re: single desk has gone...smh says (part 1)
Monopoly: AWB can kiss it all goodbye By Elizabeth Knight February 16, 2006 Page 2 of 2 ABACUS
JOHN HOWARD yesterday was at last forced to take the first step in what will undoubtedly conclude with AWB losing its monopoly over the export of wheat. It's a nonsense that it has taken him this long to do it - just as it's ridiculous that the government of Iraq had to force the issue.
The Prime Minister has now conceded that because Iraq won't deal with AWB for the current wheat tender, one option is to allow someone else to export wheat until the Cole inquiry delivers its findings.
Of course AWB had to "voluntarily" relinquish its right to veto others exporting wheat - which it did after its chat yesterday with Howard and other relevant ministers. The trouble for the Government is that it would have to change legislation to legally force AWB to lose its monopoly export status.
Nonetheless AWB is now in a position where it can kiss this monopoly goodbye, along with all its attendant financial benefits.
The only sensible thing the AWB chairman, Brendan Stewart, has done to date is sack the company's chief executive, Andrew Lindberg, and recognise yesterday that the meeting with Howard and its potential outcomes was serious enough to suspend trading in the company's shares.
Make no mistake, AWB shares should fall like a stone when they resume trading today. Not because potentially losing one contract to Iraq is a big deal but because it might finally convince some doe-eyed investors and analysts that the good old days are over for AWB.
For the smart money, the writing has been on the wall for AWB since the astounding allegations of bribery and corruption started to surface. But many in the stockmarket have been stoic in their views that any falls in AWB's share price simply present an opportunity to buy.
The financial damage that AWB will suffer could take years to play out if/when it loses this monopoly. The best case scenario for AWB is that it will still be able to export wheat but will face competition. However, this may not be the best outcome for many farmers, who have been pretty vocal about the benefits of selling their export crop into a single pool which is marketed offshore by one body.
On the other side of the equation, the lessons learned from AWB about the corruption that can be born of monopoly power will resonate throughout the Government.
(And let's not forget that this episode began when the Australian Wheat Board was a government body and therefore right under the nose of authorities.)
So the Howard Government ultimately needs to decide whether AWB gets any slice of the action. From an ethical standpoint it deserves none.
The Cole inquiry was told yesterday that new evidence showed AWB always knew the millions of dollars it paid to a Jordanian trucking company had ended up in the hands of Saddam Hussein's regime.
Losing the monopoly will take a heavy toll. It is AWB's biggest single source of income and a great way to capture a customer base for many of its other services.
The challenge to restore credibility and earnings and ultimately a respectable share price will be enormous but the first task will be finding a new chief executive.
AWB Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
