Note-maker governance not good enough: RBA
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CANBERRA, Nov 30 AAP
November 30 2012, 1:46PM
Central bank governor Glenn Stevens has conceded that governance polices at its two note-making companies at the centre of an alleged bribery scandal were clearly not good enough.
The agents of Reserve Bank of Australia's (RBA) wholly-owned subsidiary Note Printing Australia (NPA) and part-owned note-making firm Securency have been accused of offering bribes to overseas officials to gain business.
"We deeply regret the governance arrangements in the companies proved not to be strong enough to detect and prevent the things that are alleged to have occurred," Mr Stevens told a parliamentary hearing on Friday.
"To the best of our knowledge, the companies had appropriate policies, but clearly in the end if these matters occurred then one can only conclude for all that ... it wasn't good enough. There is no way around that."
In his opening statement to the joint committee on the Australia commission for law enforcement integrity, he said the companies had done a great deal of work to reform policies and compliance over the past several years.
"A key learning point for the Reserve Bank from these events is the extent of possible risks that can come from operating commercial ventures which export to a range of foreign jurisdictions," he said.
"This has caused the Reserve Bank to re-evaluate its risk appetite insofar as such entities are concerned."
The alleged corruption at NPA occurred in 2004, and was brought to the attention of its board by former employee Brian Hood, who was asked to prepare a paper for the board.
This triggered law firm Freehills to be commissioned to investigate the company in 2007.
It subsequently investigated Securency, but no irregularities were found in either case.
Mr Hood was made redundant in 2008 after the NPA was reorganised.
Mr Stevens said Mr Hood was treated more generously than the minimum requirement because of the value the company had put on his service.
He said NPA and Mr Hood had parted on good terms, but Mr Hood later initiated a claim that had recently been resolved.
Mr Stevens said out of respect for Mr Hood and his privacy he would not divulge the settlement.
"This was a negotiation where he initially claimed a very large sum of money. A smaller amount of money has been ultimately agreed," he said.
Australian Securities and Investment Commission (ASIC) deputy chairman Belinda Gibson, who also appeared at the hearing, asked for questions on Securency and NPA to be conducted in-camera, citing criminal prosecutions before the Supreme Court of Victoria.
Australian Greens leader Christine Milne, outside the hearing, questioned whether the RBA was naive or had turned a blind eye to corrupt acts because of the difficult jurisdictions in which the companies were working.
"I really think the Australian community is going to be wondering how we have such a failure of governance at the corporate level inside the Reserve Bank," she told reporters in Canberra.