Starlight Salons Ltd & Discover Yourself Supplies Pty Ltd (DYS) - AWB Case Study - Law Assignment Help

Assignment Task -           

Exercise 1: Workshop Objectives 4, 5 and 6

Sally is a director of Starlight Salons Ltd, as well as a 40% shareholder of Discover Yourself Supplies Pty Ltd (DYS). DYS is in the business of supplying European hair styling products.DYS has three directors. DYS enters a contract with Starlight Salons for the supply of$150,000 worth of product, which has a gross profit margin of 70%. The constitutions ofboth companies do not require disclosure of a conflict of interest to the members.Advise Sally as to whether she is required to disclose a material personal interest and, if so, to whom under section 191 of the Corporations Act. You only need to include the Law and Application in your answer.

The following exercises will be covered during the workshop.

Exercise 2: Workshop Objectives 2 and 3

AWB Case study
AWB, a public company, is the manager and marketer of all Australian bulk wheat exports (known as the “National Pool”). Commonwealth legislation currently gives AWB this monopoly power. Prior to 2001, AWB was a grower owned and controlled company. AWB’s objective under the National Pool is to maximise returns to growers. In 1990, following the invasion of Kuwait, the United Nations imposed sanctions on Iraq. By Resolution 661 the United Nations required that all states prevent their nationals making available funds to the Government of Iraq, or to persons or bodies within Iraq. The resolution also required that states prohibit their nationals from trading with Iraq, except for the provision of supplies for medical purposes or, in humanitarian circumstances, foodstuffs. In 1995 the Security Council adopted Resolution 986, which established the Oil-for-Food Programme. That permitted Iraq to sell oil under UN-approved contracts, with the proceeds of sale being paid into an escrow account controlled by the United Nations. Iraq was permitted to purchase humanitarian goods, including foodstuffs. Contracts for such purposes, if approved by the United Nations, were to be funded from the escrow account. Otherwise, the restrictions on dealings with Iraq imposed by Resolution 661 remained. In 1996 Iraq commenced purchasing foodstuffs under the Oil-for-Food Programme, including significant quantities of wheat from AWB.

On 21 April 2004 the United Nations Secretary-General appointed his own commission ofinquiry (the Independent Inquiry Committee) to investigate allegations of fraud and corruption under the Oil for Food Programme. It emerged that a practice had developed whereby instead of seeking reimbursement of transport costs from the escrow account, Iraq would direct contracting entities (including AWB) under the Oil for Food Programme to make payments to Iraqi-controlled bank accounts or non-Iraqi front companies who would forward the payments to the government of Iraq (“inland transportation fees”). These fees were included in the price quoted by AWB and thus recouped from the UN escrow account.

One conduit for such funnelled payments was a Jordanian company called Alia, which was owned partly bys Ministry of Transportation and acted as a collection agent for the Iraqi government. AWB knew that paying inland transportation fees to Alia was a means of making payments to the Iraqi Government. This plan was concealed from the United Nations.

Suppose that you were an officer of AWB. In negotiating and implementing contracts between AWB and the Iraqi Grain Board (IGB), did you exercise your power in good
faith in the best interests of the company?

In your answer consider whether you had to be concerned with the following interests:

1. Present shareholders?
2. Future shareholders?
3. Grain growers?
4. The Australian public?
5. The Iraqi people?

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