Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I move:

That this House directs the Prime Minister to immediately establish a full and independent inquiry with:

(1) powers equivalent to a Royal Commission to investigate the bank note bribery scandal concerning the Reserve Bank of Australia, Securency and Note Printing Australia; and

(2) terms of reference that require it to investigate and report on at least the following matters:

(a) allegations of corruption in securing note printing contracts and payments to overseas agents into offshore tax havens;

(b) what the Reserve Bank of Australia, Austrade and the Australian Government each knew about the alleged behaviour, and when they knew it;

(c) what due diligence was applied and what investigations were conducted into the allegations;

(d) whether there has been appropriate governance by public institutions and companies;

(e) what action has been taken to prevent improper dealings occurring again and whether that action is sufficient;

(f) recommendations regarding future actions that should be taken by government and agencies to prevent similar problems in the future; and

(g) any related matters.

There is a dark cloud hanging over the Reserve Bank of Australia that only the government can remove. Saying hardly a word, the Treasurer has allowed this dark cloud to grow and cover ever more of the landscape. As a result, Australia's central bank sits with its governance under question. It is now time for the Prime Minister to step in and restore public confidence in the Reserve Bank with a full and independent inquiry.

It is absolutely essential in a democracy for the public to have confidence in the integrity and appropriate governance of our public institutions. In a market economy, it is particularly crucial that there is the same confidence in the key institutions that are tasked with managing the economy. That is what makes the recent allegations of involvement in bribery against two Reserve Bank subsidiaries, Securency and Note Printing Australia, all the more concerning. The more that is revealed about the bank note scandal, the more it appears that serious questions about corporate governance at the Reserve Bank need to be answered. It is also clear that questions need to be answered by the government, particularly with regard to Austrade and the Department of Foreign Affairs and Trade.

I want to review briefly some of what has been disclosed about this whole affair. According to reports by the Age, the leadership of the RBA failed to notify the police of evidence that it had as far back as 2007 that its subsidiary Note Printing Australia was involved with the bribery of foreign officials. The NPA board, which included former and current RBA board members or officials, was provided information in 2007 that company agents were bribing officials in Malaysia and Nepal, according to the Age. After being alerted to bribery concerns by the NPA board, the Reserve Bank leadership decided to handle the matter internally rather than notify the police. The Australian Federal Police were not told about these allegations regarding the NPA until May 2009, about two years later, and only after the Age exposed corruption concerns at the other RBA company, Securency. This is despite the RBA's chief auditor finding serious problems with NPA's use of agents and his findings being examined by the bank's audit committee, according to the Age.

To get to the nub of it, we are talking about tens of millions of dollars of public money. Both of the RBA's companies have now been charged with conspiracy to bribe foreign officials and a number of executives have also been charged. Yet the RBA is still to explain what and when it knew and how its oversight of these two companies could be so flawed as to allow this to happen. Most importantly—and this is crucial—we must get to the bottom of why it appears that the RBA failed for so long to notify police of the serious evidence of wrongdoing.

It is incredible to me that, in spite of these serious allegations of corruption and bribery and the breakdown in accountability and governance, the government and, in particular, the Treasurer have remained almost mute about the problem. It is the Australian Greens' view that the government can no longer be silent on this matter and it is time for action. The Prime Minister should establish a full and independent inquiry that has the powers it needs to get to the bottom of what has occurred, and it needs to look at everyone involved, including the Reserve Bank.

So I am moving this motion to make clear parliament's view that the government cannot ignore this problem and must establish such an inquiry. I want to make clear that in moving this motion there is no suggestion on our part that the AFP is not doing its job in investigating and bringing charges. This inquiry will not cut across the AFP's work because the inquiry's focus will be on the failure of governance within the RBA, something the AFP investigation does not necessarily have as its focus. This is not about undermining the Reserve Bank; it is the opposite—because now, more than ever, given the global financial instability, it is vital that public confidence in the Reserve Bank is restored. (Time expired)

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Is the motion seconded?

Andrew Wilkie (Denison, Independent) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

I am certainly pleased to have the opportunity to rise to speak on the matter of the Reserve Bank of Australia board and, in particular, its subsidiaries, Securency and Note Printing Australia. I note that this motion has been put forward by the Australian Greens. When you go to the heart of this matter, it is a call by the Australian Greens for there to be a full-blown inquiry into what the Reserve Bank knew, when they knew and what they did about it. However, the matters at the core of this issue, dealing with Reserve Bank board governance with respect to Securency and Note Printing Australia, are matters that I, as a member and Deputy Chair of the House of Representatives Standing Committee on Economics, have already asked the Reserve Bank Governor himself about at two inquiries that the economics committee has conducted with the Reserve Bank.

There can be no doubt that the issues and the allegations at the core of this matter are substantial. There can be no doubt that, when it comes to corrupt practices such as paying bribes to foreign officials, this is the kind of matter that ought to be dealt with very firmly. When these allegations were first raised with me, off the back of some very fine investigative work by a number of journalists, that was part of the reason I took it upon myself to ask some hard questions of the Reserve Bank Governor. It is beholden upon all of us in this place to make sure that we walk the fine line between allowing transparency and asking difficult questions on hard topics while not allowing matters to become partisan politics purely and simply because it suits certain agendas at certain times. So in good faith I put to the Reserve Bank governor a number of questions in 2010 and subsequently at hearings of the House of Representatives Standing Committee on Economics. We know that the time line is not as apparent as the mover of the motion put it. Certainly, it would suit these conveniences of the Greens to argue that there is a large conspiracy and a cover-up—and, in fact, we know there were corrupt officials being paid inappropriately by Australian agencies—but the truth is that it is simply not that clear-cut. Where the evidence tends to indicate that there may be a prima facie basis to support the assertion of a conspiracy and a cover-up, charges have been laid. The AFP is investigating the conduct at the core of this. They are investigating it in a way that is not beholden to party political process or prone to grandstanding but rather in a way that is focused upon discerning the truth—something that I fear is not at the core of the Greens motion on Securency.

There is one area on which I do agree with the Greens on this matter—that is, that a full and frank account is owed to the Australian people by the Treasurer. The reason I say it is owed by the Treasurer is that under evidence from the Reserve Bank Governor we know that the first time that information was transmitted from the Reserve Bank to the executive arm of government occurred under his watch as Treasurer of the country. That was the first time that this Labor Treasurer—or, indeed, any executive member of the parliament that we know of—was informed about some of the practices that had taken place and whether or not these practices were appropriate.

In defence of aspects of the activities of the Reserve Bank, it is clear to me, based upon the evidence that I have been given in answers from the Reserve Bank Governor and my own reading of, for example, the audit by KPMG and the evidence from Rick Battellino and others, that shortly after the AWB scandal the Reserve Bank board instructed that there be a thorough review of the practices and policies of NPA—that is, Note Printing Australia—and Securency in their use of offshore agents. Although the headline figures that the Greens used sound controversial, they were not inconsistent with a business of this size. The findings of that review made a number of recommendations. In some instances the use of agents was ceased, and in others it was continued. But there was a breakdown of management controls, and that is part of what AFP investigation has gone too.

In the fullness of time, a thorough political investigation may be the prudent thing to do; but right now is not the prudent thing to do. There is an AFP investigation. Charges have been laid. It is not the time for political grandstanding; it is time for the AFP to do their work. It may, however, be the appropriate time once the Treasurer has given account.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

In speaking to this motion, I say from the outset that I totally understand and accept the concern put up by the member for Melbourne to explain why he is raising this issue. I do not, however, accept and support his motion. The motion and the issue relate to the activity of the banknote marketing company Securency. Securency is half owned by the Reserve Bank of Australia and half owned by UK plastic film manufacturer Innovia. Securency was formed in 1996 to commercialise polymer banknote printing technology that had been jointly developed by the Reserve Bank of Australia and Australia's Commonwealth Scientific and Industrial Research Organisation, CSIRO. I think it is great to think that the CSIRO was involved in the development of the banknotes that are now being used by countries in other parts of the world. In order to win banknote supply contracts between 1999 and 2005 the marketing of the new design of these polymer banknotes began. If a contract is won, I understand that Note Printing Australia, a company 100 per cent owned by the RBA, manufactures the bank notes.

The prosecutions currently underway are the first under Australia's foreign bribery legislation introduced in 1999, and that in itself is quite significant—prosecutions are currently underway based on an act of parliament that was introduced 12 years ago, and this is the first time that it has been used. I understand that six former Securency officials have been charged with offences relating to bribing public officials in Vietnam, Indonesia, Malaysia and Nigeria. I understand further that Malaysian authorities have laid bribery charges against two individuals.

These matters are currently before the courts, and I would expect that the matters are also currently under continuing Australian Federal Policy inquiry. It is my view, and I believe it would be the government's view, that these matters are being properly investigated across international jurisdictions—and, in fact, charges have been laid. To widen the investigation, as the motion proposes, with powers equivalent to a royal commission whilst court proceedings are underway would in my view be inappropriate, regardless of whether it was to be an investigation conducted by a member or former member of the judiciary, by another suitable person or even by a committee of this parliament

As the member for Moncrieff has said, it may be appropriate to widen the investigation subsequent to the court outcomes, but it is not appropriate in the midst of court proceedings. In response to the member for Moncrieff's criticism of the Treasurer, I point out to the House that the alleged offences took place between 1999 and 2005—that is, prior to this government's coming to office and under the watch of the previous coalition government.

I also note, as other members who have spoken have noted, that in 2007 the Reserve Bank of Australia engaged corporate law firm Freehills to carry out a confidential probe of the activities in question. According to the Reserve Bank of Australia, Freehills found no breach of Australian law involving Note Printing Australia. Of course, we have not seen that advice and we rely on the Reserve Bank's response in respect to it. I further note that since 2008—that is, subsequent to the matters before the courts—Securency and Note Printing Australia have both had a change of chairmanship; the Reserve Bank of Australia's Assistant Governor, Dr Rob Rankin, is now the chairperson.

The member for Melbourne referred to today's Age newspaper, where a story by Richard Baker and Nick McKenzie in which allegations of bribery associated with 2002 and 2004 note printing contracts for the Nepalese government by Note Printing Australia appear. I understand that the Australian Federal Police is also investigating that matter.

This is a serious matter—any allegation of corruption or bribery is serious—and it is reflected by the penalties associated with the matter. However, I say to the member for Melbourne, 'Let us wait to see what the court outcome is before we take this matter further.' (Time expired)

Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on this motion regarding bank note bribery allegations. I would like to congratulate my colleague, Steven Ciobo, who asked a series of questions about this very issue during a recent House of Representatives committee hearing with the Reserve Bank.

We know that the role of the Reserve Bank is a critical one. The Reserve Bank of Australia is Australia's central bank. It conducts monetary policy, it works to maintain a strong financial system and it issues the nation's currency. It is a policy making body, and that policy making body has serious responsibilities. It provides selected banking and registry services to a range of Australian government agencies and to a number of overseas central banks and official institutions. It also manages Australia's gold and foreign exchange reserves. Any question as to the propriety of the Reserve Bank is a very serious one.

The question at the fore today relates to two subsidiaries of the Reserve Bank: Securency, 50 per cent owned by the Reserve Bank; and Note Printing Australia, 100 per cent owned by the Reserve Bank. There have been a number of allegations that have been ventilated in the media over a period of time. At the core of the issues that have been raised is the use of agents and those agents making payments, or bribes, to secure contracts overseas. This is currently under police investigation. However, there are still questions around who knew what, when they knew it and what they then did about it. It would be a serious issue indeed if the RBA did not have appropriate governance standards to identify any potential breaches of the law. It would be a critical issue indeed for the RBA if in fact it was made aware of issues and did not immediately refer those issues to the police for investigation. It would be a serious issue if the RBA tried to deal with this matter internally. It would be a serious issue if the RBA did not notify the government when it became aware of the concerns regarding allegations of bribery of foreign officials.

Thinking back on some of the recent matters that have involved allegations of foreign bribes, I recall Kevin Rudd making quite a lot of noise about these issues in 2005. In fact, he had quite a lot to say about it. He said it was most critical that in circumstances where these sorts of allegations are made they should be properly and thoroughly investigated. In fact, he indicated that, foreign bribes were associated with the 'worst corruption scandal in Australia's history'. The government needs to look very seriously at the position it is taking on this issue today compared with the position that it has taken it the past.

As I said before, before the Greens' member for Melbourne there was Steven Ciobo. He has done quite a lot of forensic work on this issue in the House of Representatives Standing Committee on Economics in his pursuit of questioning of the Reserve Bank Governor. He asked a series of questions during the last meeting. Specifically, he asked when the Reserve Bank was made aware of these issues. The Reserve Bank Governor said in his response that he was first made aware of the issues in relation to Securency in May 2009, which is when the reports were first publicly ventilated. However, according to recent media reports, it seems that the board was aware of issues relating to the sister company, Note Printing Australia, in May 2007. So there are some serious issues to be properly investigated and looked at. I note that there is going to be a committee hearing of the Reserve Bank on Friday and I am sure that these questions will be addressed during that hearing. It is imperative that the police are able to get on with their investigation. This is critical. The government should not stand in the way of any police investigation. The police should be able to go about their business and to secure the information that they need in order to do their job properly and thoroughly.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the motion of the member for Melbourne, which calls for this House to establish an independent inquiry into the 'bank note bribery scandal concerning the Reserve Bank of Australia, Securency and Note Printing Australia'. The motion suggests that such an inquiry should have powers equivalent to a royal commission. This is a serious call indeed, and one that this House should think about carefully before endorsing. It is a matter of record that serious allegations have been made, but it is also worth noting, as previous speakers in this debate have done, that the Reserve Bank has conducted internal reviews which found no wrongdoing on the part of any RBA staff or RBA appointed board members of Securency. The matter is also under investigation by the Australian Federal Police, and it might therefore be thought appropriate for this House not to step into a space which is already occupied by a police investigation.

It is a great irony that one of the great Australian inventions that we often point to, the polymer bank note—which, alongside the black box, is often regarded as one of Australia's great innovations—should be caught up in an apparent scandal like this. It is important to recognise the statements the Reserve Bank of Australia have made concerning the scandal which, as previous members have noted, arose in 1999 to 2005. By coincidence, that is around the same period the AWB scandal was occurring that the member for Higgins referred to. The Reserve Bank of Australia noted in a statement on 1 July this year:

None of the individuals charged now has any connection with the companies or with the Reserve Bank.

No one in the Reserve Bank has been accused of wrongdoing, nor have any members of the company boards who were drawn from the Reserve Bank.

The Reserve Bank's statement also noted:

Over the past several years much has been done to tighten controls and strengthen governance so as to avoid any re-occurrence of the alleged behaviour:

The Reserve Bank statement ended by noting that it would not make further comments about the charges as they were now to be tested in the courts. Similarly, this House should wait and see the results of those police investigations before putting in place an investigation of our own.

It is absolutely critical that we recognise the context in which we are having this conversation. Amidst some global turmoil on US and European markets, Australia has extraordinarily strong economic fundamentals, one of the lowest unemployment rates in the developed world, one of the lowest levels of government debt in the developed world, and strict fiscal rules and strong banks. In the Asian century we are located in the fastest-growing region of the world, deeply enmeshed in the economies of Asia.

It is true, of course, that a high dollar puts pressure on certain sectors, Dutch disease puts pressure on manufacturing, domestic tourism and our higher education sector, which is reliant on overseas students. But it is important when we are discussing matters such as the Reserve Bank and the conduct of monetary policy in Australia not to forget the fundamental economic environment in which we find ourselves. Ours is a position that almost any developed country in the world would be glad to trade places with. Both the Treasurer and the Reserve Bank governor note that when they attend international meetings virtually any colleague around the world would be happy to trade places with them. So it is in that strong economic context that this conversation is occurring.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise to speak on this motion proposed by the member for Melbourne that there ought to be a royal commission into the question of the allegations which have been made concerning the Reserve Bank of Australia and its subsidiaries.

The issue before the House this evening is not whether serious allegations have been raised about the conduct of individuals involved with the Reserve Bank or its subsidiaries. It is true that serious allegations have been raised. The issue is not whether the Reserve Bank of Australia or its subsidiaries should comply with the law. Of course they ought to comply with the law, be that in Australia or in any other jurisdiction around the world in which that organisation, its subsidiaries or its officials or executives are operating. The issue is not whether there is a need for this matter to be investigated. If allegations of this degree of seriousness have been made and have been reported then clearly there is a need for them to be investigated. The issue is not whether on this side of the House we take this matter very seriously. Clearly, we do take this matter very seriously and, as the House has already been informed, the member for Moncrieff has been assiduous in pursuing this matter in the House Standing Committee on Economics, asking a number of questions about it because it does raise a very serious question of public interest. The issue is not whether the Reserve Bank of Australia is a major economic institution in this country. Of course the Reserve Bank of Australia is an institution of the very first importance to economic management and to the economic security that Australians rightly expect the government to provide.

The issue before the House, which is encapsulated in the notion that we are considering, is a far more narrow and precise issue. It is this: what is the right process to investigate and to pursue the allegations which have been made? As the House is well aware, this matter is being investigated by the Australian Federal Police. I emphasise that on this side of the House we make no comment about the merits of that process and of course all individuals involved are entitled to the presumption of innocence. I simply make the point that there is a process being carried on as we speak by a federal government agency, the Australian Federal Police, in relation to the allegations which have been made and so therefore, against that backdrop, the question before this House tonight is a very simple, clear one: is there a case to overlay that process which is presently underway with an entirely new and separate process, the process embodying and involving a royal commission?

A royal commission ought not to be set up lightly. There is a high bar that must be met before any government should commence to establish a royal commission. There must be a demonstrated view that the existing mechanisms for investigating the matter are inadequate. There must be a justification. There must be a basis for granting the coercive powers which royal commissions typically have. Royal commissions typically have the capacity to deal with witnesses in a way which denies them many rights of procedural fairness that are available to a witness in an ordinary traditional judicial proceeding. If you are to set that higher standard, if you are to establish a body with these out of the ordinary powers, you need to demonstrate that there is a case to do that and that the established processes are not sufficient, are not adequate, to deal with the allegations which have been made. You have to do more than say that there are serious questions which need to be investigated. You have to demonstrate that the existing processes of investigation which, as the House is aware, involve the Australian Federal Police are not adequate. The simple point I make is that that has not been demonstrated.

Debate adjourned.