RBA held evidence of bribery
Richard Baker and Nick McKenzie
August 11, 2011
THE leadership of the Reserve Bank failed to alert police after the bank received damning evidence in 2007 that its subsidiary Note Printing Australia was implicated in the bribery of foreign officials.
In mid-2007, the NPA board was given information detailing how the company's agents were bribing officials in Malaysia and Nepal.
A senior RBA source told The Age the evidence included admissions by the agents that they had used commission payments from NPA to bribe officials to secure banknote printing contracts from the countries' central banks.
The NPA board members who received the information included former RBA deputy governor Graeme Thompson, former RBA board member Dick Warburton, former RBA assistant governor Les Austin, RBA assistant governor Frank Campbell and former federal Liberal Party treasurer Mark Bethwaite.
After being alerted about the bribery concerns by the NPA board, the RBA leadership decided to handle the matter internally rather than call in the Australian Federal Police.
The AFP was not alerted until May 2009 after The Age first exposed corruption concerns at NPA's sister company, Securency.
In response to the 2007 internal corruption warnings, the RBA's chief auditor, Paul Apps, was tasked to investigate.
The RBA confirmed yesterday that Mr Apps had found serious problems with NPA's use of agents and recommended a separate investigation to determine whether Australian laws had been broken. NPA sacked all its agents in response to the bribery concerns.
The Apps findings were referred to the RBA board's audit committee, which also audits NPA, and was chaired at the time by deputy RBA governor Ric Battellino. RBA governor Glenn Stevens was briefed on the audit.
Law firm Freehills was then contracted to investigate NPA's exposure to bribery through the actions of its agents.
In a statement yesterday, the RBA said Freehills had found no breach of Australian law and, as such, ''the question of a referral to AFP did not arise''. The RBA has twice refused freedom of information requests from The Age for the Freehills report.
But RBA sources have confirmed to The Age that evidence provided to RBA officials in 2007 was serious enough to warrant an immediate referral to police.
In February, Mr Stevens told a federal parliamentary committee it was unlikely any RBA officials knew of bribery allegations involving its two banknote subsidiaries prior to the first Age report in 2009. ''We are examining ourselves. A question would be, is there any way that anyone in the RBA ever knew anything? I am pretty sure the answer to that is no," he said.
The Age's May 2009 report triggered the police investigation which last month led to the charging of NPA and Securency with Australia's first-ever foreign bribery offences.
Securency and NPA - which are respectively half and fully owned and supervised by the RBA - have told prosecutors, as
stated in court, they will plead guilty to bribing officials in Malaysia, Vietnam and Indonesia.
NPA's Malaysian agent Abdul Kayum - who was specifically referred to in the 2007 evidence seen by RBA officials - was last month charged by Malaysian authorities with bribing a former Malaysian assistant central bank governor, who was also charged.
In its statement yesterday, the RBA defended its actions. ''On any reasonable reading, the NPA board at that time sought the appropriate information, sought appropriate advice, responded appropriately to the information it received, and reasonably relied on the advice it received,'' it said.
NPA prints plastic banknotes and Securency produces the plastic banknote substrate. In 2007, both companies' boards were chaired by former RBA deputy governor Mr Thompson.
When NPA was warned in 2007 about bribery, several of its senior figures were members of the Securency board. Along with Mr Thompson, they included Mr Austin and then NPA chief executive Chris Ogilvy. The trio did not stop Securency using its high-risk network of overseas agents - including Malaysia's Abdul Kayum - despite sacking all NPA's agents due to the corruption findings raised in 2007.
Mr Thompson stood down as NPA chairman in September 2007, four months after he was briefed on the bribery allegations and just weeks into a three-year contract extension.
He retired as Securency chairman six months later, in March 2008. Mr Ogilvy was forced out of NPA at the same time.
ASIC has been urged by Greens leader Bob Brown and federal MP Kelvin Thomson to investigate the adequacy of the Securency and NPA boards' corporate governance. It has refused to say if it is investigating.
Read more: http://www.theage.com.au/national/rba-held-evidence-of-bribery-20110810-1imx5.html#ixzz1UfJNP1Dm
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