Leaders of the Australian wool industry fear that a lawsuit brought by South African growers could destroy parts of the privatised Australian wool industry. The concerns came to light in a confidential Senate hearing, the Australian Associated Press reported today.

Although they have publicly promoted the privatisation of the Australian Wool Research and Promotion Organisation (AWRAP), the in-camera meeting showed that they actually have major reservations over the initiative.

Wool Council president David Wolfenden, National Wool Forum chairman Peter Laird and Woolgrowers Advisory Group member Michael Nicholls had urged the government and opposition parties to back AWRAP's privatisation.

AWRAP is facing a multi-million lawsuit from South Africa-based Cape Wools over the Woolmark Company, which both organisations once part-owned.

Mr Nicholls said the future of Australia's best known wool company, Woolmark, was at threat because of the lawsuit: "It is unresolved and we do not know the dimensions, but what we fear is that the dimensions may be of a size that destroys the possible commercial business now known as the Woolmark Company," he said.

Mr Nicholls said as the government appointed the AWRAP board that helped create the problem that is the cause of the lawsuit, it had to be responsible for any legal debts: "It was the board appointed by the governments of the day that put us in this position," he said. "Woolgrowers were not informed as to what was going on and the prospect of what might happen to them."