The Reserve Bank of Australia agreed to sell its 50 percent stake in Securency International Pty, the note-printing unit at the center of corruption allegations, as it seeks to draw a line under the biggest scandal of Governor Glenn Stevens’s term.
U.K.-based film manufacturer Innovia Films, which already owns half of Securency, agreed to pay A$65 million ($66.6 million) to the RBA for the remainder, the central bank said in a statement on its website. Extra payments may follow if Securency exceeds earnings benchmarks, the statement said.
Eight former managers and employees at the RBA’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. Stevens was called to testify to parliament about the case in October and said that, while he believed officials who reported to him acted appropriately, there should have been more questioning and “skepticism” of both companies.
The sale indicates the RBA is “seeking to distance itself from this failure of corporate governance,” said Anil Hargovan, an associate professor specializing in corporate law and governance at the Australian School of Business in Sydney, part of the University of New South Wales. “There are still lessons of accountability and transparency to be learned.”
NPA will remain a wholly-owned unit of the central bank, the RBA said in the statement today.
The central bank has faced 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.
Stevens’s seven-year term as governor expires Sept. 17, three days after an election is scheduled to be held, with the government having the power to either reappoint him or name a successor in the three months before his time is up. Prime Minister Julia Gillard announced the election Jan. 30, effectively creating an almost eight-month campaign compared with the usual time period of about a month.
Opposition finance spokesman Andrew Robb said Jan. 31 that Gillard should hold off on announcing the next head of the central bank until after the election.
Stevens hasn’t said publicly whether he wants to extend his tenure. Since taking the helm in September 2006, he has presided over annual inflation that’s averaged 2.8 percent -- within the RBA’s target range of 2 percent to 3 percent -- and unemployment at 5 percent as the world’s 12th-largest economy extended a recession-free era to 21 years.
In a separate statement today, the central bank published an independent review of its oversight of the two units. The review, conducted by Cameron Ralph Pty, found that the RBA “gave reasonable consideration as to the governance arrangements for the two companies and put in place processes for their oversight and reporting which were broadly consistent with usual practice at the time.”
“With the benefit of hindsight, there could have been more oversight applied to the activities of the companies, which may have detected earlier the alleged illegal payments,” according to the review. “But that does not mean that the Bank’s oversight at the time was inappropriate.”
The review didn’t look into the allegations of bribery or the Australian Federal Police investigation of the charges. “We have not examined any material relating to those allegations as such, other than to address the supervision issue,” it showed.
The RBA said in November 2010 that it would sell its stake in Securency. Macquarie Capital advised the central bank throughout the process, the RBA said today.