Questions pile up about the RBA's wayward child

October 2, 2009
The Reserve must start accounting for its oversight of Securency.
FOR obvious reasons Australians are entitled to expect their central bank to comply with the highest
standards of probity, transparency and good governance. This includes an assumption that the
Reserve Bank, as chief custodian of the nation's financial system, would apply proper scrutiny to the
activities of its subsidiary companies, especially when those companies seek contracts, however
lucrative, in corruption-riddled parts of the world.

And yet as The Age continues to expose a worrying trail of dubious deals struck by the RBA's half-
owned subsidiary Securency, the Reserve has maintained a somewhat undignified silence on the
subject. We acknowledge the RBA acted properly in initiating a federal police probe - and KPMG audit -
into commission payments made by Securency to politically connected foreign middlemen. We would
not expect the RBA to say anything that cuts across those inquiries.

But the silence is beginning to smell like an unwillingness to face facts and to act on them. Securency's
operations, namely the engaging of middlemen with shady pasts and the payment of commissions into
offshore tax haven accounts (contrary to RBA rules) and the curious size of those commissions, raise
serious questions about the extent of the RBA's knowledge and the quality of its oversight.

At the very least, we deserve some kind of explanation about why, in the Reserve's recent annual
report, governor Glenn Stevens expressed confidence in the way the bank had supervised Securency's
activities. The bank has effectively opened the door on its own probity through this extraordinary
assertion.

The Reserve's failure to stand down officials within Securency while the company remains under
investigation - a convention of good governance - is also mystifying.

As The Age reports today, federal police are investigating whether Securency bribed Nigerian officials
to win a bank-note contract. The probe centres on a series of multi-million-dollar payments made by
the company into an offshore tax haven account of two UK-based businessmen, Benoy Berry and Mike
Harding, who boast high-level political connections in Britain and Africa. The men were paid to help
Securency win a 2006 contract from the Central Bank of Nigeria to print its polymer notes.

An Age investigation unearthed evidence the firm paid millions into a tax haven bank account
belonging to Dr Berry, while an overseas-based source claims Securency paid $1 million into accounts
tied to two companies overseen by Mr Harding. Our investigation also found that Mr Harding directs
some of his companies' earnings into a tax-free business zone at Sharjah airport in the United Arab
Emirates.

The RBA declined to answer questions about Securency's activities in Nigeria, in the same way it kept
mum last month when Securency's Africa manager, Peter Chapman, resigned and the company's
convicted South African middleman, Donald McArthur, was sacked. The sacking took place only
after The Age revealed McArthur had pleaded guilty last year to reckless trading involving fraudulent
transactions. Again, the details of Securency's engagement with McArthur raise questions of the RBA.

And there's more. Why did Securency in 2003 engage an arms dealer linked to the supply of weapons
to Latin American drug gangs to help it win a bank-note printing deal in Paraguay? Why did Securency
discuss its bank-note technology with Sudanese central bank officials last year? Doing business with
Sudan would not violate Australia's international obligations under the UN sanctions regime, but should
an RBA subsidiary even be talking to a country backlisted by the US for supporting terrorism and
ranked among the world's most corrupt by Transparency International?

And, while we're at it, why did the RBA pay $500,000 to a self-styled ''white witch'' to oversee an
ultimately disastrous workplace overhaul at the fully owned Note Printing Australia, Securency's sister
company? On the other hand, perhaps a consultant with special powers may have helped Securency's
officials better appreciate the risks of using agents in corruption-prone countries.

Government agencies and departments must also account for their knowledge of Securency's
activities, and their action, or inaction, as a result. But first, we wait for our bank to speak.
No prize for losing? Not in the AFL, and that's wrong
MONEY talks. For months the AFL flatly dismissed the concerns of commentators, fans, club officials
and players that once clubs were out of finals reckoning they were willing to lose deliberately to gain
extra draft picks. Now the AFL has been required to satisfy the state gambling regulator that ''tanking''
does not happen. Its first formal response failed to do so, but this time the AFL cannot afford to leave
its head in the sand. The Victorian Commission for Gambling Regulation can strip the AFL of its right to
a percentage dividend on betting on games or can ban betting on low-placed teams, thus hitting the
AFL where it hurts.

The league needs to do a better job of satisfying the regulator than it did with fans, commentators and
bookmakers during the season. Bookmakers said ''tanking'' was a factor in framing odds on low-placed
teams. At times, concern was so great that betting on the wooden spoon was suspended. Former
Melbourne player Russell Robertson made it clear last week that tanking was not a matter of asking
players to lose. As he noted, Melbourne ensured it won no more than four games - and thereby
retained a priority pick, giving it the top two draft selections - by playing most of its team out of
position. For bookmakers and punters, a lot of money is at stake and the amounts are growing along
with a pervasive betting culture. Millions are wagered in a distorted market, which is the focus of the
regulator's concern.

Yet for those who revere the game purely as a footballing contest, priority picks, in particular, make
the prize for losing too great. Even if this only weakens a team's will to win, that is enough to cast
doubt on the integrity of results. The new Gold Coast and Western Sydney teams have been given the
pick of the draft in coming seasons, but after that priority picks should be dropped to restore public
confidence in every contest.

RBA bosses approved tactics in Nigeria deal

NICK MCKENZIE AND RICHARD BAKER
October 12, 2009
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, toldThe 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.''

GOT A TIP? email investigations @theage.com.au

RBA gets 'please explain'

NICK MCKENZIE AND RICHARD BAKER
October 14, 2009
THE head of Nigeria's central bank has called on the Reserve Bank of Australia to explain why its bank-
note firm's dealings in Africa involved multimillion-dollar payments to offshore tax havens.

Central Bank of Nigeria governor Sanusi Lamido Sanusi described as ''disturbing'' the revelation that
more than $10 million in commissions were wired to accounts - including some in secretive tax havens
- by the RBA's bank-note firm Securency.

Securency, which is overseen by the RBA and chaired by assistant Reserve Bank governor Bob Rankin,
sent the payments to middlemen it hired to win banknote deals in Nigeria and elsewhere in Africa.

The request for an explanation from one central bank to another in connection to a corruption scandal
is unprecedented in international banking and comes amid the Australian Federal Police's inquiry into
allegations Securency may have engaged in foreign bribery.

Asked whether the RBA should shed some light on why its subsidiary sent large commissions to tax
havens, Mr Sanusi said: ''I think they [the Reserve Bank] should explain. I think that corruption is a
two-way street: there are those who give and those who take. We must fight it from both ends.

''The best way to fight corruption is to expose it and we must get to the bottom of it. If the
investigations go deeply enough and the money trail is followed, the beneficiaries will be exposed,'' Mr
Sanusi said.

In his interview with The Age, Mr Sanusi also stressed the need to combat corruption in Nigeria, which
has had a devastating impact on the west African nation's development.
Nigeria switched from paper currency to Securency's polymer banknotes during the five-year reign of
Mr Sanusi's predecessor at the central bank, Charles Soludo.

Mr Sanusi's comments come as RBA governor Glenn Stevens and Mr Rankin continued to refuse to
answer questions about the growing commission-for-contracts scandal.

Earlier this month, The Age revealed that two well-connected UK-based businessmen, Mike Harding
and Benoy Berry, received tax-haven account payments from Securency. Their role apparently
involved convincing central bank governors and politicians in Africa of the merits of polymer currency.

Securency's Africa manager, Peter Chapman, recently resigned from the company while its South
African agent, Donald McArthur, who is a convicted white-collar criminal, was recently sacked.
Securency, along with Mr Chapman and Mr McArthur - through their lawyers - have denied any
wrongdoing.

Asked whether he would encourage Nigerian policing agencies to assist the AFP inquiry, Mr Sanusi
said: ''It will be in the interest of this country in my view to work closely with all agencies aiming to
expose and deal with corruption and our agencies will give all support.''

Mr Sanusi said the scope of local police investigations would depend on the information provided by
Australian authorities.

''My sense is that this investigation will need to be triggered by some concrete information showing
that Nigerian officials benefited financially from any aspect of the polymer contract,'' he said.

''If we had this, I have no doubt the President will authorise our Economic and Financial Crimes
Commission to work with Australian police authorities to get to the bottom of things.''

Mr Sanusi said he was keeping a close watch on the story, which has dominated the Nigerian media
since The Age revealed that large commission payments and offshore accounts were tied to
Securency's Nigerian dealings.

Mr Stevens has declined to answer questions about what Securency's commission payments were for
or why they were sent to secretive offshore banking accounts - which makes them difficult to trace.

A Reserve Bank spokeswoman has previously said the RBA would not comment on Securency's
operations due to the ongoing AFP investigation.

Got a tip-off? Email investigations@theage.com.au

RBA company 'bribed Nigerians'

RICHARD BAKER AND NICK MCKENZIE
October 2, 2009
A RESERVE Bank of Australia company is under Federal Police investigation for allegedly bribing
Nigerian officials to win a bank-note deal in the most serious development yet in the cash-for-contracts
scandal.

The bribery probe centres on a series of multimillion-dollar payments by RBA firm Securency into
offshore bank accounts of two British-based businessmen.

Benoy Berry and Mike Harding boast high-level political contacts in Britain and Africa.

The Age can reveal that among those contacts are senior British politician Lord David Steel and his
adviser Atul Vadher, who were involved with Dr Berry and Mr Harding in another venture, Global
Secure Currency Ltd, about the same time the pair were promoting Securency in Africa.

Lord Steel is a co-founder and former leader of Britain's Liberal Democrats political party, inaugural
presiding officer of the Scottish Parliament, a life peer of the House of Lords and vice-president of the
Royal African Society.
His long-time assistant, Dr Vadher, has also been an adviser to at least two African governments and
contested the 1999 European Parliament elections for the Liberal Democrats. The Age is not
suggesting any wrong-doing by Lord Steel or Dr Vadher.

Securency's payments to Dr Berry and Mr Harding, coupled with their links to a senior British politician
and his adviser, are likely to attract the interest of Britain's Serious Fraud Office.

An AFP taskforce has been investigating Securency since May for possible breaches of Australia's
criminal code, which outlaws payments to foreign officials.

The probe is focused on large commission payments by Securency to politically connected foreign
middlemen, often into tax haven accounts.

An investigation by The Age into Securency's Nigeria activities can reveal that the RBA firm paid
millions of dollars into a tax haven bank account belonging to Dr Berry. The total figure is not known.

In 2006, Dr Berry's security technology company Contec Global was investigated by Uganda's
corruption watchdog after the country's internal security agency accused it of paying a $1.8 million
bribe to a minister. The bribery allegation could not be proved, but a report found the Ugandan
minister had been improperly "fronting" for Dr Berry's firm because he stood to benefit from the deal.
Dr Berry has not responded to inquiries from The Age.

An overseas-based source aware of Securency's dealings in Africa said the firm paid more than $1
million into accounts tied to two companies effectively overseen by Mr Harding, 72, including one
called called JH Marketing Africa 2000.

Mr Harding, associated with the British Conservative Party, lived in Africa for 20 years working for
British company Unilever.

The Age has learned that Mr Harding directs some of his earnings into a company account in a
secretive tax-free business zone at Sharjah airport in the United Arab Emirates.

UAE officials said they could only disclose who owned the business if they were given a "judicial order".
But The Age linked the UAE entity that received the Securency payment to Mr Harding by matching its
phone number to a telephone listing in the Englishmen's home town of Bracknell.

Mr Harding, who initially denied any association with Securency when questioned by The Age earlier
this year, said last week he could not discuss the payment from Securency to his UAE company
because it had become "a legal matter".

Dr Berry and Mr Harding were paid to help Securency, which is half-owned by the RBA and British firm
Innovia Films, promote its polymer currency across Africa and win a 2006 contract from the Central
Bank of Nigeria.

Mr Harding said the Nigeria negotiations were handled by the company's Africa manager, Peter
Chapman, and Dr Berry. Mr Chapman recently resigned and is believed to be in Brazil.

"I had nothing to do with the supply contract to Nigeria," Mr Harding said. "It was all handled by Mr
Chapman and Mr Berry. I became involved after that was agreed."

Despite Mr Harding's attempts to distance himself from Dr Berry, corporate records show the pair to be
the only shareholders in a British company called Global Secure Currency Ltd, registered in 2004.
Corporate records show Lord Steel and Dr Vadher were Global Secure Currency Ltd directors between
September 2005 and August 2006.

Mr Harding denied any involvement in the shell company, saying he did not pay for the shares allotted
to him. "I won't have anything to do with shell companies . . . they can be used to launder money," he
said.

Lord Steel and Dr Vadher were also directors of Dr Berry's Contec Global company during the same
period. Corporate records show the pair remain small shareholders in Contec Global.

Dr Berry, who is also Burundi's honorary consul to India, was last month threatened with prosecution
by the Central Bank of Nigeria for being among the country's worst debtors.

Lord Steel told The Age this week his business association with Dr Berry was shortlived and that
neither he nor his assistant Dr Vadher received any directors' fees or attended board meetings.

"We met Benoy Berry when we were in Uganda and he was angling for a contract there," Lord Steel
said in a statement.

"He seemed a pleasant and successful guy and he asked us to join his board, which we agreed to do.
We were never shareholders.

"However, we soon became disillusioned and decided to disengage . . . I am surprised to learn that we
were even registered as directors, because our association with him lasted only a few months."

It is not the first time Lord Steel has been involved with controversial companies and businessmen.

In the 1990s, he was a director of Heritage Oil & Gas, which was run by British businessman Tony
Buckingham. Mr Buckingham also directed controversial mercenary soldier company, Executive
Outcomes, which was involved in conflicts in Sierra-Leone and Angola in 1995.

Lord Steel is also involved with controversial Anglo-Iraqi businessman Nadhmi Auchi, who heads
finance and arms trading company General Mediterranean Holdings. Lord Steel has been a GMH
director for many years.

Auchi was convicted of fraud in France in 2003 over his role in the takeover oil company Elf. Auchi is
challenging his conviction and two-year suspended jail sentence. The RBA continues to refuse to
discuss Securency's overseas activities.

Got a tip? Email investigations@theage.com.au

Push for RBA Senate probe

BY RICHARD BAKER AND NICK MCKENZIE
October 5, 2009
The Reserve Bank of Australia is facing calls for a Senate inquiry into the cash-for-
contracts scandal engulfing its banknote printing companies.
THE Reserve Bank of Australia is facing calls for a Senate inquiry into the cash-for-contracts scandal
engulfing its banknote printing companies.

The Greens will push today for an inquiry into multimillion-dollar payments made by RBA firms
Securency and Note Printing Australia to politically connected foreign middlemen.

Greens leader Bob Brown said the damage to the RBA's reputation caused by the disclosures about
alleged bribery by Securency was of sufficient public interest to warrant a Senate inquiry.

An Australian Federal Police taskforce has been investigating a series of large payments made by the
RBA firms into the tax haven bank accounts of shady middlemen they hired to help win contracts.

Senator Brown, who is likely to have the support of Family First senator Steve Fielding and
independent senator Nick Xenophon, will require backing from either Government or Opposition
senators for his push for an inquiry to be successful.

So far the Government and Opposition have refused to comment on the controversy surrounding the
RBA's firms and have blocked previous moves to have Parliament scrutinise their activities.

Senator Brown said he would be surprised if the Government and Opposition blocked his push for an
inquiry.
"It is a Senate committee's job to inquire into matters of public interest and it would be a very serious
matter for issues of this magnitude to be denied an inquiry," Senator Brown said.

"I can't see how the Government and Opposition can vote against it. If they do, they are going to have
to be right on top of the issue and argue why on the floor of the Senate."

If Senator Brown succeeds in his move for an inquiry, RBA assistant governor and Securency chairman
Bob Rankin and a host of the company's senior executives are likely to be called to give evidence.

The push for a Senate inquiry comes as an English businessman, paid more than $1 million by
Securency to represent it in Africa, told The Age he would have no further dealings with the firm until
its senior managers were sacked or resigned.

"We want no more contact, no more dealings, because these boys are struggling to find a way out of
their problems and it is going to become a very serious case," Mike Harding said.

The Age last week revealed Mr Harding and another British-based businessman, Benoy Berry, were
paid several million dollars by Securency to market the company's polymer notes in Africa and to win a
currency printing deal in Nigeria. Much of the money was paid into tax haven bank accounts.

The payments to the politically connected businessmen are at the centre of an AFP investigation into
Securency for allegedly bribing Nigerian officials to win a 2007 contract.

Asked if he was aware of any bribes being paid to Nigerian officials, Mr Harding said: "It is the nature of
the beast. I'm not ignorant of what goes on. As soon as I learned of the troubles with Securency I
pulled right back."

The AFP inquiry will examine the links between Dr Berry, who has previously been investigated for
corruption in Uganda, and senior British politician Lord David Steel and his adviser Atul Vadher. The
Age is not suggesting any wrongdoing by Lord Steel or Dr Vadher.

Lord Steel, founder of the Liberal Democrats party, and Dr Vadher were directors of a company called
Global Secure Currency Ltd, which was registered in 2004 with Dr Berry and Mr Harding as the
shareholders.

Lord Steel and Dr Vadher resigned as directors of Global Secure Currency in 2006 after 11 months on
its board. The pair also resigned as directors of another of Dr Berry's companies, Contec Global, at the
same time. Corporate documents show they remain small shareholders in Contec Global.

Lord Steel told The Age that he met Dr Berry in Uganda some years ago and agreed to join his
companies' boards. He said neither he nor Dr Vadher received any directors' fees and they had quit
their roles after becoming "disillusioned".

Mr Harding, who denies any wrongdoing in his work for Securency, told The Age there was concern in
Nigerian political circles about the events that led to Securency's contract with the Central Bank of
Nigeria.

"The Senate in Nigeria will ask for a judicial review of the contract and that whole business," the 72-
year-old businessman said. "I have a team of lawyers advising me . . . I've put a ring of protection
around everything that I may or may not have done. There are all kinds of ramifications."

Australia rebuked on graft cases

RICHARD BAKER AND NICK MCKENZIE
October 6, 2009
THE world's leading authority on corruption has criticised Australia's record on pursuing foreign bribery
cases as Nigeria moves to investigate kickback allegations against a Reserve Bank of Australia
company.

The Organisation for Economic Co-operation and Development told The Age Australia had not launched
a single prosecution for foreign bribery offences in the decade since it joined dozens of nations in
ratifying an anti-bribery convention.
OECD anti-corruption head Patrick Moulette said Australia had for several years delayed acting on
recommendations to increase fines for those convicted of overseas bribery. He said Australia had only
implemented 12 out of 22 OECD recommendations for toughening its stance on foreign bribery.

Australia's decision to reject an OECD recommendation to ban companies convicted of bribery from
bidding for government contracts was disappointing, he said.

In response to criticism from the OECD and corruption watchdog Transparency International, the
Government last month introduced a bill to increase fines for those convicted of foreign bribery.

The OECD's criticism of Australia came as the Central Bank of Nigeria yesterday said it would
investigate claims its officials received bribes to award a banknote supply contract to RBA company
Securency.

The bank's governor, Sanusi Lamido Sanusi, told Nigeria's Daily Trust newspaper that police and
Nigeria's anti-corruption body were also likely to probe allegations the bribes were funnelled via UK-
based businessmen, paid millions of dollars by Securency.

An Australian Federal Police taskforce has been investigating polymer banknote supplier Securency
and sister company Note Printing Australia since May. The police probe centres on a series of
multimillion-dollar payments made by the RBA companies to politically connected middlemen to help
win contracts in Asia, Africa and Latin America.

Many payments were to tax-haven bank accounts, contrary to RBA rules. Several of Securency's
middlemen have been implicated in previous corruption scandals and one has been convicted of white-
collar crime.

The Age also learnt last night that the Rudd Government was unlikely to back a push by the Greens for
a Senate inquiry into corruption allegations against Reserve Bank subsidiaries.

A spokesman for Government Senate leader Chris Evans said the matter of the RBA companies had
been referred to the AFP and that it was ''inappropriate to comment further''.

The Opposition said it would discuss supporting Greens leader Bob Brown's motion in a party room
meeting. The Greens will need its support to instigate the Senate inquiry.

Got a tip? Email: investigations@theage.com.au

roker
RICHARD BAKER AND NICK MCKENZIE
September 10, 2009
THE Federal Government's trade agency warned the Reserve Bank of Australia about using a Kuala
Lumpur arms broker to help win currency printing deals in Malaysia.

Malaysian businessman Abdul Kayum Syed Ahmad has been a broker for a Pakistani weapons
operation suspected of playing a key role in that country's nuclear arms program.

He is the second arms trader to be used as an agent by one or both of the RBA's currency firms,
Securency and Note Printing Australia. The Age last month revealed Securency's use of an arms dealer
suspected of supplying guns to Latin American drug gangs as its agent in Paraguay.

Former business associates of Mr Ahmad told The Age that he claimed to have high-level political
connections in Malaysia that he could use to help strike deals for foreign companies.

Securency and NPA engaged Mr Ahmad in the late 1990s to lobby Malaysian government and banking
officials to adopt the Australian-made polymer banknotes.

The Australian companies won currency printing contracts in Malaysia in 1998 and 2004.
An Australian Federal Police taskforce is investigating Securency's payments of multimillion-dollar
commissions to shady foreign middlemen used to help win currency printing deals in Africa, Asia and
Latin America.

Some payments were made into accounts in offshore tax havens, contrary to Reserve Bank rules.
Several of the company's agents have been implicated in corruption scandals and one has been
convicted of white collar crimes.

The revelation of the use of a second arms dealer came as Securency insiders told The Age that the
details of the company's multimillion-dollar payments to foreign middlemen were only known to about
five senior executives, including managing director Myles Curtis.

An Austrade background check on Mr Ahmad was done in July 2007. Its findings prompted the Reserve
Bank to audit all foreign agents used by NPA.

By late 2007, the Reserve Bank had ordered NPA to sever ties with Mr Ahmad and its other overseas
middlemen due to integrity concerns.

A former NPA director told The Age: ''We thought the use of some agents posed a risk to the Reserve
Bank.'' When asked about the use of an agent in Malaysian, he said: ''There is enough doubt in any of
these countries when you use agents. The potential [for corruption] is always there.''

Despite the probity fears, the Reserve Bank's other polymer banknote company, Securency, continued
using its network of foreign agents in an arrangement overseen by Mr Curtis.

Securency is believed to have continued its association with Mr Ahmad for some time after NPA
stopped dealing with him.

The Reserve Bank fully owns NPA and half owns Securency in partnership with a British private equity
firm. Both companies are chaired by RBA assistant governor Bob Rankin.

Mr Ahmad's Kuala Lumpur investment company Aksavest is alleged to have received hundreds of
thousands of dollars in commissions from Securency and NPA.

Sources aware of the RBA companies' dealings in Malaysia have told The Age that the commissions
paid to Mr Ahmad were exceptionally high. They also said the deals with Malaysia's central bank could
have been done without the involvement of a middleman.

An archived page from Mr Ahmad's Aksavest website from 2001 displays ties to Securency and NPA.
The website also tells of his company's role as an affiliate of the Pakistan Government's Air Weapons
Complex, which makes a range of laser-guided bombs, un-manned aircraft and air defence software.

Global anti-proliferation watchdog the Nuclear Threat Initiative says the Air Weapons Complex has
been identified as the ''facility most likely involved with the weaponisation of Pakistan's air and ballistic
missile deliverable devices''.

Mr Ahmad declined to discuss his work for Securency and NPA, while the RBA's Dr Rankin refused to
answer questions about Securency and NPA's activities in Malaysia.

Heads roll at RBA company

NICK MCKENZIE AND RICHARD BAKER
September 15, 2009
A scandal involving the Reserve Bank of Australia and its global banknote printing activities has
claimed its first casualties, with the departures of two key executives.

Peter Chapman, Africa manager at the RBA's polymer bank-note firm Securency, has resigned, while
the firm's South African middleman - white-collar criminal Donald McArthur - has been sacked.

Their departures come amid a continuing Australian Federal Police probe into the company.
As the Africa manager of Securency, Mr Chapman directed the movement of millions of dollars in
commissions to bank accounts in offshore tax havens and other locations as the company tried to win
contracts from central banks around the continent to print polymer notes.

News of his departure comes a day after the Government and Opposition quashed moves in the
Senate to scrutinise the company's dealings in Asia, with a motion from Greens leader Bob Brown
voted down.

The AFP is probing Securency's payment of multimillion-dollar commissions to shady foreign

middlemen who helped win currency printing deals in Africa, Asia and Latin America.

Some payments were made into accounts in offshore tax havens, contrary to RBA rules. Several of
Securency's agents have been embroiled in previous corruption scandals and have high-level political
contacts.

Mr Chapman, a British national, worked closely with McArthur promoting Securency's polymer
banknotes to countries in Africa. Its biggest contract in Africa, with Nigeria, is believed to have
involved millions of dollars in commissions.

McArthur is among several Securency middlemen to have received commission payments in bank
accounts held in tax havens such as the Seychelles.

Securency dismissed McArthur after The Age revealed he had pleaded guilty last year to reckless
trading involving fraudulent transactions tied to a massive corporate collapse in South Africa in 1999.

When first contacted by The Age this year, McArthur denied ever working for Securency, despite 2006
court documents lodged during his prosecution listing his occupation as a commission agent for the
company.

Yesterday, Senator Brown proposed a motion demanding the Government answer questions about a
commission agent used by Securency and its sister company, Note Printing Australia, in Malaysia.

The agent, Abdul Kayum Syed Ahmad, who has also worked as an arms broker, was sacked by Note
Printing Australia in 2007 after an internal inquiry raised integrity concerns.

As the Government and Opposition joined forces to vote down his motion, Senator Brown accused
them of shielding the RBA from parliamentary scrutiny. He said he would seek answers from RBA
officials at an estimates hearing.

''It shows a worrying subservience to the RBA and it is time Parliament got over it,'' he said. ''The RBA
is there to provide a service to the community and is not beyond the scrutiny applied to other agencies
operating under a parliamentary statute.''

Family First senator Steve Fielding said he was surprised the Opposition refused to back the motion.
''The Opposition went missing when it came to holding the Government to account. This is not good for
transparency and openness.''

A spokesman for the Government leader in the Senate, Chris Evans, defended the Government's
refusal to answer questions. ''These are matters for the independent Reserve Bank,'' the spokesman
said.

RBA calls in auditors

RICHARD BAKER AND NICK MCKENZIE
August 17, 2009
THE Reserve Bank of Australia has called in external auditors to probe multimillion-dollar trans-actions
between its banknote-making subsidiary and shady foreign middlemen.

Auditors from accounting firm KPMG arrived at the Craigieburn headquarters of polymer banknote
maker Securency last month to begin a forensic examination of the company's accounts.
The auditors have been asked to trace the transfer of large sums of money by Securency into the
accounts of foreign businessmen who have political connections in various Asian and African countries
where the firm has won currency-printing deals.

The KPMG audit is separate to an investigation by the Australian Federal Police into Securency's
overseas dealings.

The external audit is the first sign of independent action by the RBA over concerns about Securency's
business dealings since it requested that the AFP investigate the company in May.

The police inquiry was ordered by RBA assistant governor and Securency chairman Bob Rankin after
reports by The Agedisclosed large commission payments being made by the company to overseas
agents it had hired to win banknote-printing contracts.

Several Securency agents have been implicated in international corruption inquiries. One agent, South
African businessman Donald McArthur, has pleaded guilty to reckless trading involving fraudulent
company transactions.

Some of Securency's payments to agents have been made into bank accounts in tax-haven locations
known for their secretive banking provisions, such as the Seychelles in the Indian Ocean.

The RBA has refused to comment on its decision to send in external auditors. Securency said earlier
this year that its accounts were audited annually by the RBA.

The RBA has also refused to discuss whether it has ordered Securency to cut ties with certain agents,
including McArthur, amid concern about their previous commercial activities.

Securency's sister firm, Note Printing Australia, was told by the RBA to dismiss its network of foreign
agents in 2007 after an internal audit confirmed probity fears about some of them.

NPA, which prints cash for Australia, New Zealand and Malaysia, is fully owned by the RBA and has
been chaired by Dr Rankin since last year.

The inaugural chairman of Securency and NPA, former Australian Prudential Regulation Authority chief
executive Graeme Thompson, resigned in February last year. Former NPA chief executive and
Securency board member Chris Ogilvy stood down in late 2007.

The RBA has not explained why it allowed Securency to keep its foreign-agent network when NPA was
asked to sever ties with its middlemen in 2007.

The Federal Government has refused to comment on Securency's overseas dealings, citing the police
inquiry.

The Government last week released details about the make-up of Securency's board after Assistant
Treasurer Nick Sherry appeared not to know the level of RBA involvement when asked about it in
Parliament in June by Greens leader Bob Brown.

Four of Securency's directors are appointed by the RBA. They are Dr Rankin, RBA board member John
Akehurst, RBA chief financial officer Daryl Ross and former RBA assistant governor Les Austin. British
firm Innovia Films, which owns the other half of Securency, is represented by four directors. Securency
managing director Myles Curtis is a non-voting director.

Cash for contract claims

RICHARD BAKER, NICK MCKENZIE AND SOM PATIDAR IN NEW DELHI
August 4, 2009
A RESERVE Bank of Australia subsidiary allegedly paid a six-figure sum to an Indian political lobbyist as
part of a campaign to break into the world’s biggest banknote market.

A complainant with intimate knowledge of the operations of polymer banknote maker Securency has
told Australian Federal Police that a senior company executive allegedly disclosed to him in 2007 that
a $120,000 donation was made to Indian political figures.
According to the complainant, the Securency executive said the political donation was hidden in the
company’s accounts under ‘‘marketing expenses’’. Securency denies the allegation, saying it has not
made political donations in India or elsewhere.

It is yet to win a contract in India.

Indian sources have confirmed Securency paid a Mumbai lobbyist with ties to senior figures in one of
India’s main political parties tens of thousands of dollars in 2007.

Mumbai accountant and property developer Satinder Singh Bachher received the payment.

It is unclear if that payment is the one allegedly referred to by the Securency executive as a political
donation.

Some of Securency’s rivals only make large commission payments after contracts have been awarded,
to avoid perceptions of kickbacks. There is no evidence that Securency paid any kickbacks in India.

Mr Bachher has repeatedly refused to be interviewed by The Age. Indian Government officials have
told The Age that Mr Bachher and his company, Bachher Investments, have links to the leadership of
the centre-right Bharatiya Janata Party.

The BJP is the major opposition party in India. In alliance with other conservative parties, it was in
power between 1998 and 2004.

Indian sources claimed Mr Bachher helped facilitate meetings between Securency executives and
Indian Government officials when the BJP-led coalition held power.

AFP is investigating Securency, which is half-owned by the Reserve Bank, following a series of reports
by The Age about the company’s payments to foreign businessmen used to help win lucrative
contracts.

Securency and the Australian Government have long regarded India as a prize market for Securency’s
banknotes. Australian diplomats and ministers, including Foreign Minister Stephen Smith, have
extensively lobbied Indian Government officials on Securency’s behalf.

Reserve Bank assistant governor Bob Rankin, chairman of Securency and sister firm Note Printing
Australia, yesterday again refused to answer any questions about the companies, citing the federal
police inquiry.

The bank refused to say if it was allowing Securency to continue using businessman Donald McArthur
as its African agent, after it emerged he had pleaded guilty to reckless and fraudulent transactions
relating to one of South Africa’s biggest corporate collapses.

Securency has paid him tens of thousands of dollars into an account in the Seychelles, an Indian Ocean
tax haven.

Securency has said its overseas agents are appointed with the assistance of Australian Government
trade agency Austrade, and Australian embassies.

Fraud link to agent of RBA firm

NICK MCKENZIE AND RICHARD BAKER
August 3, 2009
Donald McArthur
A banknote company chaired by an assistant governor of the Reserve Bank of Australia paid a failed
businessman who was under fraud investigation tens of thousands of dollars through an offshore tax
haven account.

The businessman, Donald McArthur, who was last year convicted of corporate offences, worked in
Africa as a lobbyist for banknote maker Securency.

The RBA, which half-owns Securency, is refusing to explain if it approved the payments and what
action it is taking in the face of continuing disclosures about its subsidiary's activities.

McArthur was implicated in South Africa's biggest corporate collapse 10 years ago. Last year, he
pleaded guilty over several reckless and fraudulent company transactions related to health services
firm, MacMed, of which he was chairman and chief executive.

Among those who worked with McArthur to promote Securency's technology in Africa is controversial
casino tycoon, Vivian Reddy, a benefactor to South African President Jacob Zuma.

South African sources and Securency insiders say the banknote firm paid tens of thousands of dollars
into at least one account McArthur set up in the Seychelles, an Indian Ocean tax haven known for its
secretive banking.

The revelation that an RBA subsidiary has paid money into a tax haven account tied to a controversial
businessman raises fresh questions about Securency's operations, especially given the corruption risks
facing banknote companies in developing nations.

Last week, RBA assistant governor (currency) Bob Rankin and other bank officials declined repeated
requests from The Age to discuss what they were doing in response to the ongoing revelations about
Securency, citing the fact that the company was under investigation by the Australian Federal Police.

The RBA is refusing to say if McArthur remained an agent of Securency.

Dr Rankin and fellow RBA board member John Akehurst are directors of Securency.

The AFP has begun a comprehensive investigation into Securency's operations following a series of
reports by The Age about the company's payment of million-of-dollars in commissions to well-
connected overseas middlemen to help win foreign banknote printing contracts.
Some of the payments have been made to businessmen previously implicated in unrelated corruption
scandals or into mysterious accounts in offshore tax havens in a possible breach of the RBA's own
rules.

Securency insiders have been concerned that payments to agents with links to overseas government
or central bank officials left the RBA exposed to allegations of potential corruption.

McArthur was investigated by South African police after his company MacMed collapsed in 1999.

In May last year, he pleaded guilty to 30 charges relating to reckless and fraudulent company
transactions. He received a fine.

McArthur told a South African court in 2006 he was working on a "commissions-on-sales basis for
Securency".

He told The Age earlier this year he had never worked for Securency.

South African central bank director of currency management Rashid Aboobaker Ismail told
Johannesburg's The Mail & Guardian newspaper in May he recalled McArthur being in a delegation led
by Mr Reddy in 2004 or 2005 to promote Securency.

The AFP inquiry is also believed to be examining the overseas dealings of Securency's sister firm, Note
Printing Australia.

Fully owned by the RBA, NPA has printed money for Malaysia, Nepal and Bangladesh. In 2007, NPA
severed ties with its overseas agents after an RBA audit confirmed probity fears.

The Age recently revealed NPA executives secretly met senior figures from Saddam Hussein's Iraqi
regime at the height of international sanctions in 1998 and that Securency more recently sent
representatives to meet officials from Sudan's corrupt government.

Got a tip? Email investigations@theage.com.au