Aussies ‘ignored’ M’sian banknote scandal

Teoh El Sen | August 22, 2012

A 'secret' memo warning the Reserve Bank of Australia two years ago before the polymer banknote printing scandal, involving a Bank Negara official and a Malaysian agent, was ignored.

PETALING JAYA: A “private and confidential” memo warning top officials of Australia’s central bank of possible corruption, involving a Malaysian agent, among others, was withheld from the Australian parliament and police.

The memo was about the Reserve Bank of Australia’s subsidiaries Note Printing Australia (NPA) Ltd and Securency International on getting contracts to print polymer banknotes for Malaysia .

Pressure mounted today for an independent inquiry into allegations that the Reserve Bank of Australia (RBA) covered up evidence of bribery by its note-printing subsidiaries.

Eight executives from two firms either wholly or part-owned by RBA – NPA and Securency International – are facing claims they conspired to bribe officials at foreign banks to secure contracts to make plastic banknotes.

This is said to be one of the worst cases of corruption in Australian history.

The Australian newspaper The Age broke the story today. The paper said the memo was sent in 2007 to “deputy governor of RBA” by Brian Hood, a senior business executive of NPA.

The RBA is now being accused of a cover-up, as this document was never before revealed despite a parliamentary committee investigating the matter.

The RBA had issued a statement denying that it had misled the parliamentary committee, explaining that the said document was “not new”.

According to The Age, the memo had, among other matters, warned that “extraordinarily” large payments made by NPA to its Malaysian agent had been used to make “payments to others – including officials… and politicians”.

It also said that the Malaysian agent had admitted that such payoffs were “the accepted way of doing business in that part of the world”.

Malaysian middleman

The same agent had asked for NPA’s funds to be directed to an ANZ account of a mystery “nominated individual” whose “position” the lobbyist refused to disclose.

An online transcript of the memo read: “My concerns over probity in respect of the Malaysian agent first arose when he requested commission funds owing to him be directed to an ANZ Brisbane account of a nominated individual.”

“When I indicated that this request wouldn’t be entertained by NPA, he retracted the request. The agent would not explain what position/role the nominated individual held.

“During a visit to Melbourne, the agent sought to reassure me that dealing through such ‘networks’ was the accepted way of doing business in that part of the world,” Hood also wrote in the memo.

The memo also said that NPA was giving its overseas agents “greatly exceeded” industry standards and that those agents had admitted paying off officials.

While the Malaysian agent was not specifically named in the memo, businessman Abdul Kayum Syed Ahmad has been repeatedly singled out as the Malaysian middleman representing NPA and Securency in the scandal.

The scandal broke out in 2009 after news reports forced RBA to initiate investigations with the police. It is illegal in Australia to use middlemen to procure government contracts.

In July, 2011, the Malaysian Anti-Corruption Commission (MACC) conducted joint investigations with the Australian Federal Police (AFP) in which six Australian executives from the two banknote companies, and two Malaysians were arrested.

Abdul Kayum, 62, who is also an arms dealer, was charged with giving bribes amounting to RM100,000 through a middleman to former Bank Negara assistant governor Mohamad Daud Dol Moin for help in procuring a polymer note printing contract.

Tip of the iceberg

Daud was alleged to have received the bribe to procure the contract, which saw NPA and Securency International awarded a RM95 million contract to print the RM5 polymer notes.

Abdul Kayum is charged under Section 11 (a) of the Anti-Corruption Act and faces up to 20 years in jail and a fine of five times the bribe amount. He faces the same penalty under Section 16 of the Anti-Corruption Act if found guilty.

Daud, 58, was charged with accepting the RM100,000 bribe from Abdul Kayum to help secure the contract. Daud faces the same punishement if convicted under Section 11(a).

Both men, accused of giving and receiving two bribes of RM50,000 each between Dec 1, 2004, and Feb 16, 2005, had pleaded not guilty.

Meanwhile, the six former employees of NPA and Securency International were then also charged at the Sydney magistrate’s court with “bribing Asian officials to secure contracts to print their currencies”.

They were former Securency chief executive Myles Curtis; former NPA chief executive John Leckenby; former Securency chief financial officer Mitchell Anderson; former NPA chief financial officer Peter Hutchinson; former Securency sales executive Rognvald Marchant and
former NPA sales executive Barry Brady.

Although Abdul Kayum is said to be at the centre of the investigations for Malaysian and Australian police, it was reported that the charging of Daud was only the “tip of the iceberg”, with more senior officials involved in the scandal.

Former prime minister Abdullah Ahmad Badawi had to deny allegations that two Australian banknote firms attempted to bribe him for a RM100 million Malaysian currency contract when he was still in office.

The Age had reported that anti-graft authorities believe Securency International and NPA allegedly sought to bribe Abdullah in 2003, with part of RM13.5 million in commissions made to two Malaysian middlemen.

Other than Kayum, the other agent for Securency International and NPA was named as former Umno state assemblyman Abdullah Hasnan Kamaruddin.

Home Minister Hishammuddin Hussein’s name was also mentioned in the scandal as another report had alleged that Securency International had hired a company chaired by his brother to help it win banknote contracts in Malaysia in 2009 as it could “offer it access to, and influence over,
Malaysia’s top politicians”.

The company, Liberal Texhnology Sdn Bhd, later said that Haris Onn Hussein, who is also Prime Minister Najib Tun Razak’s cousin, had sold his shares in 2006

Previously, it was also reported that three people were charged with being paid RM11.3 million to secure the contract from Bank Negara and to ensure that the government of Malaysia opted for polymer notes.

Meanwhile, RBA governor Glenn Stevens is expected to face questions about the allegations and the 2007 memo at a parliamentary committee hearing in Canberra on Friday.

The memo apparently contradicts several previous statements made by Stevens to a federal parliamentary committee in 2011 that the RBA did not know of bribes and corruption inside its subsidiaries before the 2009 reports.

Stevens had later corrected his testimony to say that a document had been provided to his deputy Ric Battellino, who is now retired.

The police inquiry began in May 2009 after The Age exposed the scandal.

Securency International prints polymer banknotes for 30 countries and was responsible for the 1998 Kuala Lumpur Commonwealth Games RM50 commemorative notes. The company itself has also been charged with three counts of conspiracy to influence foreign officials.