RBA Note Printing Case
NPA prints banknotes for the RBA, Australian passports, and banknotes for a small number of other countries, while Securency manufactures, markets and supplies a range of polymer substrates on which banknotes are printed by NPA and others. In July 2011, the AFP announced that it had charged two subsidiaries of the RBA, NPA and Securency, as well as six former banknote executives, with paying bribes to foreign officials 'in order to win banknote supply contracts. In August 2011, the AFP reported that a seventh individual had been charged. At the time, the RBA wholly owned NPA and owned 50 per cent of Securency.
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In March 2013, another individual was charged with foreign bribery activities alleged to have occurred in Nepal. At the same time, additional charges were laid against three individuals who were originally charged in 2011 in relation to efforts to secure banknote contracts on behalf of NPA. The AFP noted that the total number of individuals charged with foreign bribery offences as part of the investigation as of March 2013 was nine. The matters remain before the courts.
In early March 2012, evidence of 'possible illegality' by senior Reserve Bank officials and business figures in connection with the banknote bribery case was referred by the AFP to ASIC. However, after having reviewed material from the AFP for possible breaches of directors' duties under the Corporations Act 2001, ASIC decided not to proceed to a formal investigation.
Role of RBA and NPA directors
Mr Ric Battellino, Deputy Governor of the RBA from 2007 to 2012 informed the committee that while detailed reporting was a practice within the RBA, he could not comment on the reporting practices of the NPA and Securency because the 'corporate structure' in existence at the time 'removed all that from the Reserve Bank'. RBA Governor, Mr Glenn Stevens also indicated that the governance arrangements in both NPA and Securency 'proved not to be strong enough to detect and prevent the things which were alleged to have occurred'.
In relation to NPA, evidence provided to the committee by Mr Brian Hood, a former NPA senior executive who became a whistleblower, also emphasised the poor organisational culture in existence at the time of the alleged offences. In relation to the practices within NPA regarding the payments of agents, Mr. Hood explained that: Some time not long before I had started the Indonesian agent had been paid $7.4 million. The Malaysian agent was being paid millions of dollars. Quite naturally that caused me to look at it financially and say: 'Hang on—what are the agents doing? What is their role? What is the value? What are we getting in return here in the context of the business's overall financial shape?' But progressively, given events especially with the Malaysian agent, the concerns went from just being financial to being ones of ethics and honest and probity, so attempting to divert funds into somebody else's bank account, being dishonest about having an agency agreement with Securency where he had...