Malaysian govt officials linked in Aussie banknote supply scandal

The Age investigative team of Richard Baker and Nick McKenzie today quoted a source aware of the work of MACC saying the middleman provided details about the RM11.3 million (A$4 million) in commissions he received from Securency and Note Printing Australia.

Frankie D’Cruz, The Malay Mail

Explosive revelations about alleged kickbacks by Reserve Bank of Australia (RBA) subsidiaries to Malaysian government officials have surfaced in an ongoing inquiry by the Australian Federal Police (AFP) into sex and bribes to win banknote supply contracts.

Melbourne-based The Age newspaper reported this morning that the inquiry into alleged bribery by RBA has had a major breakthrough with a Malaysian businessman and arms broker providing details about alleged kickbacks to Malaysian officials.

The inquiry revolves around RBA’s Melbourne polymer currency company, Securency International and another banknote firm Note Printing Australia, in what has been described as Australia’s most serious corruption scandal.

It was reported that the details stemmed from an interview with the businessman by the Malaysian Anti-Corruption Commission (MACC) here.

The Age reported that the businessman was questioned about his work as a middleman for both the banknote firms between the late 1990s and 2007.

At Press time, comments were not available from MACC officials.

The report said intelligence from the interviews had been sent to the AFP taskforce investigating whether executives of the two RBA subsidiaries breached anti-bribery laws.

This was due to the fact that they allegedly had knowledge of payments made to foreign officials to help win banknote supply and printing contracts.

The Age investigative team of Richard Baker and Nick McKenzie today quoted a source aware of the work of MACC saying the middleman provided details about the RM11.3 million (A$4 million) in commissions he received from Securency and Note Printing Australia.

The middleman, it was claimed, was paid the money to help the RBA firms win currency supply and printing contracts from Bank Negara due to his powerful political connections.

Allegedly, at least one person closely connected with a senior Malaysian government official received kickbacks from the commissions paid by the RBA firms.

The middleman had also been a broker for a Pakistani government-linked weapons-making factory.

Securency and NPA engaged him in the late 1990s to lobby the Malaysian government and banking officials to adopt the Australian-made polymer banknotes.

The Australian companies won currency printing contracts in Malaysia in 1998 and 2004.

The AFP is investigating Securency for allegedly bribing officials in countries, including Nigeria, Malaysia and Vietnam, where it paid millions of ringgit to well-connected middlemen after being awarded banknote supply contracts.

The payments were reportedly often made into secretive offshore tax havens, such as the Seychelles and Switzerland.

An external audit by RBA in March found Securency paid more than RM133 million (A$47.5 million) in commissions to its global network of agents between January 2003 and January last year.

Securency was also alleged to have been willing to supply prostitutes to officials from an Asian country to win contracts.

The firm has been under AFP investigation since May last year, after The Age revealed its large payments to foreign middlemen implicated in past corruption scandals.

The sex and bribe allegations

A witness had claimed that the Reserve Bank of Australia’s polymer currency company, Securency International, was willing to supply prostitutes and pay bribes to foreign officials to win banknote supply contracts.

● A key witness in the Australian Federal Police (AFP) inquiry into the scandal told an investigation by the The Age newspaper and ABC TV’s Four Corners — that was aired in May — that a middleman hired by Securency to win contracts from foreign governments told him that he intended to bribe a central bank governor from an Asian country.

● The witness, who was a Securency employee, has given Federal police his diary in which he recorded the middleman telling him in 2007 that the “governor would be very happy if the commission [payment] was increased”.

● The witness has also revealed that a senior Securency manager told him to arrange an Asian prostitute for a visiting deputy governor of a foreign central bank.

● The witness said he did not act on the request, although he believed other employees had arranged prostitutes for central bank officials.

● In a 2008 diary entry, the police witness recorded that a consultant employed in Asia by Australia’s overseas trade agency Austrade told him that to win contracts, Securency needed to hire someone to bribe officials or “to pass white envelopes for you”.

● The RBA owns half of its polymer currency company Securency and all of Note Printing Australia.

● Securency has employed a network of global agents to help it convince foreign central banks and governments to buy its polymer notes.

● The KPMG audit was scathing of Securency management’s conduct in appointing, monitoring and paying its agents, several of whom operate in countries seen as the world’s most corrupt.

● After the release of the audit, the Securency board, chaired by the bank’s assistant governor Bob Rankin, announced the departure of the company’s long-serving managing director Myles Curtis and company secretary John Ellery.

● Both had their houses raided by the AFP last year. They deny wrongdoing.

● Securency and NPA had been strongly supported by ministers in the Rudd and Howard governments.

● Labor and the Coalition have repeatedly rejected motions by Greens and independent senators for a Senate inquiry into the scandal.

● Under Australian law, it is a criminal offence for companies or individuals to pay foreign officials in order to obtain a business advantage. The offence carries a maximum 10-year jail term and substantial fines.