Battellino gave 'clear message', Hood says

4 Oct 2012, 1:38 pm   -   Source: AAP

A former employee of the RBA's banknote making firm was advised to stay quiet about alleged corruption, a parliamentary committee has been told.

A former senior executive at central bank subsidiary Note Printing Australia (NPA) has told a federal parliamentary committee he was advised to keep quiet about alleged corruption at the firm at his farewell lunch.

Brian Hood, who was made redundant by the note-making company in September 2008, on Thursday appeared before a federal parliamentary joint committee inquiring into the integrity of overseas commonwealth law enforcement operations.

He told the committee in Sydney that at his farewell lunch, then Reserve Bank of Australia (RBA) deputy governor Ric Battellino shook his hand and told him to stay quiet about events at NPA.

"It was a pretty clear message and I took it literally," Mr Hood told the committee.

"It was a sensitive matter, that it was confidential, and he wanted it to remain confidential ... and he didn't want me to say anything about it."

Asking outside the hearing if he had any reason to believe the alleged advice from Mr Battellino may have been given with the blessing of RBA governor Glenn Stevens, Mr Hood said: "No comment. It would only be speculation."

Alleged bribery of foreign bank officials by agents of the wholly owned RBA subsidiary and the central bank's part-owned note-making company Securency was reported by Fairfax Media in 2009.

Mr Stevens has repeatedly said he knew nothing of the scandal until then.

On September 17, Mr Hood told Melbourne Magistrates Court that in 2007 he had a 90-minute meeting with Mr Battellino to discuss his concerns about payments to foreign sales agents.

As chief financial officer, Mr Hood had discovered unaccounted payments to NPA agents in Malaysia and Indonesia running into millions of dollars.

He wrote a report for the NPA board in 2007, before the face-to-face meeting with Mr Battellino and the head of audit.

"I optimistically thought we had got pretty much close to the top and the matter would now be dealt with," Mr Hood told the committee on Thursday.

"It had been a long and difficult process up until then."

Agents were terminated, a special audit of NPA was carried out, and an investigation was undertaken by international law firm Freehills.

But other than that, Mr Hood said nothing changed, and "we were effectively told to get back to work and get back to business".

Mr Hood told the committee he believed he was subsequently victimised as a whistleblower and his job changed.

"My responsibilities and duties were cut back significantly, and ultimately I was made redundant," he said.

As CFO he had responsibility for finance, IT, security and compliance, but by the time he was made redundant he retained only the finance function.

Part of Thursday's hearing was held "in camera", and letters Mr Hood wrote to Mr Stevens in 2011 were provided to the committee on a confidential basis.

Mr Stevens and Mr Battellino, who retired from the RBA in February 2012, will on Monday face the House of Representatives economics committee, which has previously quizzed the RBA officials on NPA and Securency.

Eight former employees at the firms have been charged with conspiracy to bribe public officials at foreign banks in a bid to secure contracts to make plastic banknotes.

The RBA told AAP it would not comment on Mr Hood's statements to the committee.

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