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SYDNEY - Australian wheat exporter AWB Ltd, found by a government inquiry to have deceived the United Nations by providing kickbacks to the Iraqi government of Saddam Hussein, will separate its wheat export business from the main part of the company.
The move to quarantine the wheat export monopoly from the rest of the company comes ahead of a decision by the Australian government next week on possible changes to the monopoly, known as the "single desk".
"The split proposal will enable AWB Ltd. to become a more efficient and commercially focused organisation with a standard commercial constitution that will facilitate the transition to a more competitive environment," Stewart said in a statement to the Australian Stock Exchange.
AWB's shares fell over 4 per cent to A$2.70 after the announcement, which confirmed earlier newspaper reports. The shares have lost over 60 per cent of their value since January.
AWB chairman Brendan Stewart said he will resign when shareholders approve the split, expected in 2007.
Under the plan, AWB will become two separate companies, a wholly grower-owned single desk manager and a purely commercial agri-business company.
The Australian government is considering a range of options on the future of the wheat export monopoly, including giving it to other Australian grains groups, or moving a veto power on applications for wheat exports from AWB to the government body the Wheat Export Authority, or allowing international grains giants to enter the Australian wheat export trade.
The government has said it will reach a decision next week.
Stewart said in Wednesday's statement that the AWB board "deeply regrets" the manner in which the company's wheat trade with Iraq was conducted from 1999 to 2004 under the United Nations oil-for-food programme.
It also regretted the damage done to Australia's trade reputation, he said.
"The board ultimately accepts accountability for the way in which the wheat trade with Iraq under the United Nations oil-for-food programme was conducted and is committed to making significant changes to ensure it does not happen again," he said.
Under new managing director Gordon Davis, AWB had embarked on a cultural change programme to develop and commit to a set of values, Stewart said.
The government inquiry found that AWB had "a closed culture of superiority and impregnability, of dominance and self-importance".
This led it to deceive the UN and the Australian government in providing A$222 million worth of kickbacks to the government of Saddam Hussein between 1999 and 2003, mainly disguised as trucking fees and service fees.
AWB's decision to fully separate the parent company from subsidiary AWB International, which operates the export monopoly, follows functional separation of the two businesses in July.
The proposal will establish AWB International as a wholly grower-owned manager of the national export pool, with an obligation maximise returns to wheat growers.
AWB Ltd will continue to be a stock exchange listed company whose main business would be the Landmark rural services operation, which it acquired in 2003 for A$825 million.
- REUTERS
