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.
AWB Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
