RBA bosses approved tactics in Nigeria deal
Nick McKenzie and Richard Baker
October 12, 2009 - 12:00AM
Senior Reserve Bank of Australia officials approved the high-risk business practices that have put its bank-note firm at the centre of an international police probe.
The Age has learnt that serving and former RBA board members were aware of a controversial commissions-for-contracts model used by its polymer bank note company Securency to strike deals in some of the world's most corrupt countries.
Under the model, Securency offers politically connected foreign middlemen commissions that far exceed the industry standard of about 7 per cent, if they are successful in convincing politicians and central banks to switch from paper to polymer currency.
The revelation of the RBA's approval of the commissions-for-contracts model comes as Nigeria's media accuse some of the country's most senior central bank and finance officials of profiting from the millions of dollars sent by Securency to secret tax haven accounts.
A top Nigerian Government figure, who requested anonymity, told The Age that local police agencies, including the Economic and Financial Crimes Commission, would assist the Australian Federal Police taskforce investigating Securency.
Central Bank of Nigeria governor Sanusi Lamido Sanusi has also reportedly promised to launch an internal investigation into the bribery allegations.
The Age can reveal that more than $10 million in commissions were sent to offshore accounts in connection to the company's dealings in Africa, where in 2006 it convinced Nigerian officials to switch the country's paper banknotes to polymer.
The RBA this week refused to explain what the payments were for or why they were sent to secretive offshore banking accounts - which makes them difficult to trace.
The RBA said the AFP investigation also made it unable to answer questions about why its representatives on the Securency board allowed the high-risk business activity of paying large commissions to agents to continue after its sister firm Note Printing Australia stopped the practice in 2007.
The police inquiry may continue for months. Accounting firm KPMG has also been engaged by the RBA to review Securency's business practices.
Several sources aware of Securency's operations, including a former RBA board member, confirmed the bank's board representatives approved the company's commission-for-contracts model.
Securency was established in 1996 and is jointly owned by the RBA and a British private equity firm. It is chaired by RBA assistant governor Bob Rankin and its board has had several serving and former RBA officials. NPA is fully owned by the RBA and also chaired by Dr Rankin.
In its recently released annual report, the RBA said its Securency board members had ''put measures in place'' to ensure ''strict and unambiguous protocols'' to govern the use of commission agents.
Despite these protocols, Securency has engaged commission agents previously implicated in corruption scandals and who received payments to tax-haven accounts in the Seychelles, United Arab Emirates, Switzerland and other overseas locations.
University of Sydney corruption expert David Chaikin said the RBA's international reputation was suffering: ''It is pretty rare, certainly for a first world country, to have a central or reserve bank accused of being involved in unethical behaviour.''
Dr Chaikin said Securency's practice of promising agents larger-than-normal commissions if they succeeded in winning a contract ''effectively promoted corrupt behaviour''.
The AFP investigation was a big opportunity for the Rudd Government and the AFP to demonstrate how Australia dealt with alleged international corruption, he said.
''The Government and the AFP have been talking the talk for a long time. Now with Nigeria signalling its willingness to investigate the allegations over there, it has opened up a huge opportunity for the AFP to get to the bottom of this.''
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This story was found at: http://www.theage.com.au/national/rba-bosses-approved-tactics-in-nigeria-deal-20091011-gsew.html