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RBA Says Officials Acted in Good Faith in Securency Case

RBA Says Officials Acted in Good Faith in Securency Bribery Case
The Reserve Bank of Australia said, “The bank’s executives acted in good faith and with integrity. It is completely without foundation to suggest otherwise.” Photographer: Ian Waldie/Bloomberg

The Reserve Bank of Australia said its executives acted with integrity in response to allegations of bribery at its note printing units amid a new report that a senior bank official was aware of corruption in 2007.

An assistant governor was told five years ago that the RBA’s half-owned subsidiary, Securency International Pty, hid a A$492,000 ($513,000) payment to a Malaysian arms dealer, the Australian Broadcasting Corp. and Fairfax Media Ltd. newspapers reported yesterday, citing documents from the central bank’s files. The documents contradict Governor Glenn Stevens’s testimony to a parliamentary panel that the bank knew nothing of the Securency bribery allegations until they became public in 2009, according to the report.

“The Reserve Bank is committed to transparency on these matters,” the central bank said in a statement on its website. “The bank’s executives acted in good faith and with integrity. It is completely without foundation to suggest otherwise.”

Eight former managers and employees at the bank’s Note Printing Australia Ltd. unit and Securency 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.

‘Growing Cloud’

Bandt said the allegation that an assistant governor was aware of payments to the Malaysian arms dealer reinforced the need for an investigation.

“The growing cloud over the Reserve Bank and its governance will not clear until a full inquiry is conducted,” Bandt said in a statement after the report.

The RBA reiterated that it is compiling documents relating to the allegations of bribery and will make them public once it receives court approvals.

“This work is progressing,” the central bank said in the statement. “It is important that the legal process is respected and that the release of any documents is done in a way that does not jeopardize the right of the accused to a fair trial.”

Further Payments

The Malaysian arms dealer’s company wrote to the assistant governor demanding further payments and stating that it had convinced the Southeast Asian nation’s government to award note printing contracts, according to the report on the Age newspaper’s website.

Records show the issue was raised at a Note Printing Australia board meeting in September 2007, according to the report.

Liberal lawmaker Tony Smith, a member of parliament’s economics committee, said the panel must take up Stevens’s offer last month to make a special appearance to answer questions and present documents related to the matter, the newspaper reported.

The bank plans to submit documents, which include a 2007 report from the Freehills law firm that concluded no Australian laws were broken at Note Printing Australia, to the parliamentary panel “at the earliest opportunity,” Stevens said Aug. 24 in his semi-annual testimony before the economics committee in Canberra.

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.

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