8/2/2019 Grant Hattam Quill Award for Investigative Journalism - Richard Baker and Nick McKenzie

1/2METAGE A001

WEDNESDAY, OCTOBER 5, 2011 NEWSPAPER OF THEYEAR $1.70INC

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AFL TRADE TALK Club-by-club analysis PLUS Pay talks collapse SPORT

THE TROUBLEWITH MOBILES

Why complaintsagainst telcosare rising FOCUS

WEATHER ODD SPOT INDEX ISSN 0312-6307

9 770312 630035B C D

MELBOURNE Late rain 12 22BALLARAT A little late rain 8 17

BENDIGO A little late rain 8 19GEELONG Late rain 10 21HORSHAM Rain developing 9 19

MILDURA A little rain 12 19SALE Becoming cloudy 5 20

WARRNAMBOOLRain later12 19WODONGAA little late rain 6 20

Details PAGE21

For a small fee, two Alabama game wardens will turncremated remains into ammunition the deceasedsloved ones can fire. Warden Thad Holmes said itsounded strange to those not comfortable aroundguns, but for those who a re, its not weird at all.

ARTS PAGE 19CLASSIFIEDS BUSINESSDAY 21-23

COMMENT & DEBATE PAGE 17EDITORIALS, LETTERS PAGE 16MINDGAMES PAGE 20

OBITUARIES PAGE 20SHARES BUSINESSDAY 18-20

SHIPPING BUSINESSDAY 17TELEVISION PAGE 21WORLD PAGES 11-13

MELBOURNE DAMS

48.3%A YEAR AGO: 35.3%

MELBOURNE DAMS

63.2%A YEAR AGO:47.3%

RBA officials hid details

of secret commissions

EXCLUSIVE

Banknotesscandalcoveredup

By NICK McKENZIEand RICHARD BAKERAGE INVESTIGATIVE UNIT Bob Rankin Chris Ogilvy Frank Campbell Ric Battellino Graeme Thompson

Continued PAGE 8

SOME of the Reserve Bank of

Australias most senior officialswere involved in covering upextensive evidence of corrup-tion inside the central bankssubsidiaries, Note Printing Aus-tralia and Securency.

An investigation byThe Agehas found top RBA officials sup-pressed damaging informationin 2007 and 2008 about the pay-ment of secret commissions to

middlemen hired by the RBAfirms to win banknote contractsin Nepal and Malaysia.

Among the officials whoknew of the serious corruptionconcerns are deputy governorRic Battellino, former deputy

governor Graeme Thompsonand former Note Printing Aus-tralia boss Chris Ogilvy.

Assistant RBA governorFrank Campbell and formerassistant governor Bob Rankin,

who is now the central bankschief representative in Europe,also did not relay to police orcorporate regulators evidenceabout misconduct that may

have breached Australian laws.

The evidence of the cover-upsis containedin internaldoc-uments from the RBA and thebanknote firms, including manyseized by the federal police afterexecuting search warrants.

The documents challengeRBA governor Glenn Stevenssstatement to a federal parlia-mentary committee in Februarythatnoonein theReserveBank

or on our board knew of cor-

ruption allegations involvingSecurency and NPA before The

Agerevealed them in May 2009.In another development,

c on f id en t ia l d oc u me nt sobtained under freedom-of-information laws reveal that atthe same time the RBA officials

were suppressing informationabout corruption, the RBAboard was given a written warn-

ing about Note Printing Austra-

lias conduct.In a statement last night, the

RBAdeniedThe Agesallegations,saying they were based on inac-curate and incomplete facts. Itsaid specific details could not beaddressed as the matters were,or were potentially, the subjectof court proceedings.

Files held on the computerarchives of RBA or its two subsi-

diaries confirm that senior RBA

officials on the board of NotePrinting Australia a companyfully owned and overseen by theReserve were aware that thefirm had lied in tender docu-ments given to the Nepal CentralBank.

The documents containedfalse information about howmuch money NPA had funnelledto a Nepalese middleman in

2002 and 2004 in order to winbanknote contracts. The accur-ate disclosure of such commis-sions was required underNepalese law.

In September 2007, the NPAboard agreed that the hiding ofthe commissions from the Nepalcentral bank amounted to seri-ous breaches but, in the sameboard meeting, agreed not todisclose these breaches to Nepalfor pragmatic reasons and onlegal advice.

Among the NPA board mem-bers involved in this decision

were Mr Campbell, Mr Thomp-son (then chairman of NPA andSecurency) and Mr Ogilvy, NPAsmanaging director who was alsoa Securency director.

Months earlier, the NPAboard was warned its Nepalesemiddleman may be using hiscommissions to pay bribes.

A further cover-up occurredin 2007 after Mr Thompson, MrCampbell and Mr Ogilvy dis-covered that the price of abanknotecontracthadbeen arti-ficially inflated to cover secretcommissions to a Malaysianmiddleman.

Again, rather than reportingthis potentially illegal behaviourto police or corporate regulators,the serving and former RBA offi-cials on the boards of Securencyand NPA agreed to handle it

internally.The board of NPA contracted

law firm Freehills to conduct anaudit of corruption-related con-cerns. The RBA says Freehillsfound no breach of Australianlaw and therefore the bank didnot need to notify police.

The Agecan also reveal that:I I n 2 00 7, M r T h om ps on

Details PAGE21

WEATHERPartly cloudy.Patchy laterain.12-22THURSDAY Late showers 13-21

FRIDAY Patchy showers 13-21

SATURDAY Clearing showers 13-21

SUNDAY Early showers 12-20

Police errors

cast doubt

on convictionsBy STEVE BUTCHER

MANY hundreds and pos-

sibly thousands of defend-ants may have been wronglyconvicted of serious criminaloffences, given that numeroussenior Victoria Police investigat-ors have admitted makingunsworn affidavits.

A policeman with almost25 years experience has con-fessed to a judge he had neversworn on a Bible or affirmed his

word basic legal require-ments in obtaining hundredsof search warrants by affidavit.

Detective Senior SergeantStephen McIntyre told a CountyCourt pre-trial hearing the onlypractice Ive ever seen in Vic-toria Police has been to sign aname and have it witnessed.

He said the practice relatedto every warrant Ive ever beeninvolved in from memory andadded: I cant recall an instancein my career where this hasntoccurred.

As k ed a b ou t t he w or dsworn, Senior SergeantMcIntyre said the process healways accepted was that bysigning the document, I wasacceptingthe truthfulness ofthedocument and the contents ofthe document, and that wouldsuffice.

After his evidence, the judge, who cannot be named for legalreasons, remarked: Im justthinking how many appeals [bythose convicted] are now goingto be launched upon newevidence being discovered.

When prosecutor NickPapas, SC, conceded the affi-davitsupportingthe searchwar-rant of one premises was notsworn under oath, the judgeruled that its entry was notauthorised and was a trespass.

The non-swearing of theaffidavit constitutes conduct

which is clearly inconsistent

with the minimum standards ofacceptable police conduct in allthe circumstances, he said.

The judge asked that a high-ranking officer explain howsucha practicehad evolved,and

yesterday Superintendent BrettGuerin told him it had inad-vertently crept in.

Superintendent Guerin saidthat after learning of Senior Ser-geant McIntyres proposed evid-ence, he walked through thecrime department whichhouses about 560 officers inspecialist crime squads andabout 25 detectives told himthey followed the same process.

He told defence barristerLuke Barker he did not neces-sarily regard officers whoobtained warrants withoutproperly sworn affidavits asacting negligently or carelesslyin discharge of their duty.

Asked by Mr Barker what wasthe qualifier, he replied: Theirstate of mind.

If they believed that they were dealing with the rightthing, that they believed that bysigning the affidavit in the pres-ence of a sergeant or above waslegally binding on them, I dontbelieve it would be reckless.

Superintendent Guerin saidthe practice had apparentlydeveloped over time where alot of officers do not swear anaffidavit, they sign it, it s

witnessed, they believe theyrefulfillingthe requirementsof thelaw.

He revealed last Friday thatevery member of and above therank of inspector was remindedof the requirements in swearingaffidavits. The hearing resumestomorrow.

Local astronomer thanks his lucky stars for physics Nobel prize

Australian National Universitys Brian Schmidt has been recognised for his work leading a team that traced the universes expansion to nearly 8 billion light years ago. PICTURE: MELISSA ADAMS

By BRIDIE SMITHSCIENCEAND TECHNOLOGYREPORTER

Nobelrules waivedPAGE12

THIRTEENyearsafterprovingtheunthinkable thattheuni-versewasnot onlyexpandingbutdoingso atan acceleratingrate AustralianNationalUni-versity astrophysicistBrianSchmidthas beenawardedaNobelprize inphysics.

ProfessorSchmidtwonthe

honour jointlywitha one-timeHarvardclassmate, AdamRiessfromtheJohns HopkinsUni-versityand SpaceTelescope Sci-enceInstitute,and SaulPerlmutter froma separateteamatthe Universityof California.

Theworldstop physicsprize,announcedin Stockholmover-night,recognisedthepair fortheir workleadinga 20-membersupernovasearch team,whichtracedthe universesexpansiontonearly8 billionlightyearsago.

Theinternational teamessentiallyusedthe brightnessofthe mostdistantexplodingstars,known as supernovae, likelightbulbsto probethe universeandmeasure distances.

Speakingto TheAgelastnightfromhishomein Canberra,

American-bornProfessorSchmidtadmittedthat thefind-ingsshowingtheuniversewasgrowing,firstreleasedin 1998,

wereinitially greetedby somewithguarded scepticism.

Gravityshould slowthe uni-versedown,so when wefoundthereverse washappeningitwasareal surprise,he said. Butthemorewelooked, thestrongertheresultbecame.

ProfessorSchmidt,44, gradu-atedwitha PhDfromHarvardUniversityin 1993andmovedtomovedto Canberrathe following

year withhisAustralian wifetowork atthe ANUsMountStromloObservatory.

Australiahas givenme agreatopportunitytodo thisresearchandI reallyhavetothank myluckystarsforbeingabletodo myworkhere,hesaid.

ProfessorSchmidtsaid hereceivedthenewsjustafter8pm.

HesaidtheSwedish accentontheotherendof thephoneline

wasenoughto convincehimthatthecallwasgenuine. Itwaslikewhenmyfirstson wasborn,hesaid.Itwas a life-changingexperience.

Professor Riess wasalsoaler-tedby thisSwedish soundingvoiceon thephone . . .I knewit

wasntIk ea.ProfessorSchmidt saidhe

doubtedbeing a Nobellaureatewouldchangethewayhe wentabouthis work. Heexpectedtobebackin thelecturetheatretoday butaddedthathisabilitytotalkaboutscienceandsharehisloveof astrophysicsmightgeta broaderairing. Peoplewillprobablylistento mea bitmorethantheyusedto,hesaid.

ProfessorSchmidtand Riesssharethe NobelPrizewith

anotherastrophysicist,Saul Perl-mutterfromthe UniversityofCalifornia,Berkeley, whoheadeda separateteam.

ProfessorPerlmutter, 52, saidajournalistwokehim inhisBerkeleyhome withthe news.It

wasfunto explainsomethingthatwasjustso basic,he said.Whenwestartedthisprojectwethoughtweweremeasuringhowmuchtheuniversewas slowing

down,but itsjust gettingfasterand faster.

ProfessorSchmidt ajointUS-Australian citizen joinsanimpressivelist of Australiansawardeda Nobelprize.

Amongthose recognisedforscientificresearch arefather andsonduoWilliamandLawrenceBragg (the1915prizein physics),SirHoward Walter Florey(phy-siologyor medicine, 1945),Sir

FrankMacFarlaneBurnet (phy-siologyor medicine,1960),Pro-fessorPeter Doherty(physiologyormedicine,1996)and ProfessorBarryMarshallandDr Robin

Warren(physiologyor medicine,2005).Australias firstfemaleNobellaureatewas ProfessorElizabethBlackburn(physiologyor medicine,2009). With AGENCIES

8/2/2019 Grant Hattam Quill Award for Investigative Journalism - Richard Baker and Nick McKenzie

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MR008

8 THEAGEWEDNESDAY, OCTOBER 5, 2011

NEWS

A question would be, is thereany way that anyone in the

RBA ever knew anythingabout anything? I am pretty

sure the answer to that is no.

RBA Governor Glenn Stevensto parliamentary committee in February 2011

GRAEME THOMPSON Former RBA deputy governor and NPA/Securency chairmanI Covered up secret commissions from Nepalese and Australian authorities in September 2007I Authorised large payment to Malaysian agent sacked for corruption concerns in 2007I Approved the hiding of a secret commission in an inflated Malaysian contract in 2007I Told in 2007 of NPAs alleged bribes did not alert police

FRANK CAMPBELLAssistant RBA governorI Covered up secret commissions from Nepalese and Australian authorities in September 2007I Learnt of secret commissions in inflated Malaysian contract but did not tell authoritiesI Told by agent that senior Malaysian politicians had been personally influenced to award contract to NPA in 2007I Told of NPAs suspected bribes in 2007 but did not alert police

CHRIS OGILVY former NPA managing director and Securency directorI Sought to cover up damning evidence of bribes paid by NPA from RBA auditors and lawyersI Covered up secret commissions from Nepalese and Australian authoritiesI Failed to call in police about explicit information about NPA bribery in 2007

RIC BATTELLINO RBA Deputy GovernorI Learnt of NPAs suspected bribes in 2007

but did not alert policeI Directed staff to handle bribery concerns

internally in 2007-08

BOB RANKIN RBA European ChiefOfficial and Securency ChairmanIWarned in writing in 2008 of corruption

and corporate malfeasance but did nottell police;

I Approved Securency payments to offshoretax havens in 2009, after police beganbribery probe

RBA banknotes scandal covered upFrom PAGE1

Got atip?investigations@theage.com.au

personally authorised a paymentof almost $500,000 to a Malaysianmiddleman just months after theagent was sacked by Note Printing

Australiaovercorruption concerns.I Mr Thompson, Mr Campbell, MrOgilvy and other RBA officials weretold in writing in 2007 that theMalaysian middleman was payingkickbacks with NPA funds, but didnot alert police.I Dr Rankin was warned in writingin 2008 of corruption and seriousmisconduct at Note Printing Aus-tralia but did not alert police or the

Australian Securities and Invest-ments Commission.I In 2007 and 2008, Mr Battellino

was told of serious corruption con-cerns at NPA but did not alertpolice and instead directed staff tohandle concerns internally.I Mr Campbell was asked by another Malaysian agent to ensureNPA paid him his commissionsbecause the agent a formerMalaysian MP and ruling politicalparty treasurer said he had usedhis personal influence with Malay-sian politicians to win the RBAfirms major contracts.

The first call any RBA officialplaced to police about corruption

was made by Dr Rankin in May2009, after The Age published thefirst story about the scandal.

In July, the Australian FederalPolice charged NPA, Securency andseveral former company executives

with bribery offences in Malaysia,Vietnam and Indonesia. The policeallege the commissions received byseveral middlemen were used topay millions of dollars in bribes

Police have not charged anyRBA officials or appointees to theboards of its subsidiaries. A federalpolice spokesman said the invest-igation was continuing.

Documents released underfreedom of information include aconfidential memo presented tothe RBA board in October 2007.

The memo stated: There has

been a long history of concern,including that expressed by the

Audit Committee and the RBAboard, that the laxity of the controlenvironment at NPA has been atserious odds with the careful risk-management culture of the bankand that these cultural deficienciespotentially expose the bank to seri-ous reputational and financialrisk.

In February, Mr Stevens told aparliamentary committee: As faras I can see, the board membersthat we appointed from our side[the Reserve Bank] have actedproperly. I am yet to see evidenceto the contrary.

We are examining ourselves. Aquestion would be, Is there any

way that anyone in the RBA everknew anything about anything? Iam pretty sure the answer to that isno. Quite a bit of work is beingdone to go back through records.

You would expect us to do that andwe have done that.

Deputy Opposition Leader JulieBishop said last night that thelatest revelations involved seriousallegations of breaches of domesticand foreign laws that, if proven,could seriously harm Australiasinternational reputation.

The government must take allnecessary steps to ensure that any-one involved in corrupt behaviouror in attempting to cover up suchbehaviour be held accountable fortheir actions, she said.

Greens MPAdam Bandt saidtherevelations were astounding andhe would request that the House ofRepresentatives economics com-mittee re-call Mr Stevens and otherRBA officials to explain how thesenew revelations sat with their pre-vious evidence.

The Treasurer can no longerstand to one side. He must imme-diately establish an inquiry to getto the bottom of these seriousallegations, Mr Bandt said.

What the RBA said yesterdayTHE bank categorically denies the alleg-ations made byThe Age, which arebased on inaccurate and incompletefacts. We do not seek to address thespecific detail of your allegations since

these matters are, or are potentially, thesubject of court proceedings and giverise to risks of contempt.

As set out in the banks statement ofAugust 10 to The Age, the NPA board in2007 sought the appropriate informa-

tion, sought appropriate advice, respon-ded appropriately to the information itreceived, and reasonably relied on theadvice it received. As the Freehills

investigation in 2007 concluded therewas no breach of Australian law, thequestion of referral to the AFP did notarise. No material was brought to theattention of Reserve Bank officers in2008 that had not been provided to theNPA board, the auditors and Freehills,and rigorously investigated, in 2007.

The AFP has stated on July 1 that noRBA board members have beeninvolved in any wrongdoing and that thecharges against the companies are nota reflection of board members beingcomplicit in or having knowledge of anyillegal activity.