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Ugandan minister pops up in Australian bank deals

By Independent Team & Agencies

Contec Global, the company that was once at the centre of the Uganda National ID tender has surfaced in a report condemning the Australian Reserve Bank for involvement in the payment of multimillion-dollar commissions to shady middle-men in its drive to win banknote printing deals with foreign governments.

Among the allegationS being made is one that the Reserve Bank made payments to Contec Global, “a London firm which was accused in an official Ugandan inquiry of having a corrupt relationship with a Ugandan minister found to be “fronting and lobbying” for the company”.

The Ugandan minister was not named in the article published on the website:

Securency, a Melbourne-based banknote supplier half-owned by the Reserve Bank, reportedly made a substantial number of “commission” payments to agents, including those previously implicated in corruption scandals. The company, which has supplied polymer material to print money in Australia and 26 other countries, is chaired by the bank’s assistant governor, Robert Rankin. Its board features another two Reserve Bank appointees, as well as executives from a British firm, Innovia Films, the owner of the other half of Securency.

Some of Securency’s agents are closely tied to officials in countries ranked by Transparency International as highly corrupt.

Several agents have been named in official corruption investigations in Africa and Asia. At least one has a criminal conviction for fraud. Company insiders have raised concerns that the company’s practices have left it exposed to allegations that some commissions could be used to pay kickbacks to foreign officials.

The reports claimed Securency has:

Been linked with a controversial South African casino tycoon, Vivian Reddy, who was embroiled in the recently aborted corruption trial involving his friend, the President, Jacob Zuma. Reddy denies the allegations.

Made payments to companies linked to a South African businessman, Don McArthur, who last year was convicted for fraud. McArthur denied any link to Securency.

Paid million of dollars in commissions to a Vietnamese company, CFTD, whose subsidiary, Banktech was managed by the Vietnamese central bank governor’s son at the time the bank decided to switch to polymer notes in 2002. A 2007 Vietnam corruption inquiry found the governor’s role in the deal was irregular.

A company insider also claims he was told that Securency had provided US$ 100,000 – subsequently donated to an Indian political party in 2007 – while it was seeking a trial of polymer notes. It is claimed the payment was recorded in accounts as “marketing expenses”.

In a statement, Securency said it conducted a thorough due diligence process when appointing agents, which included checks by the Federal Government agency Austrade and compliance with international anti-corruption conventions. Securency said its agents – whose identities are disclosed to the Reserve Bank representatives on its board ¡ª had signed agreements forbidding payments to foreign officials and politicians.

In its statement, Securency acknowledged it had cut ties with agents on a “number of occasions” when it was not satisfied with performance. Securency denies any payment to Indian political parties or politicians.

In contrast to Securency, an associated company, Note Printing Australia – which is fully owned by the Reserve Bank – said it no longer used agents because it was “more responsible” to deal directly with central banks.

The revelation of Securency’s payments to agents in developing countries has the potential to embarrass the Government and the Reserve Bank, especially so soon after the Iraqi kickbacks scandal involving AWB.

The Reserve Bank’s Deputy Governor, Ric Battellino, said the bank was aware Securency operated in countries with “bad reputations” but was “conscious to ensure arrangements were in place to avoid corruption payments”. There is no suggesting Securency has engaged in bribery but its operations with agents in corruption-prone countries raise concerns about its risk management procedures.

Company insiders claim Securency offers agents commissions of between 10 and 20 per cent of any deal they help win. The industry standard is from 2 to 6 percent. Securency said commission payments varied between its agents, and advice from Austrade was sought to determine appropriate commissions for each country it operated in.

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