AUSTRALIAN CO AWB'S US$87 MLN CLASS ACTION TO COMMENCE
Posted on: Mon, 08 Feb 2010 01:09:59 EST
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A class action against Australian agribusiness company AWB Ltd (ASX:AWB) involving more than 1,000 shareholders seeking compensation for its failure to disclose Iraqi kickbacks begins in the Federal Court on Wednesday.
Members of the action say they collectively lost over $A100 million (US$87.03 million) when AWB shares plummeted after the Cole inquiry found in 2006 that AWB paid more than $290 million to the former Iraqi regime between 1999 and 2003.
No shareholder class action has yet reached judgement in Australia, with settlements between parties the usual outcome.
The trial, to be held in Sydney, was to begin on Tuesday but was pushed back one day due to a court delay.
The court hearing comes almost three years after the class action was first filed in the Federal Court by retired farmers and former AWB shareholders, husband and wife John and Kaye Watson.
Many other institutions and investors who bought AWB `B Class' securities after March 11, 2002 and retained them until January 13, 2006, have since joined the action.
They will allege AWB breached its continuous disclosure obligations by failing to inform the market it paid fees to the Iraqi regime, disguised as transport fees, in exchange for access to the country's lucrative wheat markets.
AWB also engaged in misleading or deceptive conduct by making representations to the market about the nature of its dealings with Iraq and its integrity, they claim.
Investors would not have bought AWB shares, or paid a lower price for the shares, if this alleged non-disclosure and misleading conduct had not occurred, lawyers for the claimants will argue.
The class action is being run by Maurice Blackburn lawyers and funded by the listed litigation fund IMF Australia Ltd.
The trial has been set to run for five weeks.
AWB shares closed down one cent at $1 on Monday.
(AAP) lm
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