sevan Executive Director on behalf of the OIP to the Permanent Representative of Australia to the United Nations which states that the original approval was given on 13 August 2002. Provisional approval was given by facsimile dated 13 August 2002 from Farid Zarif on behalf of the OIP to the Australian Mission. Copies of these documents are available for inspection on reasonable notice.

On or about the dates set out below, in accordance with Reg. 13CA of the Customs Regulations, AWB received from DFAT permission to export the wheat sold under Contract A1441.

The permissions to export are contained in several certificates issued by DFAT on or about the following dates:

AWB received payment from the UN Escrow Account in the sum of €116,698,052.29 pursuant to Contract A1441.

AWB received the following payments from the UN Escrow Account pursuant to Contract A1441:

AWB paid to Alia the sum of €18,229,441.09 in respect of purported inland transportation fees (incorporating purported service fees) in relation to the wheat delivered pursuant to Contract A1441.

The following amounts were paid by AWB to Alia in relation to Contract A1441:

On or about 9 April 2003, Contract A1441 was amended so that:

the CIF Free in Truck price for the undelivered balance of wheat was €196.13 per tonne CIF out to Red Sea or Persian Gulf ports;

the undelivered balance of wheat would be shipped by AWB no later than 12 May 2003.

The amendment is in writing and constituted by a document entitled "Format for Amendments to Existing Contracts Negotiated and Agreed Pursuant to Security Council Resolution 1472 (2003)" dated 9 April 2003. A copy of this document is available for inspection on reasonable notice.

On or about 11 December 2002, AWB entered into Contract Number A1670 with the IGB for the supply by AWB to the IGB of 500,000 tonnes of wheat (Contract A1670).

Contract A1670 is in writing and is constituted by:

(A) a document entitled "AWB Limited - Australian Wheat CIF Contract" dated 11 December 2002; and

(B) a document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 14 December 2002.

Copies of the documents are available for inspection on reasonable notice.

Contract A1670 contained terms including the following:

AWB agreed to sell and the IGB agreed to buy 500,000 tonnes of Australian wheat (and 5 per cent more or less at AWB's option);

the CIF Free in Truck price for the wheat was €280.37 per tonne;

the wheat was to be discharged Free into Truck to all silos within all governorates of Iraq;

AWB agreed to ship the wheat during the period 1 January 2003 to 30 June 2003, subject to receipt of appropriate UN approval;

payment was to be made by a procedure that involved the Central Bank of Iraq requesting the bank holding the UN Escrow Account to open an irrevocable, non transferable, letter of credit in favour of AWB for payment from the UN Escrow Account;

a copy of the 661 Committee letter stating that AWB was eligible for payment from the UN Escrow Account was required to effect payment.

The terms are in writing and are contained in the document entitled "AWB Limited - Australian Wheat CIF Contract" dated 11 December 2002 and the document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 14 December 2002.

The per tonne price of €280.37 agreed in Contract A1670 included:

the sum of €51.30 on account of a purported inland transportation fee (which incorporated a purported service fee); and

the sum of €8.40 which constituted the repayment by the IGB of part of the Tigris Debt.

The inland transportation fee and the amount applied to the repayment of the Tigris Debt are recorded in the following documents:

(A) the summary sheet for the file relating to Contract A1670;

(B) an email from Chris Whitwell to Yousif of the IGB dated 9 December 2002;

(C) a fax from Chris Whitwell to Yousif of the IGB dated 11 December 2002;

(D) an email from Yousif of the IGB to Dominic Hogan dated 18 December 2002.

Copies of the above documents are available for inspection on reasonable notice.

On or about 23 December 2002, AWB submitted Contract A1670 to DFAT for on forwarding to the OIP for examination as to price and value in accordance with the procedures set out in paragraph 10 above which submitted documents did not refer to the purported inland transportation fee, the purported service fee or the Tigris Debt.

The submission was in writing and is constituted by a facsimile dated 23 December 2002 from Nigel Edmonds-Wilson to Don Cuddihy of DFAT together with one copy of each of the documents referred to in the particulars to paragraph 65 above and one copy of a document entitled "Notification or Request to Ship Goods to Iraq". Copies of these documents are available for inspection on reasonable notice.

On or about 2 September 2003 the OIP determined that AWB was eligible for payment from the UN Escrow Account in relation to the sale of wheat pursuant to Contract A1670.

The determination is evidenced by a document dated 22 January 2003 and issued on 2 September 2003 by Benon V Sevan Executive Director on behalf of the OIP to the Permanent Representative of Australia to the United Nations. Provisional approval was given by facsimile dated 22 January 2003 from Farid Zarif of the OIP to the Australian Mission. Copies of these letters are available for inspection on reasonable notice.

On 25 September 2003, Contract A1670 was amended so that:

the CIF Free in Truck price for the wheat was €254.88 per tonne CIF all governorates of Iraq shipped to port at Umm Qasr;

the CIF Free in Truck price for the wheat was €265.88 per tonne CIF all governorates of Iraq shipped to port at Aqaba;

AWB agreed to ship the wheat during the period 15 December 2003 and 15 May 2004, subject to specified penalties for late shipment

The amendment is in writing and is constituted by a document entitled "Format for Amendments to Existing Contracts Negotiated and Agreed Pursuant to Security Council Resolution 1472 (2003) and 1483 (2003)" signed by Chris Whitwell on behalf of AWB on 25 September 2003. A copy of the amendment is available for inspection on reasonable notice.

On or about 31 December 2003, Contract A1670 was further amended so that:

the CIF Free in Truck price for the wheat was €261.52 per tonne CIF all governorates of Iraq shipped to port at Umm Qasr;

the CIF Free in Truck price for the wheat was €272.52 per tonne CIF all governorates of Iraq shipped to port at Aqaba;

AWB agreed to ship the wheat during the period 1 January 2004 and 31 March 2004, subject to specified penalties for late shipment.

The amendment is in writing and constituted by a document entitled "CPA Amendment to Contract Comm Number 1201376" dated 31 December 2003. A copy of the amendment is available for inspection on reasonable notice.

AWB received payment from the UN Escrow Account in the sum of €134,433,260.95 pursuant to Contract A1670.

AWB received the following payments from the UN Escrow Account pursuant to Contract A1670:

On or about 11 December 2002, AWB entered into Contract Number A1680 with the IGB for the supply by AWB to the IGB of 500,000 tonnes of wheat (Contract A1680).

Contract A1680 is in writing and is constituted by:

(A) a document entitled "AWB Limited - Australian Wheat CIF Contract" dated 11 December 2002; and

(B) a document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 14 December 2002.

Copies of the documents are available for inspection on reasonable notice.

Contract A1680 contained terms including the following:

AWB agreed to sell and the IGB agreed to buy 500,000 tonnes of Australian wheat (and 5 per cent more or less at AWB's option);

the CIF Free in Truck price for the wheat was €280.37 per tonne;

the wheat was to be discharged Free into Truck to all silos within all governorates of Iraq;

AWB agreed to ship the wheat during the period 1 January 2003 to 30 June 2003, subject to receipt of appropriate UN approval;

payment was to be made by a procedure that involved the Central Bank of Iraq requesting the bank holding the UN Escrow Account to open an irrevocable, non-transferable letter of credit in favour of AWB for payment from the UN Escrow Account;

a copy of the 661 Committee letter stating that AWB was eligible for payment from the UN Escrow Account was required to effect payment.

The terms are in writing and are contained in the document entitled "AWB Limited - Australian Wheat CIF Contract" dated 11 December 2002 and the document entitled "Ministry of Trade/Grain Board of Iraq - Contract for the Supply of 500,000 MT Australian Wheat" dated 14 December 2002.

The per tonne price of €280.37 agreed in Contract A1680 included:

€51.30 on account of a purported inland transportation fee (which incorporated a purported service fee); and

€8.40 which constituted the repayment by the IGB of part of the Tigris Debt.

The inland transportation fee and the amount applied to the repayment of the Tigris Debt are recorded in the following documents:

(A) the summary sheet for the file relating to Contract A1680;

(B) a fax from Chris Whitwell to Yousif of the IGB dated 11 December 2002;

(C) an email from Chris Whitwell to Yousif of the IGB dated 12 December 2002; and

(D) an email from Mr Yousif of the IGB to Hogan dated 18 December 2002.

Copies of the above documents are available for inspection on reasonable notice.

On or about 23 December 2002, AWB submitted Contract A1680 to DFAT for on forwarding to the OIP for examination as to price and value in accordance with the procedures set out in paragraph 10 above which submitted documents did not refer to the purported inland transportation fee, the purported service fee or the Tigris Debt.

The submission was in writing and is constituted by a facsimile dated 23 December 2002 from Nigel Edmonds-Wilson to Don Cuddihy of DFAT together with 1 copy of each of the documents referred to in the particulars to paragraph 76 above and 1 copy of a document entitled "Notification or Request to Ship Goods to Iraq". Copies of these documents are available for inspection on reasonable notice.

On or about 12 February 2003 the OIP determined that AWB was eligible for payment from the UN Escrow Account in relation to the sale of wheat pursuant to Contract A1680.

The determination is evidenced by a document dated 17 January 2003 and issued by Benon V Sevan, Executive Director of OIP to the Permanent Representative of Australia to the United Nations on 12 February 2003. Provisional approval was contained in a facsimile from Farid Zarif on behalf of the OIP to the Australian Mission dated 17 January 2003. Copies of these documents are available for inspection on reasonable notice.

On or about 9 April 2003, Contract A1680 was amended so that:

the CIF Free in Truck price for the wheat was €247.04 per tonne CIF free out to Red Sea or Persian Gulf Ports;

the date for shipment of the wheat was no later than 12 May 2003.

The amendment is in writing and constituted by a document dated 9 April 2003 entitled "Format for Amendments to Existing Contracts Negotiated and Agreed Pursuant to Security Council Resolution 1472 (2003)". A copy of this document is available for inspection on reasonable notice.

On or about 9 July 2003, Contract A1680 was further amended so that the CIF Free in Truck price for the wheat was €259.17 per tonne and €266.22 per tonne CIF free out to Red Sea or Persian Gulf Ports respectively for the vessels Pearl of Fujairah and Andromeda.

The amendment is in writing and constituted by a document entitled "Amendment Two to Existing Contract 1300016 as Negotiated and Agreed Pursuant to Security Council Resolution 1472 (2003)". A copy of this document is available for inspection on reasonable notice.

On 25 September 2003, Contract A1680 was further amended so that:

the CIF Free in Truck price for the wheat was €254.88 per tonne CIF all governorates of Iraq shipped to port at Umm Qasr;

the CIF Free in Truck price to silo for the wheat was €265.88 per tonne CIF all governorates Iraq shipped to port at Aqaba;

AWB agreed to ship the wheat during the period 25 September 2003 and 31 December 2003, subject to specified penalties for late shipment.

The amendment is in writing and constituted by a document entitled "Format for Amendments to Existing Contracts Negotiated and Agreed Pursuant to Security Council Resolution 1472 (2003) and 1483 (2003)" dated 25 September 2003. A copy of this document is available for inspection on reasonable notice.

On or about the dates set out below, in accordance with Reg. 13CA of the Customs Regulations, AWB received from DFAT permission to export the wheat sold under Contract A1680.

The permissions to export are contained in several certificates issued by DFAT on or about the following dates:

In addition, permissions to export are contained in certificates issued by DFAT on or about the following dates in relation to wheat originally allocated to Contract A1441, which wheat was ultimately sold under Contract A1680:

AWB received payment from the UN Escrow Account in the sum of €133,778,833.78 pursuant to Contract A1680.

AWB received the following payments from the UN Escrow Account pursuant to Contract A1680:

Copies of the email and draft agreement are available for inspection upon reasonable notice.

On or about 19 November 2004, Lindberg approved the payment of the Tigris Debt by AWB to Tigris after deduction of the sum of US $500,000 which amount was to be retained by AWB as a commission.

The approval is referred to in an email from Richard Fuller to Jim Cooper of AWB dated 19 November 2004, a copy of which was sent to Lindberg and on which appears a handwritten notation of Lindberg stating "OK, but need to see the documents". Further, Lindberg orally approved the execution of the Tigris Agreement dated December 2004 by Dr Richard Fuller on behalf of AWB (International) Ltd in a meeting in around early December 2004 at which Sarah Scales, Lindberg and Fuller were present. and in an executed agreement between Tigris and AWB (International) Ltd dated December 2004 signed by Lindberg. Copies of these documents are available for inspection on reasonable notice.

89A. In or about early December 2004, AWB (International) Ltd entered into an agreement dated December 2004 with Tigris (Tigris Agreement) which provided for the payment of a service fee to Tigris in the amount of US$ 7,087,202.24 after deducting a success fee of US$500,000 payable by Tigris to AWB (International) Ltd.

A copy of the Tigris Agreement is available for inspection upon reasonable notice.

On or about 9 December 2004, AWB paid to Tigris the sum of US $7,087.202.24 purportedly as repayment of the Tigris Debt.

The payment to Tigris is evidenced by the following:

(A) An invoice dated 1 December 2004 issued by Tigris to AWB (International) Ltd in the sum of US $7,087,202.24 after deducting a recovery fee of US $500,000.00 by AWB. A copy of the invoice is available for inspection on reasonable notice.

(B) A document entitled "US$AP Posting Information" which authorises the payment of US $7,087,202.24 to the Tigris bank account (Nat West Offshore (Gibraltar) Ltd Account No 9544-39038571). A copy of the document is may be inspected upon reasonable notice.

(C) A copy of the Bank of New York Consolidated Activity Report which shows that a payment by AWB of US $7,087,202.24 was made into the bank account referred to in sub-paragraph (B) above on 9 December 2004 at 1.04. A copy of the document is available for inspection on reasonable notice.

(D) An executed agreement between Tigris and AWB (International) Ltd dated December 2004The Tigris Agreement. A copy of the agreement Tigris Agreement is available for inspection on reasonable notice.

90A. In or about mid-December 2004, Lindberg informed the AWB Board that:

(a) AWB (International) Ltd had recovered a debt for Tigris and had thereby earned a commission; and

(b) legal advice had been obtained and there had been compliance with all necessary laws;

(c) the contract price for contracts A1670 and A1680 had been inflated in order to recover the debt for Tigris;

(d) AWB had entered into an agreement (the Tigris Agreement) that did not reflect AWB's role in relation to the recovery of the Tigris Debt, nor the commercial character of the transaction as presented by Lindberg to the Board; and

(e) the legal advice had been sought and obtained retrospectively following AWB's recovery of the Tigris Debt through the inflation of wheat prices under the Oil-for-Food Programme, because of concerns about the legitimacy of the circumstances surrounding the recovery of the debt and the payment to Tigris.

Lindberg orally informed the Board of AWB of the above matters in meetings with the Board on 14 December 2004 and 15 December 2004. Copies of the relevant minutes of Board meeting are available for inspection on reasonable notice.

90B. By reason of the matters alleged in paragraphs 16, 17, 28, 29A, 29B, 29C, 30, 31, 33, 34, 34A, 34H, 35, 88A, 89, 89A, 90, 90A and 90B above, Lindberg knew, ought to have known, or knew facts that ought to have put him on a train of enquiry that would have disclosed that:

(a) the Tigris Debt had been recovered by inflating AWB's wheat contracts A1670 and A1680 under the Oil-for-Food Programme;

(b) AWB had entered into the Tigris Agreement, which did not reflect the true circumstances in which the Tigris Debt was recovered; and

(c) the Board of AWB had not been apprised of the matters at (a) and (b)_ above.

90A90C. At all material times from July 1999 to November 2003, Alia was a company partly owned by the Iraq Ministry of Transport.

Alia was incorporated in Jordan in 1994 as a joint venture between Sheik Hussain Al-Khawam and the Iraqi Ministry of Transport. In the period between July 1999 and November 2003, the Iraq Ministry of Transport held a forty-nine percent shareholding in Alia. The Plaintiff also refers to and relies on a letter dated October 2004 from Alia to Chris Whitwell of AWB. Further particulars may be provided prior to trial.

90D. On or about 13 November 1999, Alia entered into a written agreement (the collection agreement) with the ISCWT, a company operated by the Iraqi Ministry of Transport, to collect inland transportation fees on behalf of the ISCWT.

A copy of the collection agreement is available for inspection upon reasonable notice.

90E. Pursuant to the collection agreement, between late 1999 and mid 2003, Alia:

(a) notified the ISWCT upon receipt of purported inland transportation fees (including any incorporated purported services fees) deposited into Alia's bank account;

(b) remitted the amount of such fees less Alia's commission to the ISCWT's bank account at the Al-Rafidain Bank in Jordan.

90B90F. Prior to 21 October 2003, Alia had no legitimate role to playplayed no role in the purchase, importation or transportation of the wheat delivered in respect of Contracts A1111, A1112, A1441, A1670 and A1680 and there was no legitimate basis for AWB to treat it as entitled to any amount on account of such purchase, importation, or transportation.

Under the collection agreement, Alia was only responsible for providing information regarding future shipping and receiving and forwarding to the ISCWT payments made in respect of purported inland transportation fees (including incorporated purported service fees). Prior to 21 October 2003, AWB was not responsible for, and made no arrangements with Alia or any other party in relation to, the transportation of wheat within Iraq. Unlike the appointment of Alia as its protective agent at the Iraqi port of Umm Qasr, AWB did not prior to 21 October 2003 enter into a contract with Alia in respect of the discharge or transportation of wheat delivered to Iraq. AWB did not initiate discussions for or negotiate a contract with Alia concerning the provision by Alia of inland transport services. AWB did not receive any documents describing the logistical details of trucking services rendered by Alia.

Further particulars may be provided prior to trial.

(a) the payments referred to in paragraphs 44, 53 and 63 above were made in contravention of, or were otherwise contrary to or inconsistent with, Resolution 661, in that the said payments resulted in funds and/or financial or economic resources being made available to the Government of Iraq that were not payments for humanitarian purposes or foodstuffs; and

(b) the payments obtained from the UN Escrow Account referred to in paragraphs 43, 52 and 62 (to the extent that these payments related to payments for purported inland transportation fees, including any incorporated purported service fees) and paragraphs 75 and 88 (to the extent that these payments related to the payment of the Tigris Debt) were contrary to or were otherwise inconsistent with Resolution 986 in that these payments were obtained for purposes other than to meet the humanitarian needs of the Iraqi population or the financing of export to Iraq of foodstuffs under the Oil-for-Food Programme.

At all material times, AWB and its subsidiary AWBI AWB (International) Ltd (AWBI) held a statutory monopoly for the export of wheat from Australia, which monopoly was known as the "single desk".

The statutory monopoly was established pursuant to s.57 of the Wheat Marketing Act 1989 (Cth). The term "single desk" is a shorthand description for the legislated position conferred on AWB to be the sole exporter of bulk shipments of Australian wheat.

From 1 July 1999, AWBI held the single desk export rights under the Wheat Marketing Act.

The single desk was of great financial and commercial value to AWB.

The single desk enabled AWB to aggregate the output of thousands of wheat producers across Australia, markets those outputs strategically to around 50 countries worldwide, and manages the risks associated with this process.

Under the single desk, AWB was responsible for marketing all bulk exports of Australian wheat that growers delivered to the National Pool.

The role of a the single desk, which is similar to that of a fund manager, was to maximise net returns to wheat growers who delivered to the National Pool while providing a management fee to AWB for the provision of certain services to operate the National Pool. From 2001, the management fee was performance-based and comprising comprised a base fee (calculated as 1.5% of Gross Pool Value) and an out-performance incentive (calculated as 20% of National Pool returns achieved above a specified benchmark and a hurdle). AWB's revenue from the management fee (including both the base fee and out-performance incentive) was as follows in each financial year from 2002 to 2007:

From 2001 until the single desk was abolished in July 2008In 2001, around 90% of the grains bulk wheat exported from Australia were was exported by AWBI under regulated by the single desk or equivalent arrangements. The single desk ensured AWB was able to sell Australia's wheat crop at premium prices into world markets that were distorted by the high levels of subsidies by the governments of other exporting nations. In 2002, a study of AWB National Pool prices by Econtech, found that, as the single desk manager, AWB achieved on average a premium of $13 per tonne on Pool export sales. It also ensured that AWB did not face any competition in the international wheat markets from any other source in Australia. Australia is one of the largest wheat producers and exporters in the world. The AWB single desk facilitated the export of up to 15 to 18 17 million tonnes of wheat valued at up to $4 $5 billion annually.

Managing exports through the single desk marketing system also enabled AWB to deliver value other than simple market premiums. This value related to research and development, logistics capacity and efficiency, superior information, economies of scope and scale, integration of the value chain, strong customer relationships, continuity of supply, consistent quality, reliable performance and effective risk management.

The single desk achieved a level of international market power that individual growers in Australia could not achieve. Further, by exercising collective bargaining power and expending significant resources to undertake complex marketing and branding activities, the single desk obtained better returns for growers.

Further particulars may be provided prior to trial.

By reason of the matters alleged in paragraphs 92 and 93 above, the risk of harm or substantial threat to AWB's standing or reputation as an exporter of wheat constituted a risk to AWB's right to operate the single desk and was therefore a serious threat to AWB as a whole.

Revelation of AWB's actions in contravening, failing to comply with, or which were otherwise contrary to or inconsistent with breaches of, and failures to comply with, the United Nations Resolutions as alleged in paragraph 91 above caused substantial and irreparable enduring harm to AWB.

(A) Trade with Iraq worth more than $500as much as US$470 million per annum has beenwas forfeited following an announcement by the Iraqi Government in 2005 2006 to suspend purchases of AWB wheat during the Inquiry into Certain Australian Companies in relation to the United Nations Oil-for-Food Programme conducted by Commissioner the Hon Terence RH Cole AO, RFD, QC (Cole Inquiry) and grain production averaging 35-40 million tonnes each year with an estimated value of AUD $8 to $10 billion was damaged. In 2001 and 2002, Australia was the second largest wheat exporting country behind the United States. Between 2003 and 2005, the United States increased sales of US wheat to Iraq. A copy of the AWB announcement to the ASX dated 13 February 2006 notifying of the suspension is available for inspection on reasonable notice,

(AA) As disclosed by AWB's Chairman Brendan Stewart in a press conference on 29 November 2006, AWB's reputation was "shattered by the events of the last year, as [AWB's] role in the Oil-for-Food program has been examined forensically by Commissioner Cole". A copy of the transcript of this press conference is available for inspection on reasonable notice.

(B) On 20 December 2006, the United States Department of Agriculture (**USDA)**government announced the immediate suspension and debarment of AWB and its affiliates from participating in US government programs and contracting with the US government. In a letter dated 28 November 2005 from Lindberg on behalf of AWB to Deputy Prime Minister Vaile, Lindberg referred to a previous decision by the USDA to so suspend AWB (which decision had been reversed with the assistance of the Australian government) and acknowledged that the suspension had caused significant problems for AWB. A copy of this letter is available for inspection on reasonable notice.

(C) The revelation of AWB's actions in contravening, failing to comply with, or which were otherwise contrary to or inconsistent with,breach of the United Nations sanctions resulted in the resignation of Lindberg as Managing Director in 2005, the departures of Charles Stott (resigned on 15 June 2006), Paul Ingleby (redundant on 30 October 2006), James Cooper (resigned on 15 April 2006), Peter Geary (redundant on 3 November 2006), and irreparably substantially harmed AWB employee morale and led to an increase in voluntary turnover requiring a workforce re-engagement programme being implemented within AWB.

(CA) AWB incurred significant costs associated with the Cole Inquiry. For the 2006 financial year, AWB reported costs of $23.7 million associated with the Cole Inquiry in its accounts, and a further $6.6 million in the 2007 financial year.

(D) During 2006, KPMG was engaged by AWB to consider the current governance, internal reporting structures and practices of AWB which resulted in a report by KPMG recommending fundamental changes to corporate practices within AWB including changes to promote ethical and responsible decision making within the board and executive management of AWB.

(DA) During 2006, PWC was engaged by AWB to conduct a review into AWB's international marketing activities.

(E) [deleted]

(F) Legal proceedings have been commenced against AWB in Australia and overseas, including the following which remain on foot:

1. [deleted]

2. [deleted]

3. Watson v AWB Limited (Federal Court) NSD 659/2007; and

4. [deleted]

5. The Republic of Iraq v. ABB AG et al (US District Court for the Southern District of New York) 1:08-CV-05951.

(G) The AWB's share price and market capitalisation have has more than halved since the revelations of breaches of UN Sanctions. When Commissioner Cole was initially given his powers on 10 November 2005, the opening share price for AWB was $5.37. When public hearings commenced on 16 January 2006, the opening share price for AWB was $6.26. When Commissioner Cole presented his report on 24 November 2006, the opening share price for AWB was $2.59. As at 18 December 2007, the opening share price for AWB was $2.63. As at 20 February 2009, the opening share price for AWB was $1.24.

(GA) On 1 December 2006, as a result of the fall in AWB's share price during that year, AWB was removed from the Standard & Poor's (S&P) ASX 100 index. This index consists of the 100 largest and most liquid stocks by market capitalisation in Australia, and represents both the large cap and mid cap components of the S&P/ASX index family, covering 74% of Australian equity market capitalisation.

(HA) S&P revised its credit rating and outlook for AWB as a result of the Cole Inquiry and the implications for AWB's business of the risk of loss of the single desk:

1. On 4 April 2006, S&P affirmed AWB's 'BBB' long-term corporate credit rating, however revised the outlook for AWB from 'stable' to 'negative', citing factors including the ongoing Cole Inquiry as having heightened the risk of a possible deterioration in AWB's credit quality.
2. On 28 November 2006, following the release of the Cole Inquiry report, S&P placed AWB's 'BBB' corporate credit rating and the corporate credit rating of AWB Harvest Finance Ltd (AWBHF) (a subsidiary company which conducted AWB's crop financing business) on "CreditWatch with negative implications" as a result of the risk that AWB would lose the single desk;

1. On 11 January 2007, AWB's 'BBB' corporate credit rating was affirmed, and both AWB and AWBHF were removed from CreditWatch, however S&P retained a 'negative' outlook for both companies; and

1. On 24 August 2007, S&P lowered AWB's long-term corporate credit rating from 'BBB' to 'BBB minus', with a 'negative' outlook, citing the risk that at least some contestable wheat-export services would be provided by grain marketers/handlers other than AWB, thereby reducing the certainty of contributions of service fees and dividends from AWB's export operations.
2. AWB's long-term corporate credit rating has remained at 'BBB minus' since the revision referred to at (d) above.

Copies of the S&P Research Updates for the above revisions are available for inspection on reasonable notice.

(I) On 5 March 2008, the Minister for Agriculture, Fisheries and Forestry, Hon. Tony Burke, released proposed legislation that will On 30 June 2008, the Wheat Export Marketing Act 2008 was assented to. That Act:

(a) abolished AWB's statutory monopoly over wheat exports and the single desk;

(b) repealed the Wheat Marketing Act 1989 (Cth); and

(c) introduced a new accreditation scheme for all Australian wheat exporters, requiring inter alia that the relevant company be fit and proper.

Particulars of the Minister's announcement are at http://www.maff.gov.au/media/releases/2008/019b.html.

But for AWB's breaches of the United Nations sanctions and its other misconduct as alleged above, such legislation is unlikely to have been introduced either so soon or at all.

(IA) As a result of the introduction of the new accreditation scheme under the Wheat Export Marketing Act 2008, AWB has faced, and continues to face, significant competition in the export of bulk wheat from Australia.

Since 1 July 2008, 23 entities have been accredited to export bulk wheat from Australia under the Wheat Export Marketing Act 2008. Twenty-one of those entities are not controlled by, and are competitors of, AWB and its subsidiaries.

In the period 1 July 2008 to 29 March 2009, approximately 7.7 million tonnes of bulk wheat was exported from Australia, of which:

• Approximately 1.5 million tonnes comprised legacy shipments exported pursuant to contracts concluded under the single desk and/or transitional arrangements; and
• Approximately 6.2 million tonnes comprised shipments exported pursuant to the new accreditation scheme under the Wheat Export Marketing Act 2008 (new exports).

Of the new exports, approximately 2.2 million tonnes (or 34 percent) were exported by AWB subsidiaries, while approximately 4 million tonnes (or 64 percent) were exported by competitors of AWB and its subsidiaries.

(J) Further particulars may be provided prior to trial.

Lindberg knew or ought to have known each of the facts alleged in paragraphs 92 to 94 above and that revelation of AWB's actions in contravening, failing to comply with, or otherwise acting contrary to or inconsistently withbreaches of, and failures to comply with, the United Nations Resolutions was likely to cause substantial and irreparable enduring harm to AWB as alleged in, and of the nature particularised in, paragraph 95 above.

Lindberg's knowledge is to be inferred from the matters pleaded in and the particulars to paragraphs 3, 3A, 12I, 12N, 12O, 12P, 18 to 35, 89, 90 and, 90A, 90B, and 96A hereof. The Plaintiff also refers to and relies on a board meeting on 27 April 2005 attended by, inter alia, Lindberg and Dr Richard Fuller in which Lindberg acknowledged that revelations that AWB may have been involved in any impropriety with respect to the Oil-for-Food Program had major implications for AWB's business overseas and to whether the single desk was retained. This meeting was recorded in handwritten notes prepared by Fuller, a copy of which is available for inspection on reasonable notice.

96A. By reason of his position as Managing Director, and the matters alleged in paragraphs 3 and 3A above, during the period from April 2000 to February 2006, Lindberg's responsibilities included the following:

Lindberg was ultimately responsible for the management of AWB in accordance with the policies established by its board;

Lindberg was ultimately responsible for the overall corporate governance of AWB, including the work behaviour and performance of all of AWB's senior executives;

Lindberg was required to take reasonable steps to ensure that he and the other members of AWB's Board were informed of all relevant information that may materially impact upon AWB's performance;

Lindberg was responsible for administering and enforcing the policies and procedures relating to risk management, legal and regulatory compliance and management controls within AWB;

and as a member of the CRRC, Lindberg's responsibilities included:

(e) the assessment and consideration of reports gathered by the Corporate Risk Unit, which investigated all irregular or suspicious activities within AWB; and

(eeea) discussing, formulating and implementing risk minimisation strategies, including such strategies relating to demurrage, shipping and insurance of AWB's wheat shipped the conditions upon which AWB supplied wheat to Iraq;

and from each of the times when he knew or ought to have known of the matters alleged in paragraphs 16 to 35 above, Lindberg's responsibilities included the following:

(f) to take reasonable steps to enquire into the facts and to inform AWB's Board, the CRRC and the audit committee that AWB's contracts for the sale of wheat to Iraq included purported inland transportation fees and purported service fees, that payments of those fees were, or were likely to be, a breach of or otherwise contrary to or inconsistent with, United Nations sanctions relating to Iraq and that obtaining funds from the UN Escrow Account in respect of such payments was, or was likely to be, contrary to Resolution 986;

(fffa) to take reasonable steps to enquire into the facts and to inform AWB's Board, the CRRC and the audit committee that contracts A1670 and A1680 included an amount in respect of the Tigris Debt, and that obtaining from the UN Escrow Account in respect of such amount was, or was likely to be, contrary to or otherwise inconsistent with, Resolution 986;

(fb) to take reasonable steps to enquire into the facts and to ensure that the Tigris Agreement accurately reflected the true circumstances in which the Tigris Debt was recovered, and to inform AWB's Board that the Tigris Agreement, as concluded, did not do so.

(g) to take reasonable steps to enquire into the facts and to ensure that AWB complied with United Nations Resolution 661 and Resolution 986 when selling and exporting wheat to Iraq and obtaining payments from the UN Escrow Account

(h) to take reasonable steps to prevent AWB from entering into contracts for the sale of wheat with the IGB which required AWB to pay purported inland transportation fees, or to obtain funds from the UN Escrow account on account of purported inland transportation fees and the Tigris Debt;

(hhha) to take reasonable steps to enquire into the facts and to inform the ELG and the Board of AWB of the matters set out in paragraphs 23 to 34A and 35 in relation to the proposed payment of the Iron Filings Claim, and to state clearly his objection thereto and recommendation against, and to make a decision not to approve, the mechanism for the proposed payment in relation to the iron filings claimIron Filings Claim referred to therein;

(i) to take reasonable steps to ensure that the payment or proposed payment by AWB of purported inland transportation fees and the iron filings compensation claimIron Filings Claim, and the obtaining of funds from the UN Escrow Account in respect of purported inland transportation fees and on account of the Tigris Debt were disclosed to the United Nations and were approved by it; and

(j) to take reasonable steps to prevent AWB from making payments of the purported inland transportation fees and obtaining payments from the UN Escrow Account on account of the Tigris Debt and the purported inland transportation fees;

(k) to take reasonable steps to ensure that Project Rose was a bona fide attempt to investigate whether AWB, its officers, agents or employees had engaged in any improper conduct in relation to the Oil-for-Food Programme; and

(l) to take reasonable steps to inform AWB's Board and the Project Rose Joint Board Committee that Project Rose was not a bona fide attempt to investigate whether AWB, its officers, agents or employees had engaged in any improper conduct in relation to the Oil-for-Food Programme.

Lindberg's position as Managing Director is pleaded in paragraph 3 above. Lindberg's experience is set out in paragraphs 3 and 3A above. The particular circumstances then pertaining to AWB are alleged in paragraphs 4 to 12R and 16 to 95 above. Lindberg's knowledge is alleged in paragraphs 16 to 35, 88A to 90B and 96 above.

96B. By reason of the matters alleged in paragraphs 3, 3A and 96A above, during the period April 2000 to February 2006, Lindberg owed a duty to AWB to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise if they:

(a) were an officer of a corporation in AWB's circumstances; and

(b) occupied the office held by Lindberg and had the same responsibilities as Lindberg.

The duty arises by reason of s. 180 of the Corporations Act 2001. The particular circumstances then pertaining to AWB are alleged in paragraphs 4 to 12R and 16 to 95 above.

96C. By reason of the matters alleged in paragraphs 3, 3A and 96A above, during the period April 2000 to February 2006, Lindberg owed a duty to AWB to exercise his powers and discharge his duties:

(a) in good faith in the best interests of AWB; and

The duty arises by reason of s. 181 of the Corporations Act 2001.

Having regard to the matters alleged in paragraphs 12 to 12R, 18 to 22A and 36 to 44 (inclusive) (in respect of Contract A1111), paragraphs 12 to 12R, 18 to 22A and 45 to 53 (inclusive) (in respect of Contract A1112), paragraphs 12 to 12R, 18 to 22A and 54 to 64 (in respect of Contract A1441), paragraphs 12 to 12R, 18 to 34A, 35 and 65 to 75 (inclusive) (in respect of Contract A1670), paragraphs 12 to 12R, 18 to 34A, 35 and 76 to 88 (in respect of Contract A1680) and paragraphs 92 34B to 34N and 88A to 96 inclusive above, and in breach of the duty alleged in paragraph 96B above:

Lindberg took no or no reasonable steps to investigate and follow up on the matters raised in the Arthur AndersonArthur Andersen Report referred to in paragraphs 18 to 21 above to ensure that AWB was complying with or otherwise acting consistently with, the United Nations sanctions on trade with Iraq;

Lindberg took no or no reasonable steps prevent AWB from entering into Contract A1111, A1112 or A1441 when each contract provided for the payment of purported inland transportation fees and purported service fees; and

by reason of the matters set out in sub-paragraph (a) and (b) above, Lindberg authorised, permitted and/or assisted AWB to enter into and carry out Contract A1111, A1112 and A1441 in circumstances where he knew or ought to have known:

(i) the contract price included an amount to be paid for purported inland transportation fees and purported service fees, which amount was or was likely to be paid, directly or indirectly, to the Government of Iraq and/or its instrumentalities and funds for which amount would be obtained by AWB from the UN Escrow Account;

(ii) the said payments were or were likely to constitute contraventions of or were otherwise contrary to or inconsistent with, United Nations sanctions established by Resolution 661; and

(iii) obtaining funds from the UN Escrow Account in respect of purported inland transportation fees or purported service fees was, or was likely to be, contrary to or otherwise inconsistent with Resolution 986.

The Plaintiff refers to and repeats paragraph 13 of its further and better particulars dated 11 June 2008, save that each reference to "purported inland transportation fees" shall be read as referring to "purported inland transportation fees (including any incorporated purported service fees").

Lindberg took no or no reasonable steps to ensure that the payment or proposed payment by AWB of purported inland transportation fees, purported service fees and the iron filings compensation claim, and the obtaining of funds from the UN Escrow Account in respect of purported inland transportation fees and purported services fees and on account of the Tigris Debt, were disclosed to the United Nations and were approved by it;

(i) table the Tigris Agreement at any AWB Board meeting;

(ii) inform or advise the Board that the receipt of a commission for assisting Tigris to recover a debt was not reflected in the Tigris Agreement;

(iii) inform or advise the Board of the nature or contents of the Tigris Agreement;

(iv) inform or advise the Board as to how Tigris was entitled to a commission from AWB or AWB (International) Ltd for services allegedly provided by Tigris;

(v) discuss or explain to the Board how the Tigris Debt was collected.

Lindberg made no or no reasonable enquiries of those AWB employees who were responsible for the negotiation and administration of Contract A1670 as to whether:

(i) the purported inland transportation fees and purported services fees, and the proposed recoupment of the Tigris Debt by inflating the contract price for wheat, had been disclosed to and approved by the United Nations;

(ii) obtaining funds from the UN Escrow Account in respect of purported inland transportation fees and purported services fees and on account of the Tigris Debt, and the payment by AWB of the purported inland transportation fees, were permitted under United Nations Resolutions 661 and 986;

(iii) the payment of the purported inland transportation fees and purported services fees was being made in consideration of transportation services or other services in fact being provided to AWB; and

(iv) the purported inland transportation fees were being paid, directly or indirectly, to the IGB, the Government of Iraq and/or its instrumentalities.

Lindberg took no or no reasonable steps to prevent AWB from entering into Contract A1670 when it provided for the payment of purported inland transportation fees and purported service fees, and would result in AWB obtaining funds from the UN Escrow Account in respect of purported inland transportation fees and purported services fees, and on account of the Tigris Debt;

by reason of the matters alleged in sub-paragraphs (d) to (f) above, Lindberg authorised, permitted and/or assisted AWB to enter into and carry out Contract A1670 in circumstances where he knew or ought to have known that:

(i) the contract price included an amount to be paid for purported transportation fees and purported services fees, which amount was or was likely to be paid, directly or indirectly, to the Government of Iraq and/or its instrumentalities, and funds for which amount would be obtained by AWB from the UN Escrow Account;

(ii) the contract price included an amount on account of the Tigris Debt, funds for which amount would be obtained by AWB from the UN Escrow Account;

(iii) the payment of purported inland transportation fees and purported services fees constituted or was likely to constitute a contravention of, or was otherwise contrary to or inconsistent with, United Nations sanctions established by Resolution 661; and

(iv) obtaining funds from the UN Escrow Account in respect of purported inland transportation fees and purported services fees, and on account of the Tigris Debt was, or was likely to be, contrary to or otherwise inconsistent with Resolution 986.

The Plaintiff refers to and repeats paragraph 14 of its further and better particulars dated 11 June 2008, save that each reference to "purported inland transportation fees" shall be read as referring to "purported inland transportation fees (including any incorporated purported service fees)".

Lindberg made no or no reasonable enquiries of those AWB employees who were responsible for the negotiation and administration of Contract A1680 as to whether:

(i) the purported inland transportation fees and the purported service fees, and the proposed recoupment of the Tigris Debt by inflating the contract price for wheat had been disclosed to and approved by the United Nations;

(ii) obtaining funds from the UN Escrow Account in respect of purported inland transportation fees and purported services fees, and on account of the Tigris Debt, and the payment by AWB of the purported inland transportation fees and purported services fees, were permitted under United Nations Resolutions 661 and 986;

(iii) the payment of the purported inland transportation fees and purported services fees was being made in consideration of transportation services in fact being provided to AWB;

(iv) the purported inland transportation fees and purported services fees were being paid, directly or indirectly, to the IGB, the Government of Iraq and/or its instrumentalities.

Lindberg took no or no reasonable steps to prevent AWB from entering into Contract A1680 when it provided for the payment of purported inland transportation fees and purported services fees, and would result in AWB obtaining funds from the UN Escrow Account in respect of purported inland transportation fees and purported services fees, and on account of the Tigris Debt;

by reason of the matters set out in sub-paragraphs (d), (h) and (i) above, Lindberg permitted or assisted AWB to enter into and carry out Contract A1680 in circumstances where he knew or ought to have known that:

(i) the contract price included an amount to be paid for purported inland transportation fees and purported services fees, which amount was or was likely to be paid, directly or indirectly, to the Government of Iraq and/or its instrumentalities, and funds for which amount would be obtained by AWB from the UN Escrow Account;

(ii) the contract price included an amount on account of the Tigris Debt, funds for which amount would be obtained by AWB from the UN Escrow Account;

(iii) the payment of purported inland transportation fees and purported services fees constituted or was likely to constitute contraventions of, or was otherwise contrary to or inconsistent with, United Nations sanctions established by Resolution 661; and;

(iv) obtaining funds from the UN Escrow Account in respect of purported inland transportation fees and purported services fees, and on account of the Tigris Debt was, or was likely to be, contrary to or otherwise inconsistent with Resolution 986.

Lindberg's knowledge is pleaded and particularised in paragraphs 16 to 35 inclusive above. The Plaintiff further refers to and repeats the particulars to paragraph 97(g) above.

Lindberg failed to take any or any reasonable steps to inform or advise the AWB Board that AWB's contracts for the sale of wheat to Iraq included purported inland transportation fees and purported services fees, which fees were, or were likely to be, paid to the IGB or to other Iraqi Government instrumentalities in breach of or otherwise contrary to or inconsistent with United Nations sanctions on trade with Iraq, and funds in respect of which fees would be obtained by AWB from the UN Escrow Account;

(kkka) Lindberg approved or permitted the mechanism for payment of the iron filings claimIron Filings Claim referred to in paragraph 26 above in circumstances where he knew or ought to have known that such payments if actually made:

(i) were, or were likely to be, paid, either directly or indirectly, to the Government of Iraq and/or its instrumentalities; and

(ii) would, or would be likely to, constitute a breach of, or be otherwise contrary or inconsistent with, Resolution 661.

Lindberg's knowledge is pleaded and particularised in paragraphs 16 to 35 inclusive above. The Plaintiff refers to and repeats paragraph 16 of its further and better particulars dated 11 June 2008, save that each reference to "purported inland transportation fees" shall be read as referring to "purported inland transportation fees (including any incorporated purported service fees)".

Lindberg failed to take any or any reasonable steps to ensure that AWB complied with United Nations Resolutions 661 and 986 when selling and exporting wheat to Iraq and obtaining payments from the UN Escrow Account; and

Lindberg failed to take any or any reasonable steps to prevent AWB from making payments of the purported inland transportation fees and obtaining payment from the UN Escrow Account of funds in respect of purported inland transportation fees and the Tigris debt;

Lindberg failed to inform or advise the AWB Board of the existence of and/or the findings contained in the Arthur Andersen Report, particularly in relation to the issue of purported inland transportation fees and the concern that some of those fees were being paid to Iraq;

Lindberg failed to inform or advise the AWB Board of the matters contained in the Deeds of Release referred to in paragraph 12R above;

Lindberg misinformed the AWB Board and allowed others to misinform the AWB Board to the effect that:

Project Rose constituted a comprehensive review of the facts surrounding AWB's contracts with Iraq under the Oil-for-Food Programme, including all contract arrangements and inland transportation arrangements;

That comprehensive review had found no evidence that AWB had any knowledge that monies paid to Alia were passed on to the former government of Iraq; and

That comprehensive review had found no evidence that AWB had made payments to any other person in relation to shipments of wheat under the Oil-for-Food Programme.

Lindberg failed to adequately inform or advise the AWB Board of the allegations raised by the IIC investigators in February 2005, including that the IIC's allegations included the payment of the purported service fees;

Lindberg failed to inform or advise the AWB Board of the true nature and extent of allegations raised by the IIC in September 2005, including allegations concerning the payment of purported service fees, which fees could not be explained by reference to trucking arrangements;

Lindberg failed to inform or advise the AWB Board of the true nature and limitations of Project Rose, or to otherwise correct any of the misrepresentations made by him and others as described above;

Lindberg failed to take any reasonable steps to properly investigate the allegations made in the US Wheat Associates complaint and by the IIC investigators, or the findings made by the IIC, in relation to the payment of purported inland transportation fees and purported services fees; and

Lindberg failed to inform or advise the AWB Board of his own knowledge of any of the matters set out in paragraph 35 above after he became aware of them.

By engaging in the conduct alleged in paragraph 97 above, Lindberg:

failed to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise if they:

were an officer of a corporation in AWB's circumstances; and

occupied the office held by Lindberg and had the same responsibilities as Lindberg; and

In the premises, Lindberg breached the duty alleged in paragraph 96B above.

98A. In the premises, by engaging in the conduct alleged in paragraph 98 above, Lindberg contravened s. 180 of the Corporations Act.

Lindberg engaged in the conduct referred to in sub-paragraphs 97 above(a) to (n)u inclusive;

in so doing, Lindberg failed to exercise his powers and discharge his duties in good faith in the best interests of AWB and for a proper purpose;

in the premises, Lindberg breached the duty alleged in paragraph 96C above.

In the premises, by engaging in the conduct alleged in paragraph 99 above, Lindberg contravened s. 181 of the Corporations Act.

By reason of the contraventions set out in paragraphs 98A to and 100 above, Lindberg is liable to be the subject of a declaration in respect of each contravention pursuant to s. 1317E(1)(a) of the Corporations Act.

within the meaning of s. 1317G(1) of the Corporations Act.

In the premises, Lindberg is liable to pay a pecuniary penalty pursuant to s. 1317G(1) of the Corporations Act in respect of each contravention.

Further, ASIC seeks an order pursuant to s. 206C(1) of the Corporations Act to disqualify Lindberg from managing a corporation for such period as the Court considered considers appropriate.

A. A declaration pursuant to s. 1317E of the Corporations Act that Lindberg has contravened s. 180 of that Act in respect of each of the matters pleaded in paragraph 97 hereof.

B. A declaration pursuant to s. 1317E of the Corporations Act that Lindberg has contravened s. 181 of that Act in respect of each of the matters pleaded in paragraph 98, 99 and 100 hereof.

C. An order pursuant to s. 1317G of the Corporations Act that Lindberg pay to the Commonwealth a pecuniary penalty in relation to each civil penalty contravention in such amount as the Court thinks fit.

D. An order pursuant to s. 206C(1) of the Corporations Act to disqualify Lindberg from managing a corporation for such period as the Court considers appropriate.

F. Such further or other relief as the Court thinks fit.

[1] See key propositions sought to be advanced by ASIC tendered 7 May 2009.

[2] Amended statement of claim of 18 April 2008, [35].

[3] Proposed further amended statement of claim draft 22 April [35].

[5] See s 180 Corporations Act; ASIC v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373 at [99] to [102] per Brereton J; ASIC v MacDonald (No 11) [2009] NSWSC 287; (2009) 71 ACSR 368 at [236] to [242] per Gzell J.

[6] ASIC v Rich [2003] NSWSC 85; (2003) 44 ACSR 341, 352.

[7] See Marchesi v Barnes [1970] VicRp 56; [1970] VR 434 at 437 per Gowens J; ASIC v MacDonald (No 11) [2009] NSWSC 287; (2009) 71 ACSR 368 at [659] to [663].

[8] See, for example, the findings of the role and responsibilities of Peter MacDonald as Managing Director of James Hardie Ltd in ASIC v MacDonald (No 11) [2009] NSWSC 287; 71 ACSR 368 at [344] to [346] per Gzell J.

[14] Submissions of 24 June 2009 [15]

[24] Civil Procedure Victoria [23.02.35].