EXCLUSIVE - 'You don't fit in, f--- off'
Key whistleblower Brian Hood's efforts to lift the lid on note printing corruption did not go down well with his bosses.
Former company secretary of reserve company Note Printing Australia (NPA), Brian Hood, alerted various directors of NPA and its sister RBA polymer bank-note company Securency in 2007 that the two companies were using overseas agents whom he suspected of paying bribes to win note-printing contracts.
In a joint Fairfax Media and Four Corners investigation-- which airs on ABC 1 at 8.30pm on Monday — Mr Hood gives his first public interview to reveal the pressure he faced attempting to expose the suspected corruption.
One of his senior colleagues at NPA, who was also a director at Securency, told Mr Hood to "f--- off" from the Reserve Bank company.
AdvertisementHowever, Mr Hood said this only strengthened his resolve in 2007 and 2008 to repeatedly alert the Reserve Bank of the alleged kickbacks scandal that was looming.
"I thought, well I'm not going to give in to the bastards, I'm hitting a raw nerve here … wimping out like that wasn't in my nature."
The Reserve Bank, NPA and Securency kept Mr Hood's repeated whistleblowing hidden from police until 2009 - seven months after he'd been made redundant - when the media reported on the company's corrupt business activities. The RBA was then forced to call in the Australian Federal Police, which charged Securency and NPA with bribery in 2011.
But Mr Hood and a second RBA banknote company whistleblower, James Shelton have revealed that several former directors of the two companies - including former long-time chairman of both companies, Graeme Thompson - have never been investigated over allegations they breached the Corporations Act by allowing extremely high-risk business practices.
The Australian Securities and Investments Commission has also never investigated whether any senior RBA company officers breached whistleblower protection laws in the manner they treated Mr Hood.
Today, Fairfax Media has also exposed confidential RBA files that reveal that NPA used a "frontman" to secretly liaise with Saddam Hussein's brother-in-law and bodyguard in an illegal effort to sell plastic banknotes to the dictator at the height of UN sanctions in 1998.
Confidential bank documents reveal that in May 1998 NPA launched a secret project codenamed "Delta" to secure $80 million that Saddam Hussein had "already allocated" to buy Australian plastic note technology. RBA officials working for NPA said this money could potentially be accessed by funnelling them through a Jordanian bank "with the green light of SH [Saddam Hussein]". The RBA officials used a frontman to cover up NPA's use of the notoriously corrupt Arshad Yassin - Saddam's brother-in-law and bodyguard - as a "facilitator".
Legal expert and Sydney University associate professor David Chaikin, who reviewed the Project Delta files for Fairfax Media, said they showed a "very strong prima-facie case" that the RBA officials involved in the Iraq trip had breached UN sanction 661. The sanction banned countries from engaging in any business dealings "which promote or are calculated to promote" the sale or supply of any goods to Iraq.
Project Delta was known to top RBA banknote officials, including former long-standing NPA director Mark Bethwaite. A Delta file faxed to Mr Bethwaite in 1998 states that Arshad Yassin's involvement in the secret deal was "critical as all decisions on this project will be taken by SH [Saddam Hussein]".
Project Delta was stopped in September 1998 after John Hines, an Australian diplomat in the Department of Foreign Affairs' Middle East branch, learnt of it and wrote a furious letter to NPA warning that its "informal meeting with Saddam Hussein's brother-in-law may have already breached Australia's obligations in international law".
Project Delta was never made public because Mr Bethwaite and other NPA directors kept it secret in 1998 and again in 2009 when the corruption allegations involving NPA and Securency were aired in the media.
Rather than stopping all high-risk business practices when Delta was wound down in 1998, NPA and Securency directors embraced bribery-prone activities, including paying foreign agents huge sums in return for them convincing overseas officials to award contracts to the RBA's banknote companies.
But the Australian Federal Police and ASIC have never investigated the former directors of the two companies for overseeing these high-risk practices.
Under Australian corporate law, directors must act with care and diligence to ensure their companies do not engage in corruption.
ASIC has not interviewed a single witness or suspect after it decided in 2012 not to conduct a formal inquiry. ASIC made the decision after reviewing documents gathered during the AFP bribery probe, despite the fact that the AFP never investigated directors for corporate offences.
In his first public interview, Mr Hood alleges that not only did some former directors allow risky business practices to occur, they also covered up suspected corruption.
One example cited by Mr Hood involved Mr Thompson in 2007 ordering NPA to wire $400,000 in taxpayer money to a Malaysian arms dealer who was helping the company to win banknote contracts and who had already been paid more than $2.5 million. The money was sent despite Mr Hood's pleas not to pay the dealer because he was suspected of being corrupt.
Mr Hood said he was "gobsmacked" by Mr Thompson's conduct because it clearly exposed the RBA company to possible bribery. Even after the arms dealer was sacked, Mr Thompson and other directors approved further payments to him in return for his lobbying of Malaysian officials. In 2011, Malaysian authorities charged the arms dealer with using NPA money to pay bribes.
Mr Hood also revealed that Mr Thompson and other directors, including Mr Bethwaite and former RBA board member Dick Warburton, agreed to conceal from Nepali authorities the secret commissions that NPA had paid to an agent in Nepal.
"The inaction by ASIC has been astounding. The parent organisation [the Reserve Bank] and the boards of directors have all got their responsibilities. Clearly there has been failings ... and they should be investigated," said Mr Hood, who was the NPA's company secretary between 2004 and 2008.
A second whistleblower, James Shelton, who was a sales manager at Securency in 2007 and 2008, said: "The board is responsible for corporate governance ... They [directors] would have known there were very large deals being done in very corrupt places."
Mr Hood has also criticising RBA governor Glenn Stevens for testifying before Federal Parliament that the first the RBA knew of corruption allegations involving Securency was when they were aired in the media in 2009.
Mr Hood said he had told the RBA in writing and in a verbal briefing in 2007 that Securency and NPA were exposed to corruption.
The RBA still owns all of NPA but sold its half-share in Securency this year. The bank, Mr Thompson, Mr Bethwaite and Mr Warburton all declined to answer questions.
Mr Hood has also publicly challenged RBA governor Glenn Stevens' parliamentary testimony in 2010-2012 on the scandal, saying it "wasn't the truth".
Greens deputy leader Adam Bandt this morning said most Australians would be shocked by the revelation the Reserve Bank "was using their money to line up dirty deals with Saddam Hussein".
Mr Bandt, who has used his position on the Parlialment's economics committee to question the RBA's handling of alleged corruption within its banknote firms, said corporate regulator ASIC had to explain why it had not investigated the scandal.
"ASIC throws the book at a lone global-warming activist who sends out a press release, yet turns a blind eye to repeated claims of sustained corporate corruption in the Reserve Bank," he said.
Mr Bandt said the Greens would ask ASIC to explain to Parliament why it has failed to investigate serious and repeated claims of illegality within the RBA's corporate activities.
He also said the Greens would push for senior RBA officials to re-appear before Parliament to answer questions about their previous testimony.
The RBA in a statement said the 1998 Iraq trip was ‘‘ill-advised’’.
‘‘No banknotes were ultimately supplied to Iraq. On the records available to the Bank, the project went into abeyance after concerns were raised by DFAT with the then CEO of NPA,’’ a bank spokeswoman said.
She said bank governor Glenn Stevens had always answered questions about the scandal truthfully when appearing before various parliamentary committees.