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"AWB agrees Aus $40M payout over Iraqi bribes" AstraZ & GSK mentioned...

February 15 2010 at 12:33 PM

 "10:38 UK, 15th February 2010, by

AWB agrees Aus$40m payout over Iraqi bribes

AWB has agreed to pay Aus$39.5m (US$35m) to settle a class action suit bought by disgruntled shareholders, getting close to drawing a line under the group's scandal of paying bribes to Saddam Hussein's regime.

Shares in the Australian grain handler jumped 9%.

AWB said that the deal, which as yet requires court approval, had been agreed without the group admitting liability over the kickbacks episode, involving payments made to the former Iraqi regime between 1999 and 2003.

An inquiry in 2006 found that the payments, which were disguised as fees to a Jordanian company, were made in exchange for access to the country's wheat market.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

More than 1,000 shareholders had backed the three-year-old class action claim, which originally sought more than Aus$100m to losses relating to the scandal.

Besides being blamed for denting AWB's share price, the kickbacks episode also led to the group losing its monopoly over Australian wheat exports, allowing rivals such as ABB Grain, CBH Group and GrainCorp in on the market.

One outstanding case 

Peter Polson, the AWB chairman, said that the "commercially acceptable" settlement was "in the best interests of investors.

"The company is pleased to put this matter behind it as this is the final legal matter directed against the company in Australia arising out of activities under the United Nations Oil For Food Program," Mr Polson added.

The settlement follows the dismissal of several class action cases filed in the US. AWB was among a number of companies, including AstraZeneca, Dow Agrosciences and GlaxoSmithKline, who last month in New York filed a motion to dismiss a civil lawsuit brought by the Iraqi government.

John Watson, a retired wheat farmer who helped spearhead the class action, welcomed the settlement, adding that he was "pleased that corporate accountability has been brought to the fore, and also for those large number of shareholders that lost money".

'Barrier to an acquirer' 

In the markets, analysts at Credit Suisse signalled that the deal could add an element of bid premium to AWB shares, besides removing a management headache.

"[The] settlement of a shareholder class action removes another legacy issue, a management distraction and a potential barrier to an acquirer of AWB," the bank said.

The analysts added that AWB was "capable of funding the settlement in the course of ordinary operations".

AWB shares closed  up Aus$0.09 at Aus$1.08 in Sydney."

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