RBA to Release Documents in Bribery Probe, Governor Says

Reserve Bank of Australia Governor Glenn Stevens said the bank is compiling documents relating to allegations of bribery at its note-printing units and will make them public once it receives court approvals.

The bank plans to submit the documents, which include a 2007 report from the Freehills law firm that concluded no Australian laws were broken at Note Printing Australia Ltd., to a parliamentary panel “at the earliest opportunity,” Stevens said today in his semi-annual testimony before the economics committee in Canberra, where the bank’s views on interest rates and the economy usually dominate the discussion.

Eight former managers and employees at the bank’s Note Printing Australia unit and its half-owned subsidiary, Securency International Pty, face charges in relation to the bribing of officials in Malaysia, Indonesia and Vietnam from 1999 to 2004 to win bank-note printing contracts. The RBA is facing demands from Greens Party lawmaker Adam Bandt for a public inquiry into the matter, which has resulted in the first prosecutions under anti-bribery laws enacted in Australia in 2000.

“We are taking steps to seek the permission of the court to allow the bank to table those materials,” Stevens said.

The central bank governor today repeated denials of media allegations that some senior RBA officials were involved in covering up evidence of corruption at the units.

Freehills Probe

The board of Note Printing Australia asked Freehills to conduct an investigation after a 2007 audit raised concerns about the practices of some sales agents, Stevens said. While that probe was under way, then-Deputy Governor Ric Battellino was given a written briefing from an NPA employee raising concerns over the company’s conduct, the governor said.

“The Freehills report was highly critical of NPA’s practices,” Stevens said. “It concluded, based on the material then available, that there was no evidence of a breach of Australian law.”

Andrew McKenzie, a spokesman for Freehills, declined to comment because communication with the bank is covered by attorney-client privilege.

A similar audit was conducted at Securency, which found the company “had a ‘good and robust process’ in place in relation to overseas agent contracts and payments,” the governor said. Another audit in 2008 made the same finding, so when allegations of corruption were published in the Australian media in mid-2009, the RBA was “completely surprised,” Stevens said.

‘Critical Information’

“We now know, including from a report conducted by KPMG for the Securency Board later in 2009, that critical information regarding the use of agents was withheld from the audit teams and the Securency Board in 2007 and 2008,” Stevens told the panel.

Tony Smith, a lawmaker in the opposition Liberal Party, earlier this week called on Stevens to be more open and release internal documents relating to the bribery charges.

“If these questions linger today, they will fester tomorrow,” Smith told parliament on Aug. 20.

The Reserve Bank is committed to transparency, Stevens said today. The bank is restricted on what documents it can release by court orders, he said.

Securency’s former chief financial officer David Ellery pleaded guilty to one charge of false accounting and on Aug. 20 was given a six-month suspended sentence after he agreed to cooperate with investigators and testify at trials of the other employees.

Note Printing Australia is governed by a board of directors appointed by the Reserve Bank. Securency’s board has three directors appointed by the RBA. The central bank said in its annual report last year that it had replaced its representatives on the two companies’ boards. The RBA said in November 2010 that it will sell its stake in Securency.

To contact the reporters on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net; Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Edward Johnson at ejohnson28@bloomberg.net

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