ASIC under fire over AWB investigations

Australia's corporate watchdog was significantly under-resourced to investigate
allegations the Australian Wheat Board paid kickbacks to Saddam Hussein's Iraqi
regime, a court has heard.

In a rare public hearing, an Australian Securities and Investment Commission fraud
investigator revealed three officers "sporadically" reviewed transcripts of the Cole
commission, the 2006 inquiry into the biggest corporate kickback scandal in the
nation's history.
Brendan Caridi, a senior manager with ASIC's fraud investigation unit, estimated
that just five per cent of all the transcripts were read by his staff.
And a national task force led by the Australian Federal Police, established in 2007
to consider prosecuting AWB following the inquiry, did very little investigating in
the first six months, the court heard.
The evidence emerged on Monday during the Victorian Supreme Court civil case against
former AWB boss Andrew Lindberg.
Mr Lindberg is accused of failing in his duties as a director of the wheat exporter
because he knew or ought to have known bribes of up to $US55 a tonne of wheat were
being paid to Iraq in contravention of UN sanctions.
Mr Lindberg's lawyers took action on Monday to prevent a second case against their
client going ahead.
The fresh legal action was launched three weeks after Justice Ross Robson began
hearing the first civil case against Mr Lindberg.
In the second case, ASIC alleges Mr Lindberg failed to tell the AWB board that the
company paid more than $225 million to Saddam Hussein's regime.
The corporate regulator alleges Mr Lindberg misled the board because he knew about
the illicit payments disguised as "trucking fees" as far back as 2003.
David Collins, SC, for Mr Lindberg, argued that ASIC's second case against his
client was "vexatious", "oppressive" and "unfair" and should be dropped.
He also said it was an abuse of process and "would bring the administration of
justice into disrepute".
Mr Collins questioned why the allegations were not filed at the same time as the
first civil case, in December 2007.
Mr Caridi said the second allegations were not filed because ASIC had not yet
uncovered the specific evidence, which it says did not come to its attention until
earlier this year.
Under cross-examination from Mr Collins, Mr Caridi admitted that in the first six
months of the national task force set up to investigate prosecuting AWB, "very
little investigation activities occurred".
Nine ASIC officers were on the task force but no witnesses were interviewed and no
material was gathered from the Prime Minister's office, Mr Caridi said.
This prompted ASIC to decide in August 2007 to withdraw from the task force and set
up its own investigation, boosting staff numbers on the case to 19.
The application to throw out the second case continues on Tuesday before Justice
Robson.