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Saturday, August 27, 2011

RBA briefed on bribery, deputy governor admits


By Richard Baker and Nick McKenzie, The Age

Federal police last month charged NPA and sister firm Securency with Australia's first foreign bribery offences, alleging that millions of dollars paid to the companies' agents in Vietnam, Malaysia and Indonesia were used to bribe officials. Eight former NPA and Securency senior executives have also been charged.

THE Reserve Bank of Australia board was briefed twice in 2007 on information implicating subsidiary Note Printing Australia in overseas bribery, deputy governor Ric Battellino (pictured) admitted yesterday.

Mr Battellino's admission came as he and RBA governor Glenn Stevens faced questions from the House of Representatives' economics committee on the bribery scandal involving the bank's currency printing firms NPA and Securency.

At the committee's meeting in February, Mr Stevens said it was unlikely any RBA officials knew of bribery allegations involving its banknote businesses prior to The Age revealing corruption concerns about Securency in May 2009.

Under questioning from Liberal MP Kelly O'Dwyer and Greens MP Adam Bandt, Mr Battellino confirmed the details of a report by The Age this month, which revealed the board of NPA and senior RBA officials were, in May 2007, presented with strong evidence implicating the company and two of its agents in the bribery of officials in Malaysia and Nepal in return for contracts.

The 2007 information included an admission from an NPA agent that he had paid bribes and requests from another agent to be paid excessive commissions into a third-party bank account.

Mr Battellino said the information presented to the NPA board raised issues ''about bad business practices in relation to agents and, as a result of that, they took some very hard decisions''.

But instead of referring the bribery evidence to the Australian Federal Police for investigation, the RBA and the NPA board decided to handle the matter internally by sacking the agents, calling in the Reserve Bank's audit team and later contracting law firm Freehills to conduct an inquiry.

Mr Battellino said the RBA board was briefed on the internal inquiries into the NPA bribery matters in July and August 2007. The RBA board was told Freehills had been unable to find any breach of Australian laws, he said.

Asked by Ms O'Dwyer why neither the NPA board nor the RBA called the police in 2007, Mr Battellino said: ''There was no basis to. This was an investigation that was started by the NPA board as part of an ongoing control around the way the business was being run. They pursued that to its logical conclusion. You have to accept it is a very serious matter for any organisation to call in police to have staff investigated and my guess is that most organisations would not do that.''

Freehills did not have the AFP's powers to formally question people, issue search warrants to seize evidence or seek co-operation from overseas police. The RBA has twice refused freedom-of-information requests from The Age for the Freehills report.

Federal police last month charged NPA and sister firm Securency with Australia's first foreign bribery offences, alleging that millions of dollars paid to the companies' agents in Vietnam, Malaysia and Indonesia were used to bribe officials. Eight former NPA and Securency senior executives have also been charged.

Mr Battellino confirmed to the committee yesterday that Abdul Kayum, the Malaysian agent specifically referred to in the 2007 bribery information, had also last month been charged with corruption offences by Malaysian authorities investigating NPA's 2004 central bank contract. A former assistant governor of Malaysia's central bank was also charged with accepting a bribe from NPA.

The alleged kickbacks paid by NPA's Nepal agent, Himalaya Pande, to secure a 2002 central bank contract are still being investigated by the AFP and by Nepal's anti-corruption agency.

The NPA board in 2007 was chaired by former RBA deputy governor and former Australian Prudential Regulation Authority chief Graeme Thompson.

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