Reserve Bank Subsidiaries Securency And Note Printing Australia Fined $21m Over Bribe Offers

A wide-ranging corruption case linked to the RBA has finally wound up, following a guilty plea from one of the key players in the Securency scandal, Christian Boillot.

The fines were handed down in 2011 and 2012, but could not be reported at the time because of non-publication court orders.

The players caught up in the bribery scandal went to the very top of RBA subsidiaries Securency, which made the plastic base for banknotes, and Note Printing Australia (NPA), which produces the notes.

They included:

  • The former chief executive of Securency, Myles Curtis, who pleaded guilty to conspiring to bribe foreign officials in Malaysia and Indonesia, as well as a false accounting charge, and was given a suspended sentence
  • Securency’s former chief financial officer, John Ellery, who pleaded guilty to cooking the books regarding a commission paid to a Securency sales agent in Malaysia, and was given a suspended sentence of six months’ jail in August 2012.
  • A Securency manager, Clifford Gerathy, who pleaded guilty to false accounting and was given a three-month suspended sentence
  • The principal of a Securency agency business in Indonesia, Radius Christanto, who pleaded guilty to conspiring to pay kickbacks so Securency could do business with Bank Indonesia. He was given a suspended sentence of two years’ jail in 2013.

Mr Boillot, a former banknote executive, pleaded guilty this week in the Victorian Supreme Court to conspiring to offer a bribe to foreign officials in Malaysia. He will be sentenced on December 6.

As a result, the record fines against the RBA subsidiaries, as well as the individual sentences to executives, can now be revealed.

Securency makes the plastic base for both Australian and foreign banknotes. It was later sold by the RBA and is now known as CCL Secure.

It pleaded guilty to offering bribes to officials at the note-issuing authorities in Indonesia, Malaysia, and Vietnam.

NPA produces Australia’s banknotes and passports, and its foreign customers include the central banks of New Zealand, Singapore, Mexico, Chile and Romania.

It pleaded guilty to attempting to bribe officials in Indonesia, Malaysia and Nepal.

The offences took place between 1999 and 2004.

A series of prosecutions linked to the scandal have been kept secret for the past seven years thanks to long-running suppression orders, which have today been lifted.

In a statement, the RBA said the guilty pleas reflected that the boards of the companies accepted responsibility, showed remorse and took into account the public interest in avoiding a lengthy, costly court battle.

“The Reserve Bank strongly condemns corrupt and unethical behaviour,” RBA governor Philip Lowe said in the statement.

“The RBA has been unable to talk about this matter publicly until today, although the guilty pleas were entered in 2011.

“The RBA accepts there were shortcomings in its oversight of these companies, and changes to controls and governance have been made to ensure that a situation like this cannot happen again.”

The RBA said the prosecution had accepted that the boards of the two companies had no knowledge or involvement in the corruption.

The Indonesian conspiracy

The Victorian Supreme Court heard Securency funnelled bribes worth about $US3 million to Indonesian officials, to secure or maintain its contract with the Indonesian central bank.

The mid-1999 contract with the Bank of Indonesia to supply materials for printing polymer banknotes was worth more than $13 million.

But there was a second part to the conspiracy — under the contract with the Bank of Indonesia, the bank was entitled to claim penalty payments if the banknotes were not printed on time.

Note Printing Australia repeatedly failed to meet the deadlines set for printing 500 million 100,000 Indonesian Rupiah notes.

When the penalty payments were made, only some of the money went to the central bank.

The rest was paid “unofficially” to the bank’s officials.

The case against Securency and Note Printing Australia was the first prosecution brought under foreign bribery laws introduced in 1999.

In sentencing, Justice Elizabeth Hollingworth said the international conspiracy lasted for a substantial period of time.

“The conduct was deliberate, sophisticated, carefully orchestrated and concealed,” she said.

The prosecution also argued the bribery conspiracy could affect Australia’s capacity to engage in foreign trade.

Justice Hollingworth found the actions of Securency and NPA Ltd “… had the capacity to harm the reputation of the Reserve Bank itself, and … broader Australian interests”.

Both companies have accepted that the systems and procedures they had in place at the time of the offending were inadequate to prevent or detect the offending conduct of their senior executives.

Author: Liz Hobday

Source: ABC