The payment of millions of dollars into Iraq alongside the supply of Australian wheat raised no eyebrows when the AWB board learned of it.
A court has been told it was mid-2000 when the board was first told AWB was paying trucking fees to Iraq, and directors took the view this was "sensible".
Former AWB director Warwick McClelland said the board was told Iraq had problems under prior sanctions with the internal supply of medicine.
AWB wanted to ensure the strife-torn country "wouldn't mess up transport" of its grain and the aim was to "take on some of the transport fees".
"It raised no questions from the board because it seemed like a sensible line to take," Mr McClelland told the Victorian Supreme Court on Monday.
The Australian Securities and Investments Commission alleges AWB paid $US223 ($A300 million) in kickbacks - in the form of trucking and after-sales service fees - to Saddam Hussein's regime from 1999 to 2003.
Former AWB chairman Trevor James Flugge and group general manager trading Peter Anthony Geary are facing a civil trial for breach of duty over the payments, which also allegedly flouted UN sanctions.
Mr McClelland gave both men a positive character reference, describing Mr Flugge as a man of integrity and Mr Geary as known within AWB as "a man you could trust".
The trial also heard from former Australian ambassador to Jordan and Egypt, Robert Bowker, who was a senior DFAT official and played a central role in ensuring Australia met its Iraq sanction obligations.
Professor Bowker said when AWB applied to export chemical wheat testing kits, handheld radios and earth-moving bobcats to Iraq these were red-flagged by DFAT as possibly breaching UN sanctions.
Despite this, he said AWB never raised its payment of trucking fees with DFAT.
"I'm not aware of any formal reports or informal discussions ... in regard to trucking issues in Iraq," Prof Bowker told the court.
Under questioning, Prof Bowker agreed some AWB contracts reviewed by his office referred to the fees though he said these were read in detail by subordinates.
The case continues.
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