David Johnston (WA, Liberal Party) Share this | Hansard source

In the past month, I have received more than 100 emails and telephone calls from wheat growers in Western Australia seeking to explain their views and concerns with respect to export wheat marketing in Australia, particularly with respect to the 2006-07 crop. I have taken considerable time to speak to many personally and to write to them to explain my concern as to the wisdom and propriety of permitting AWB to continue to operate the statutory export wheat marketing monopoly as established by the Wheat Marketing Act 1989, as principally amended in 1998.

I pause to say that AWB has displayed contemptuous corporate culture with wheat growers, with shareholders—both A and B class—and with the general public. Alarmingly, the arrogance and contempt continues to this day, notwithstanding the commissioner’s finding. It seems to me that this company, amazingly and incredibly, harbours a victim mentality to its current status. The real victims in this sorry saga are the courageous and trusting wheat growers, mainly from Western Australia and South Australia, who have relied upon this company to provide stability and reliability in the production and sale of wheat by our country.

I have heard many speakers in this chamber talk about the fear campaign relating to AWB. Let us have a look at this company, which I maintain has not learnt any lessons from the Cole commission. It has conceded, begrudgingly over a long period, that the legal fees associated with the running and defending of its position in the commission amounted to $35 million. I am yet to see proper accounting for that.

Shareholders and growers should be fully informed, as should the market. As you know, Madam Acting Deputy President, a task force will be established as to the prosecution of 11 AWB personalities. I am yet to see a proper accounting of and provisioning for the legal fees associated with that matter—for defence of the likely charges to flow from the task force inquiry. So we have a huge contingent liability rivalling the $35 million on the horizon for this company.

I turn to the taxation situation of this company. This company apparently claimed $A290 million as a tax deduction, which it paid to Alia. Those of us familiar with the laws relating to taxation assessments know that upon reassessment this company will be required to put on the table the cash differential of what it paid and what it should have paid whilst we await the outcome of its objection to the assessment. My estimation of that is somewhere between $100 million and $150 million in cash on the table.

Moving on, I draw the chamber’s attention to the Statoil case in the United States, which was prosecuted under foreign corrupt payments legislation. Statoil had paid $5 million in a bribe to the Iranians to secure an oil and gas contract in Iran. It pleaded guilty to the prosecution case and was fined $21 million. Extrapolating that figure means that, were AWB to be charged and convicted, the fine is likely to be somewhere around a billion dollars. I also mention that there is a class action looming. Those involved are being egged on and encouraged by Senator Harkin and Congressman Peterson from Minnesota. A class action against AWB would involve considerable expense, given the nature of the legal fees to defend it and any outcome.

Even worse than any of those things is this. AWB is currently the largest grain trader on the Chicago board of trade. Were it to lose the right to trade there and were this entity to retain the single desk operating rights, growers would be left without a hedging possibility on the largest grain-trading market in the world. In other words, this single desk monopoly holder would be failing growers if it were to be banished from participating in what would be a risk management exercise in the nature of hedging. Lastly, the Iraqi government wants the $290 million that was apparently paid to Saddam Hussein.

The account I have just given has been said by senators in this place to be fear mongering and part of a fear campaign. Let me say that it is so frightening that AWB Ltd gave an indemnity to AWBI over legal fees and tax. If it is a fear campaign, why would the company that runs AWBI grant an indemnity—an indemnity that has never been fully explained or fully set out? Is it in writing? If so, what are the terms?

The issue of the demerger we saw last week was not adequately explained, which says to me that this whole thing was simply a charade to try to look good and to be seen to be doing something. Even worse than that, and this is in answer to the allegation of a fear campaign, AWB has set up trusts which it brazenly acknowledges are to protect individual pool years from creditors. That is the cat out of the bag. If they have got to set up trusts to quarantine and insulate each annual pool—and they have acknowledged to the Stock Exchange that they have done this—the question is: why? The answer is that the liabilities on the horizon for this company are huge and dangerous. This company has betrayed the trust and faith of wheat growers.

Chapter 5 of the Corporations Law deals with insolvency. The authorities will stroll through these trusts as if they are having a Sunday walk in the park. This is a sham, and it will be seen to be a sham. So, when we see a demerger of AWBI from AWB, what is the end result? No advance explanation for growers and absolutely no assistance to them as to where they stand. In Western Australia growers have voted very accurately according to what their understanding is, and they have not given their wheat to this corrupt company for good reason. This bill solves that problem.