Bribery fallout sinks £5-note deal
 

Richard Baker and Nick McKenzie
28.07.11.

Had the deal with the Bank of England (above) gone ahead, it could have become Securency's most prestigious contract.

The Bank of England has cancelled a secret plan to print the £5 banknote on polymer material supplied by a Reserve Bank of Australia subsidiary as the fallout spreads from the international bribery scandal engulfing the company.

The Age can also reveal that the American company that supplies the paper material on which the US Federal Reserve prints the greenback has baulked at buying Securency International, which makes polymer banknote substrate, after conducting months of due diligence.

Securency was put up for sale by the RBA in November last year, 18 months after The Age first revealed concerns that the company's payment of millions of dollars to overseas middlemen may have been used to bribe foreign officials.

The two setbacks for the RBA come after Commonwealth prosecutor David Sewell yesterday told the Melbourne Magistrates Court that Securency and Note Printing Australia had agreed to accept a ''plea brief'' from the Australian Federal Police in relation to charges the companies had conspired to bribe officials in Indonesia and Malaysia in order to obtain a business advantage.

The decision by Securency and NPA, respectively half and fully owned and supervised by the RBA, to accept the plea brief - a shortened summary of evidence rather than the much longer hand-up brief- is significant as it indicates both intend to plead guilty to the Indonesian and Malaysian bribery charges at a later date.

Former Malaysian prime minister Abdullah Badawi is among the senior foreign officials alleged to have been targeted with bribes by the RBA firms and their agents.

A former Malaysian assistant central bank governor has been charged by Kuala Lumpur authorities with accepting two bribes from the companies. Several high-ranking Indonesian central bank officials are also alleged to have received up to $2 million in bribes.

Mr Sewell told the court that the RBA firms were continuing to discuss with the AFP the possibility of adding other countries - where bribes are suspected to have been paid - to the plea brief.

The Age yesterday revealed Securency and NPA intended to plead guilty to Australia's first ever charges of foreign bribery. The expected guilty pleas will increase the pressure on the former RBA-appointed directors of Securency and NPA, who face growing questions about their supervision of the companies' activities involving multimillion-dollar payments to tax haven locations.

Acknowledging the help provided by both firms so far, Mr Sewell said early pleas could be viewed as a sign of remorse and could lead to discounted sentences. But he warned that those who did not co-operate with police would face a push by the Commonwealth for a ''greater period of imprisonment'' if convicted.

Seven former Securency and NPA executives, including former respective managing directors Myles Curtis and John Leckenby, have been charged with alleged bribery offences involving millions of dollars paid to middlemen to win banknote contracts in Indonesia, Vietnam and Malaysia.

Another former Securency executive, long-serving global sales chief Hugh Brown, has been released on bail by British police following his arrest in Hampshire in October last year.

The Age has learnt the Bank of England was preparing to trial printing of its high-circulation £5 note on Securency's polymer. But it recently overturned the decision because of the criminal charges against the company and its former executives.

Had the deal gone ahead, it could have become Securency's most prestigious contract and also one of its most lucrative. The Bank of England did not respond to questions from The Age.

Securency is half-owned by British company Innovia Films. Britain's Serious Fraud Office is investigating the company for allegedly bribing Nigerian officials to win a series of contracts between 2006 and 2009.

Securency paid middlemen involved in the Nigerian deals about $20 million in commission payments, much of which was wired to tax haven locations notorious for their secrecy and use in money laundering.

US paper banknote supplier Crane & Co also recently decided to pull out of the acquisition process for Securency.

It is believed the company, which has supplied the paper material used to print US banknotes for 200 years, found it difficult to place a value on Securency when it faced criminal prosecution and an on-going police investigation.

Despite being under investigation by the AFP since May 2009, Securency has had some recent international success. The Canadian central bank has announced it will switch the country's currency from paper to Securency's polymer. India has also run a large trial of polymer banknotes.

Securency and NPA face court again on September 7.