THREE directors of Australian Wool Innovation have been slammed by Italian processors for conflicts of interest and their failure to explain AWI marketing policies.

In a letter to AWI chairman Wal Merriman, the Italian Textile Association said it was "very embarrassed and disappointed at seeing people involved in clear conflicts of interest."

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  • Read the letter to AWI from the Italian processors: Italians attack AWI
  • Read Wal Merriman's response to the Italy issue in full (below right)
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The three directors - Chick Olsson, Dr Meredith Sheil and Laurence Modiano - were part of an AWI delegation that visited European and Asian processors and manufacturers last month.

Among the 10 signatories to the letter were Paolo Zegna of the Ermengilda Zegna Group, Pier Luigi Loro Piana of Loro Piana and Sergio Tamborini of Marzotto, who is responsible for labels including Hugo Boss.

While the association did not detail the conflicts, it is understood they relate to Mr Olsson and Dr Sheil promoting mulesing with the pain-relief treatment Tri-Solfen, in which both have interests.

Mr Modiano's conflict stems from the perception he was using AWI business to talk to processors while he is a processor.

"We felt that the delegation didn't express official AWI thinking," said the association.

"We were surprised and upset by their lack of knowledge of and extreme sensitivity to the mulesing issue, which is still seriously affecting our relationship with the market."

The Italian criticism coincides with a bitter power-struggle within the AWI board, which last week led to the resignation of chief executive Brenda McGahan.

The centre of this power struggle is a debate about AWI's marketing strategy.

Although the board, Ms McGahan and the WoolPoll vote last year endorsed a $28 million global strategy of working with retailers and brands and providing up to $250,000 leverage funding per company in what is called "business to business to consumer", the strategy has long been opposed by Mr Modiano.

The alternative marketing strategy involving refurbishment of Woolmark and a generic advertising campaign has been promoted by Mr Modiano, who has garnered support from Mr Olsson, Dr Sheil and David Webster

The four in favour of the generic Woolmark program need only one more supporter, which would mean a major change in the marketing strategy and could also lead to the replacement of AWI chairman Wal Merriman, who has been a staunch supporter of Ms McGahan and her marketing push.

Mr Webster, a West Australian grazier and Merino stud breeder, is touted as replacement chairman.

This week Mr Merriman played down the current turmoil. "Yes, we know there are differences of opinion, but we will work them through," Mr Merriman told The Weekly Times.

Regarding the Italian criticism, Mr Merriman said six Italian companies had just recently signed up with AWI.

As to his hold on the chairmanship, Mr Merriman said he "would be stopping on as long as the board wants him".

The International Wool Textile Organisation has also criticised the board. IWTO president Gunther Beier, in a letter last month to Mr Merriman, expressed his concerns with the recent developments.

"The industry can just not afford another debacle at AWI after the many that have already gone before," Mr Beier said.

"The wool textile industry is looking for some leadership from the bigger players which at present it unfortunately does not see."

Mr Olsson, Dr Sheil and Mr Modiano declined to comment.

However, in a report to the AWI February board meeting, Mr Modiano said the delegation was very successful.