Plaintiff v Defendant

Plaintiff v Defendant - [2012] VSC 339 - VSC 2012 case summary — Zoe

[111]

"Inland Transportation: USD 15 p/mt under phase 7

New contract - Phase 8 - 1 million

15 Sept-28 Jan

Chartering will pay ocean freight direct to Owners and trucking direct to nominated trucking company until otherwise advised."

[33] Around the time that the emails in the preceding paragraph were sent, there had been a reorganisation of the International Sales and Marketing Area. Mr Goodacre had been appointed general manager and was responsible for the International Sales and Marketing area. Mr Stott reported to Mr Goodacre. The new structure was put in place by Mr Goodacre and Mr Stott because of their concerns with the international sales and marketing team.

[34] On 21 September 2000, Mr Ingleby sent an email to a number of AWB employees headed "Chartering", which stated:

"just confirming that tomorrow the go fwd charteting [sic ] plan will be agreed and confirmed as previously promised.

this is urgent as we seem to find new ways for chartering to lose money each month - this month Yemen demurrage (0.5m) and Iraq trucking (0.5m) - are we sure these are to charterings account??

regards PJI"

[35] Mr Ingleby received a reply to his email of 21 September 2000 from David Cowan of AWB Chartering, which stated:

Michael Watson has argued, at length, that the trucking fee was not for our [AWB Chartering's] account.

Mark Emons & Nigel O. wanted to disguise AWB payments into Iraq for trucking fees

This was achieved by chartering taking a forward contract with Ronly to combine the freight and the trucking payments.

The new regime [at AWB] has not supported this agreement and Chartering have incurred the cost to buy out of the deal.

[36] Mr Ingleby also received a reply to his email of 21 September from Stott which stated:

In response to your queries:

I am advised by David [Cowan - AWB Chartering] that the USD 300,000 (AUD500k) payment to Ronly relates to the US 0.20cents per tonne fee that we agreed to pay for Ronly making Iraq freight and land transport payments on behalf of AWB.

[37] On 12 June 2001, Hogan sent an email addressed to Mr Alvares and Mr Morriss, and copied to Mr Ingleby and four others that set out details of Contracts A0784 and A0785, which included amounts for the inland transportation fees of USD$46.70 and USD$46.90 respectively. The email also stipulated that payments of the inland transportation fees would be made in Euros around 50 days prior to receiving repayment for those inland transportation fees from the UN escrow account.

[38] On 10 and 13 September 2001, Hogan sent emails to Mr Ingleby and Mr Goodacre (copied to others) advising that payments for inland transportation could be withheld in the event that AWB did not receive a letter of credit in respect of a shipment of wheat to be delivered to the IGB.

[115]

"AWB holding 2nd payments due to Iraq for Inland Transport equals USD$4.5 million. By 22nd September, this amount will be USD$8.864 million (which almost covers Anassa[10]). Inland Transport Payments will be held until L/C is on our counters."

[39] On 21 December 2001, Mr Ingleby was one of a number of recipients of an email from Hogan that stated that, on 20 December 2001, AWB had sold one million tonnes of Australian hard wheat to Iraq. The email set out the details of Contracts A1111 and A1112, which included amounts for "Inland Transport" of EU55.17 for Contract A1111 and EU55.40 for Contract A1112.

[40] On or about 26 July 2002, Mr Ingleby attended a meeting of the ELG in which a briefing note on Iraq was discussed. The briefing note referred to necessary actions in dealing with the Iraq market, including finalisation of a comprehensive crisis management plan to ensure AWB was best positioned in the event of any outbreak of hostilities and the development of a broad strategic approach towards Iraq, including trade and marketing, international governmental relations, Federal government relations, investment, risk management, grower and public relations.

[41] On 16 September 2002, Geary sent Mr Ingleby an email which forwarded an email from Long headed "Letter to Ronly" that stated:

Background is that this vessel hit the berth at Wallaroo, 10/4/00 and there is currently an arbitration in London going on between Amarantos Shipping Co (owner) and Atlantic and Orient Shipping (A and O), operator/time charterer. Legal advice is that owners claim is unlikely to be upheld as it revolves around the issue of charters providing a safe port. If owners win, they will pursue Ronly. Nori has been working with us for several weeks. He wants indemnity from AWB for the AUD4m in case the arbitration rules in favour of the owner.

Ronly were involved in paying inland trucking charges and chartering vessels for us because of alleged problems with the UN/IGB. AWB paid Ronly in advance ($12 per tonne) and Ronly paid (via some shelf company) the Jordanian trucking company.

Mark Emons and Mike Watson set the deal up.

... AWB paid Ronly USD20 cents per tonne facilitation fee. ...

Nori has mentioned that Paul and Trevor are aware of the deal and sanctioned it.

Nori called T Flugge Fri night complaining about our position. TF called me and wants to distance himself.

[42] Mr Ingleby replied to Geary's email of 16 September 2002 on the same day, stating "I didn't know about these deals until the parties left AWB. (usually done by IS&M and nigel) It could get messy but we have no choice than to pursue correct and ethical path."

[43] Mr Ingleby was of the view that the claim by the owners should be defended and he was conveying that view to Mr Geary.

[44] On 5 December 2002, Mr Ingleby was one of 19 recipients of an email from Whitwell entitled "SALE 1 MILLION TONNES TO IRAQ" advising that on 4 December 2002 AWB had concluded a sale for 1 million tonnes of Australian Hard wheat to Iraq (Contracts A1670 and A 1680). The email also provided details of price components of the contract and stated "Inland transport not included in price and to be mutually agreed."

[45] In March 2003, an issue arose concerning the pre-payment of the inland transportation fees in respect of a shipment of wheat on a vessel named the Pearl of Fujairah. This vessel had been directed away from Iraq as a result of the US-led invasion. This issue was the subject of email correspondence and was a topic of discussion in meetings of the Iraq Emergency Response Team (IERT).[11]

[137]

[57] The revelation of AWB's involvement in facilitating payments of hard currency to the Government of Iraq between mid 1999 and March 2003 in breach of the UN resolutions caused significant harm to AWB and to its members.

[58] Among other harm suffered, including reputational damage and loss of staff morale, there was a significant reduction in the share price between January 2006 and 30 October 2006, shortly before the Cole Report was published. In that period, AWB's share price ranged from $6.26 at the commencement of the Cole Inquiry on 16 January 2006 to a closing price of $2.52 on 31 October 2006. AWB's share price did not subsequently recover. The company was ultimately taken over at a price of $1.50 per share by a Canadian company, Agrium Pty Ltd, and was delisted on 10 December 2010. However, it is difficult to establish the extent of the link between the AWB share price and the revelation of its involvement in the OFFP, particularly after early 2006, as it was a complex situation and other adverse factors emerged after that time which also impacted upon AWB's share price, in particular ongoing drought conditions in growing areas which resulted in reduced wheat production.

[59] Further, on 30 June 2008 the Wheat Export Marketing Act 2008 came into effect, which repealed the Wheat Marketing Act 1989, abolishing AWB's statutory monopoly over bulk wheat exports (the Single Desk), and introducing a new accreditation scheme for all Australian wheat exporters. As at 24 March 2009 there were 28 accredited wheat exporters, including three subsidiaries of AWB. In his second reading speech the Minister for Agriculture, Fisheries and Forestry cited the Cole Inquiry as one of the factors providing the impetus for abolishing the single desk. The revelation of AWB's involvement in the OFFP after 2006 may have hastened the abolition of the Single Desk, but it is not possible to say it otherwise would not have been abolished.

[60] AWB has been sued in Australia and in the United States for its role in facilitating payments to the Hussein regime. AWB settled a class action in Australia in about March 2010 on terms including that AWB paid the applicant and group members the sum of $39.5 million in damages, interest and costs. Proceedings in the United States are continuing.

[61] AWB has incurred significant legal costs in responding to the Cole Inquiry, subsequent investigations and legal proceedings (including ASIC's Supreme Court of Victoria proceedings and related proceedings in the Federal Court of Australia). In the period from 1 July 2008 to 30 June 2010 alone, those costs amounted to $38.525 million.

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