Dec. 21 (Bloomberg) -- AWB Ltd., the Australian grain trader found to have paid kickbacks to Iraq, said a suspension from participating in U.S. government programs by the Agriculture Department won't affect its business.

U.S. Agriculture Secretary Mike Johanns said yesterday that Melbourne-based AWB had been suspended from participating in U.S. government programs and the government will consider whether the ``debarment'' will become indefinite.

Similar action was taken against 11 former AWB employees, Johanns said. AWB does not do any business with the U.S. government. It voluntarily agreed not to participate in USDA's export-credit program last year, and has received no credit guarantees from USDA since 2004.

``We don't envisage using it in the foreseeable future and we haven't used it since 2004,'' Peter McBride, spokesman for the company, said today. The ban does not affect AWB's currency or commodity hedging programs in the U.S. or Australian wheat exports, he said.

AWB shares rose 7 cents, or 2.4 percent, to A$2.95 on the exchange at the 4:10 p.m. close of trade in Sydney. The stock, the second-worst performer of the S&P/ASX 200 Index this year, has plunged 52 percent this year amid the government inquiry and drought.

The stock had its biggest-one day gain in five years yesterday after the company said the Australian Taxation Office had ruled the Iraqi payments weren't bribes, lifting the threat of the imposition of fines.

U.S. Credit

The company was suspended from using the U.S. credit export program, which provides insurance for sales of U.S. commodities in the event of payment defaults from buyers, in November, 2005. The company agreed not to participate in the programs during an Australian government inquiry into the Iraq payments.

The inquiry, headed by retired judge Terence Cole, last month recommended charges against 11 former officials from AWB over the kickbacks. The inquiry was prompted by an investigation by former U.S. Federal Reserve Chairman Paul Volcker that found AWB paid $222 million to the former regime of Saddam Hussein.

``It's just something we'll work through over a period of time with the USDA,'' McBride said.

Farmers' Lawsuit

A group of U.S. wheat farmers will resubmit a class-action lawsuit in the next two months seeking compensation from AWB as a result of the kickbacks, Australian Associated Press said Dec. 12. The company should be banned from participating in U.S. commodities futures markets if the company is found to have broken U.S. law, the Australian newspaper reported Dec. 13, citing Senator Norm Coleman.

AWB has said it would vigorously defend itself against any U.S. class-action lawsuit. It has also said that a ban from U.S. commodity futures markets would be ``misguided.''

The stock's valuation could be affected should the U.S. Senate conduct an inquiry into the Oil-for-Food scandal, and take action against the company, JPMorgan Chase & Co. said in a report dated today.

``This could see the U.S. Government punish AWB through AWB's access to U.S. securities exchange,'' JPMorgan wrote. ``We see this as a possible material issue for the stock.''

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

Last Updated: December 21, 2006 01:03 EST