us wheat industry plans legal attack on awb

US wheat industry plans legal attack on AWB
13:26, Tuesday, 28 November 2006

SYDNEY, Nov 28 (Reuters) - The U.S. wheat industry is
considering taking legal action against AWB Ltd. and its
monopoly grip on Australia's wheat exports after an inquiry found
that AWB had misled the United Nations over payments to secure
wheat deals in Iraq.

The Australian government inquiry, published on Monday, found
that AWB broke United Nations oil-for-food sanctions against Iraq
with the payment of $222 million in kickbacks to the government
of Saddam Hussein between 1999 and 2003.

U.S. Wheat Associates, which represents United States wheat
exporters who have long complained that AWB's monopoly inhibits
competition, said on Tuesday that AWB's subsidiary in the United
States could be liable under U.S. law.

"The funds that came from the oil-for-food programme moved
through U.S. banks," Alan Tracy, president of U.S. Wheat
Associates, told ABC radio. "There are a lot of connections here
and possible violations of U.S. law."
Mark Samson, the U.S. group's vice president for South Asia,
told Reuters from Singapore that the U.S. wheat industry was
concerned about AWB's utilisation of U.S. credit programmes.

AWB spokesman Peter McBride said AWB had no comment at this
stage.

Samson also said that several large U.S. grain traders were
interested in becoming active players in exporting from the
Australian market, in the event that the government decides to
strip AWB of its export monopoly.

Prime Minister John Howard said after the release of the
inquiry into AWB by Commissioner Terence Cole, that the
Australian government was urgently considering the future of
Australia's wheat export system.

It would be very beneficial for U.S. grains traders to engage
in price discovery in the Australian export market, Samson said.
"This would allow them to have another source from a market that
usually has a pretty good supply of wheat."

Global grain trading giants have already expressed interest
in entering the Australian wheat export industry, most recently
through the Australian Grain Exporters Association, which
represents Cargill Inc., Louis Dreyfus, Noble Group ,
Bunge Ltd. , Toepfer and Glencore.

The wheat export monopoly system, which most Australian
farmers still support in the belief that it produces higher
export prices, has been under attack for years by the world's
largest wheat exporter, the United States.

Australia is the second-largest exporter and competes
fiercely with the U.S. on world markets.

"We have serious concerns about the monopoly, over the
serious distorting effects it has on world trade. We're quite
confident that there will be a serious look at these issues now,"
Tracy of U.S. Wheat Associates told ABC radio.

But Samson said on Tuesday that the U.S. wheat industry would
not gain an advantage from the AWB scandal, despite the Cole
report's view that AWB had "cast a shadow over Australia's
reputation in international trade."

Still, Samson said the outcome of the AWB scandal might now
produce a level playing field for U.S. exporters.

Australian Foreign Minister Alexander Downer said on Tuesday
that AWB had "done a terrible thing" and had "put Australia in a
difficult position".

"But don't embrace the American wheat growers. They are
pumping the American line," he said.

AWB has already faced a threatened, but withdrawn, lawsuit by
U.S. farmers claiming $1 billion in damages.