Bank chiefs knew of bribe claims

Denial … Glenn Stevens, Governor of the Reserve Bank of Australia insists that no cover up has taken place. Responsibility … former treasurer Peter Costello wants the banks to report credible evidence to the police.
Nanjing Night Net

One step further … former federal Liberal leader, John Hewson, wants a royal commission.

THE Reserve Bank’s internal lawyer, chief auditor and an assistant governor all knew, in June 2007, of an explosive memo sent that month to the ”deputy governor RBA” detailing alleged overseas bribery by a firm owned by the central bank.

It can also be revealed that for months the Reserve withheld from police critical information it had about bribery. These revelations come after the governor of the bank, Glenn Stevens, yesterday denied any attempt to cover up evidence of bribery and told Federal Parliament’s economics committee he could not recall when he first read the June 2007 memo written by the company secretary of Note Printing Australia, Brian Hood.

Mr Stevens cast doubt on whether his then deputy, Ric Battellino, received the memo, even though it was Mr Battellino who asked Mr Hood to put his bribery concerns in writing – by saying the document might have been sent directly by Mr Hood’s lawyer at law firm Freehills, which was conducting an inquiry on the Reserve’s behalf.

But internal Reserve files seen by the Herald reveal that assistant governor Frank Campbell was aware of Mr Hood’s memo in June 2007. The files show the Reserve’s internal lawyer, Helen Brown, and the then chief audit officer, Paul Apps, were also aware of it and its explicit evidence of NPA’s involvement in bribery.

This week the Herald published Mr Hood’s memo, which detailed admissions by NPA’s agents in Malaysia and Nepal of having paid foreign officials to win banknote printing contracts.

Instead of referring Mr Hood’s bribery concerns to the federal police, the bank called in Freehills to advise whether Australian law had been breached. In a report the bank has so far refused to release, Freehills said it was unable to detect a breach.

The Reserve was forced to contact federal police in May 2009 after Fairfax Media exposed multimillion-dollar payments to shady overseas agents by NPA’s sister firm, Securency. Federal police have since charged NPA, Securency and eight former executives with bribery offences involving deals in Vietnam, Indonesia, Malaysia and Nepal, the two countries to which Mr Hood’s memo explicitly referred.

Under questioning yesterday, Mr Stevens said he could not recall when he first read or was aware of Mr Hood’s memo. ”I did not read it at that time [2007]. It wasn’t given to me, that is my memory,” he said.

The handling of the bribery scandal by the Reserve and the Gillard government has come under scrutiny this week, with the former treasurer Peter Costello saying the bank has a responsibility to report credible evidence of criminality to police. A senior federal police officer Chris McDevitt has confirmed the Reserve had known about bribery at its subsidiaries for years before it alerted police.

The former federal Liberal leader John Hewson and former foreign minister Alexander Downer yesterday challenged the government to hold a royal commission into the scandal, which has also ensnared other Commonwealth agencies such as Austrade.

Writing for the ABC website The Drum, Dr Hewson said it was ”not good enough to have to rely on the stilted testimony” of Mr Stevens.

Mr Stevens told the committee he was seeking legal advice about tabling documents significant to the case.

This story Administrator ready to work first appeared on Nanjing Night Net.