AWB Limited

The AWB was founded in 1939 to regulate the wheat market after the excesses of the Great Depression. The single desk dates to this period. This type of arrangement was not unique to Australia, as the Canadian Wheat Board was created in 1935 in a similar fashion (but its history dates back to an earlier wheat marketing board created during World War I, and also includes the experience of cooperative wheat pools during the 1920s).

For much of its early history, it was a government-run and owned company. In July 1999, it was restructured as a private company. It offered "class A" shares to those who met its definition of growers and who had the ability to elect the majority of its board and chairperson, and from August 2001, 'class B' were publicly traded on the Australian Securities Exchange. In 2008, constitutional amendments were passed. Despite resistance from several wheat lobbies and industry groups, it consolidated ownership of AWB into one type of share, giving growers no special consideration. This change was proposed by the AWB management as necessarily to having a simpler, lower-risk business model.

After privatisation, AWB grew to incorporate a number of subsidiaries to diversify its income away from its wheat exports. Its subsidiary businesses include GrainFlow to manage collection of grain from farmers to ports, companies to ship the grain overseas to customers, and Landmark rural services.

In the years immediately following the Cole Inquiry, AWB continued to be dogged by bad performance.

Following the publication of the Cole Inquiry, a new management team was installed under the leadership of Gordon Davis who was recruited from Orica in August 2006. Davis successfully reformed the constitution and the shareholder structure to consolidate into 1 class of shareholder.

This new management team has not been entirely without controversy. On 26 April 2007, Yahoo News reported that AWB also breached US sanctions on Iran. These sanctions prohibit American citizens and companies using American currency from trading with Iran. In 2006, AWB's US subsidiary attempted to pay an Iranian transport company approximately $1 million, in clear breach of the US sanctions.

In 2009, the company faced difficulties in another new market, when it was forced to recapitalise the balance sheet after the company produced significant losses from the expansion of trading activities into Brazil under Davis.

Oil for food scandal

Previously a low profile organisation, the AWB made headlines in late 2005 when it was alleged that it had knowingly paid kickbacks to the Iraq Government, in violation of United Nations sanctions and Australian law. Following the Iraqi invasion of Kuwait in 1990, the United Nations had imposed a financial and trade embargo on Iraq. However, after facing criticism over the humanitarian impacts of the sanctions, the UN from 1995 until late 2003 allowed Iraq to trade oil on the world market in exchange for food, medicine and other humanitarian needs.

Despite this, at the insistence of the Iraq government of dictator Saddam Hussein, the AWB agreed to pay "transportation fees" of around $A$290 million. This money was paid to a Jordanian transportation company, Alia. Alia kept a small percentage of the fees, and paid the remainder onto Saddam's government. This breached the sanctions placed on the Iraqi regime.

The government-sanctioned Cole Inquiry into the company's role in the scandal has been completed and was tabled by Attorney-General Philip Ruddock on 27 November 2006. The report found that, from mid-1999, AWB had knowingly entered into an arrangement that involved paying kickbacks to the Iraqi government, in order to retain its business. The Inquiry recommended that 12 people be investigated for possible criminal and corporations offences over the scandal.

At the height of the investigation, the single-desk arrangement from which AWB benefits came under criticism. In 2006, the Australian Grain Exporters Association asked the Government to remove AWB's monopoly export powers. The oil-for-wheat scandal cast doubt among some grain exporters over the trust placed in the company, especially as they lost the ability to export to Iraq during the length of the Cole Inquiry, losing one of their biggest markets.

The scandal resulted in international condemnation and litigation. On 11 July 2006, North American farmers claimed $1 billion in damages from AWB at Washington, D.C., alleging the Australian wheat exporter used bribery and other corrupt activities to corner grain markets. The growers claimed that AWB used the same techniques to secure grain sales in other markets in Asia and other countries in the Middle East. The lawsuit was dismissed in March 2007.

In August 2009, the Australian Federal Police dropped their investigation into any criminal actions undertaken by AWB and others in this matter. This decision came after Paul Hastings QC declared the prospect of convictions was limited and "not in the public interest". The Australian Securities & Investments Commission then proceeded with several civil cases against six former directors and officers of AWB. AWB's former managing director Andrew Lindberg and former chief financial officer Paul Ingleby were ultimately fined and banned from managing a company for one year. Former chairman Trevor Flugge was also fined, and banned from managing a company for five years. A civil suit brought by shareholders of AWB was settled out of court for $39.5 million in February 2010.