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Dismissal of RICO Class Action Against AWB Affirmed on Appeal

On October 2, 2009, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a purported class action suit asserting claims under the federal RICO statute against AWB Limited, the Australian corporation that succeeded the Australian Wheat Board, and a subsidiary, AWB (U.S.A.) Limited, arising out of AWB’s participation in the United Nations Oil-for-Food Programme. Cravath represented AWB Limited and AWB (U.S.A.) Limited in the suit, which was Karim, et al. v. AWB Limited, et al.

The Karim suit was filed in late 2006 by a group of Iraqi Kurds, purportedly on behalf of all Iraqi citizens from the Kurdish three northern governorates of Iraq. Plaintiffs alleged that they were deprived of benefits to which they claimed to have been entitled under the UN Oil-for-Food Programme because of an alleged kickback scheme orchestrated by the Iraqi government under Saddam Hussein, through which the Iraqi government allegedly extracted payments from sellers of humanitarian goods under the Oil-for-Food Programme, including AWB. In September 2008, the federal district court in New York dismissed all claims against our clients. (See Karim v. AWB Ltd., 06 Civ. 15400 (GEL), 2008 U.S. Dist. LEXIS 76896 (S.D.N.Y. Sept. 30, 2008).) Plaintiffs appealed that decision to the U.S. Court of Appeals for the Second Circuit and after hearing argument on September 24, 2009, the Court affirmed the dismissal on October 2.

The case is one of three different class action lawsuits brought in the New York federal court against AWB relating to its participation in the UN Oil-for-Food Programme that Cravath has successfully defended; the other two suits, brought on behalf of American wheat farmers alleging antitrust violations (Boyd v. AWB Ltd.) and on behalf of Iraqis alleging human rights violations (Mastafa v. AWB Ltd.), were dismissed in separate rulings in 2008.

The Cravath team representing AWB in these matters included partners Robert H. Baron and Timothy G. Cameron.