Federation Business School

BULAW 5911 Managing the Legal Environment, Case Study Number 4: Australian Wheat Board

The case is included in (2012) Contemporary Challenges in Corporate Governance, Wells, P. and Mueller, J. (eds) RossiSmith, Oxford, pp 89-100. Although the case is not solely on the matter of managing legal risk, significant aspects of it involve just that. It is demonstrates the links and interrelationships between legal risk and other aspects of risk that may impact on a company or other organisation.

Introduction: The Australian Wheat Board (AWB) first came to public attention and later scrutiny by the Coles Commission as a result of allegations (consequently proven in court) that it paid bribes to the Iraqi government via inflated fees to Alia, a Jordanian trucking company. The purpose of the bribes was to protect its lucrative UN wheat supply contracts under the food-for-oil agreement (a negotiated exception to the international trade embargo imposed on Iraq after its development of weapons of mass destruction (WMD).

Although the scandal erupted more than 12 years ago, it still serves as a clear reminder of how weak governance, poor decision making, misaligned priorities and rampant greed can have widely felt ramifications not only for the organisation itself but a broad range of stakeholders. This can also be the case where organisations fail to manage activity at the interface with communities, investors, markets (product, capital and employment) and opinion leaders.

Some useful links are listed below:

and if you want to dig deeper, there is this for starters (but plenty more):

Questions to consider (rather than the discussion questions at the end of the case study):

1. Why do you think AWB was able to pursue the behaviour that led to the scandal?
2. Why did the AWB scandal attract so much attention both nationally and internationally?
3. Who was affected by the scandal and the final outcome?
4. Why are the answers to 1 and 2 important in terms of legal risk management? Why and how?
5. How important is organisational reputation to sustainability of the organisation? Why?
6. Do you think the AWB should have admitted wrongdoing early or was it better to deny? Why? What else (or alternative thing) should it have done?
7. Who lost the most? Do you think that reasonable as a reflection of culpability? What does that suggest in terms of the focus of legal risk management?