The Australian Securities and Investments Commission (ASIC) has lodged an application in the Victorian Court of Appeal for leave to appeal from a judgment of the Supreme Court dismissing ASIC’s proceeding against Mr Peter Geary, the former Group General Manager Trading for AWB Ltd (AWB).
The matter is expected to return to court on a date to be fixed.
ASIC will not make any further comment in relation to this matter — or in relation to ASIC's proceeding against Mr Trevor Flugge, the former Chairman of AWB — at this time.
Background
In 2004, the United Nations (UN) established an Independent Inquiry Committee (IIC) to investigate allegations that the Iraqi government had evaded Security Council Resolutions (which imposed sanctions on Iraq) through bribery, kickbacks and surcharges on oil and illicit payments in respect of humanitarian goods.
In October 2005, the IIC presented its findings that, among other things, kickbacks were paid to Iraq in connection with contracts with various foreign companies, including AWB, in relation to the supply of humanitarian goods.
Arising from the IIC findings, the Australian Government established a Commission of Inquiry (the Cole Inquiry) in November 2005 to enquire into, among other things, matters relating to AWB’s supply of wheat to Iraq under the United Nations Oil-for-Food Program (OFFP).
In his final report in November 2006, Commissioner Terence Cole made various adverse findings against, among others, officers of AWB and recommended that those matters be investigated by relevant agencies, including ASIC and the Australian Federal Police (AFP).
In February 2007, a taskforce was established by the Australian Government, led by the AFP, to investigate matters arising from the Cole Inquiry, with ASIC contributing staff to that taskforce. In August 2007, ASIC withdrew its staff from the taskforce and commenced a separate independent investigation.
In December 2007, ASIC commenced civil penalty proceedings in the Supreme Court of Victoria against six former directors and officers of AWB, namely Trevor Flugge, Andrew Lindberg, Paul Ingleby, Peter Geary, Charles Stott and Michael Long (refer: 07-332MR).
In November 2008, the Court ordered a stay of ASIC’s proceedings against each of the defendants (except Mr Lindberg, AWB’s former Managing Director) until such time as they were advised that no criminal proceedings would be instituted against them.
In August 2009, the AFP announced that its investigation into criminal matters arising from the Cole Inquiry had been discontinued.
In May 2010, ASIC, terminated its investigation into suspected criminal contraventions of the Corporations Act (Act) based on its consideration of the evidence it had gathered. As a result of this and the earlier decision by the AFP to discontinue its investigation, the Court ordered on 2 August 2010 a lifting of the stay of the proceedings against Messrs Flugge, Ingleby, Geary, Stott and Long.
In August 2012, Justice Robson of the Supreme Court of Victoria ordered that Mr Lindberg be disqualified from managing corporations until 12 September 2014 and pay a pecuniary penalty of $100,000 for contravening section 180(1) of the Act which requires company directors and officers to discharge their duties with due care and diligence (refer: 12-191MR).
In March 2013, the Victorian Court of Appeal ordered that Paul Ingleby, AWB’s former Chief Financial Officer, be disqualified from managing corporations for a period of 15 months and pay a pecuniary penalty of $40,000 (refer:13-055MR).
In December 2013, ASIC discontinued its proceedings in the Supreme Court of Victoria against Charles Stott and Michael Long for alleged breaches of their duties as officers of AWB in connection with the OFFP after ASIC formed a view that it was no longer in the public interest to pursue its claims (refer:13-363MR).
On 15 December 2016, Justice Robson of the Supreme Court of Victoria found that Mr Flugge failed to make adequate enquiries about the propriety of the payment of inland transportation fees and as a consequence, failed to stop AWB engaging in improper conduct in paying the inland transportation fees to the Government of Iraq, in contravention of section 180(1) of the Act.
The Court also found that it had not been established that Mr Flugge knew that AWB was making payments to Iraq contrary to UN sanctions and, therefore, was not satisfied that he had breached section 181 of the Act (refer: 16-441MR).
Also, on 15 December 2016, Justice Robson dismissed the proceedings against Mr Geary, finding that he did not contravene his duties as an officer in connection with AWB's supply of wheat to Iraq under the OFFP (refer: 16-441MR).
The Supreme Court has listed the hearing of further matters in relation to the case against Mr Flugge, including orders as to costs and any penalty for the contravention, for 14 March 2017 at 10.00am. The Court has also extended the period for any application for leave to appeal by either ASIC or Mr Flugge until 28 days after the date of the Court’s judgment on penalty.
Editor's note:
The Court of Appeal heard ASIC's appeal in the proceedings against Mr Geary on 8 , 9 and 10 November 2017. The Court reserved its decision.
Editor's note 2:
On 7 December 2017, this media release was updated to reflect the length of Mr Lindberg and Mr Ingleby's disqualifications, and add Mr Lindberg's name to the list of former directors and officers of AWB.