Australia: Former AWB CFO admits contraventions of the Corporations Act 2001

Last Updated: 2 July 2012
Article by Caroline Cox
  • ASIC has secured another breakthrough in its civil proceedings against former directors and officers of AWB, with former CFO Paul Ingleby becoming the second former AWB director or officer to acknowledge in court that he had contravened the Corporations Act 2001.
  • Mr Ingleby acknowledged a failure to act with the care and diligence required of an officer in his position. ASIC and Mr Ingleby have jointly submitted the appropriate penalty should be a $40,000 fine and a 15 month disqualification from managing corporations.
  • This follows former AWB Managing Director Andrew Lindberg also recently admitting to Corporations Act contraventions1. Mr Ingleby and Mr Lindberg's admissions were made in civil proceedings brought by ASIC, and follow ASIC's recent success against former James Hardie directors and officers. No criminal charges, including charges of foreign bribery, have been laid against AWB or its representatives.

Former AWB Chief Financial Officer, Paul Ingleby, has become the second former AWB director or officer to make an admission to the Supreme Court of Victoria to a contravention of section 180(1) of the Corporations Act 2001. Mr Ingleby has acknowledged that he failed to exercise his duties as AWB officer with the degree of caution and diligence that a reasonable person in his position would exercise.

In a joint submission to the court, ASIC and Mr Ingleby indicated that the appropriate penalty should be a $40,000 fine and a 15 month disqualification from managing corporations.

Justice Robson reserved his decision, but indicated in court that he would not increase that penalty.

The acknowledgements by Mr Ingleby relate to a failure to exercise his powers and discharge his duties as an AWB officer with the requisite care and diligence.

In circumstances where he knew that AWB's trade with Iraq was conducted under the UN Oil-for-Food Programme (OFPP) prohibiting direct payments to the Iraqi Government, and that payments from a UN escrow account to AWB in relation to Iraqi wheat supply contracts could only be made for OFPP purposes, Mr Ingleby has acknowledged:

  • having information available to him as to the legitimacy of certain fees, and information suggesting that those fees were being ultimately paid to the Iraqi Government (and being recovered by AWB from a UN escrow account),
  • taking no steps to ascertain whether the fees were in fact ultimately being paid to the Iraqi Government, and
  • taking no (or no reasonable) steps to inform the AWB Board of the information which suggested that payments of the fees were ultimately being paid to the Iraqi Government.

ASIC's investigation into AWB followed recommendations in the November 2006 report of the Cole Inquiry into the UN Oil-For-Food Programme. No criminal charges were laid in relation to AWB's conduct, including in relation to foreign bribery, and related investigations by the AFP were discontinued in August 2009.

In December 2007 ASIC commenced civil proceedings against Mr Ingleby and five other former directors and officers of AWB. The development in relation to Mr Ingleby follows recent admissions in court by former AWB Managing Director Andrew Lindberg to contraventions of the Corporations Act for failing to act with the required care and diligence as an AWB director.

The court has reserved its decisions in relation to Mr Ingleby and Mr Lindberg. ASIC's civil proceedings against former Chairman Trevor Flugge, former Group General Manager Trading Peter Geary and former General Managers of International Sales and Marketing, Michael Long and Charles Stott, are ongoing.

The deals between ASIC and Mr Ingleby, and ASIC and Mr Lindberg, for contraventions in relation to their duties as officers or directors follow ASIC's recent success against former directors and officers of James Hardie.

Footnote

1 Freehills article, ' Former AWB director admits contraventions'

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