An alleged whistle blower claims that bribes totaling up to A$45 million (US$36.6 million) were paid by a company established by the Sydney-based Reserve Bank of Australia (RBA) to sell polymer banknote technology around the world.
Since May 2009, the Canberra-headquartered Australian Federal Police (AFP) has been investigating allegations of potential foreign customers being bribed by intermediaries engaged by RBA subsidiary Securency International Pty. Ltd.
Melbourne-based Securency, a joint venture established in 1996 between the RBA and United Kingdom-based polymer film maker Innovia Films Ltd., makes and markets a biaxially oriented polypropylene polymer substrate used in Australian banknotes since 1988. It has sold the technology to 30 other countries.
Securency sought the AFP investigation after an Australian newspaper last year raised allegations of kickbacks being paid by the firm's overseas agents to officials of foreign governments buying its substrate technology sold under the Guardian brand.
The company also engaged accountancy firm KPMG to examine its policies for using agents.
The week of May 24, the Australian Broadcasting Corporation's flagship television current affairs program Four Corners cited an unidentified whistle blower detailing bribes allegedly funneled through Securency agents, especially in African and Asian nations.
The program's source, allegedly an insider who worked for Securency until late 2008, claimed practices used by agents to secure contracts included paying cash to decision-makers' offshore bank accounts. He said payments were made through agents who received inflated commission rates.
Four Corners alleged an agent used to secure a deal in Nigeria was paid A$6.4 million (US$5.3 million) with the funds going to an Isle of Man account and another in Vietnam received A$14 million (US$11.4 million), including deposits to Swiss bank accounts.
The program alleged the insider had been told “a certain Asian central bank governor” would be “very happy” if a Securency agent's commission was increased. “I guess you don't need to be a rocket scientist to work out that … obviously the governor's getting a slice of it,” the source said.
In a statement, RBA condemned corrupt behavior and repeated its support for Securency's “immediate action” to refer bribery claims to the AFP.
“With the AFP investigation continuing, it would not be appropriate for the bank to comment on matters covered by the investigation,” it said.
Securency Chairman Bob Rankin said the KPMG report, published on the company's website, found using agents is “a cost-effective, well-understood model” to pursue business in foreign countries.
However, Rankin said KPMG concluded Securency's management did not properly implement company policies “which should have been adequate” to manage or mitigate associated risks.
“In its report, KPMG made 12 recommendations to enhance the company's policies [on] agents and ensure proper compliance with those policies,” Rankin said. “The board has considered and accepted all the recommendations and committed to implement them in full.”
Copyright 2010 Crain Communications Inc. All Rights Reserved.
