Reserve Bank of Australia Annual Report 2011
Reserve Bank of Australia Annual Report 2011
Reserve Bank of Australia Annual Report 2011
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Securency<br />
Securency manufactures polymer substrate for banknotes used in <strong>Australia</strong> and many other countries. It is a<br />
joint venture between the <strong>Reserve</strong> <strong>Bank</strong> and Innovia Films, a UK-based company which manufactures the base<br />
polymer film used by Securency to manufacture its substrate products.<br />
Securency is governed by a Board <strong>of</strong> Directors, <strong>of</strong> which equal numbers are appointed by the two joint-venture<br />
partners. At present, the <strong>Reserve</strong> <strong>Bank</strong> appointed directors are Bob Rankin (Chairman), John Akehurst, a<br />
non-executive member <strong>of</strong> the <strong>Reserve</strong> <strong>Bank</strong> Board, and Darryl Ross, the Chief Financial Officer <strong>of</strong> the <strong>Bank</strong>.<br />
Securency achieved a pr<strong>of</strong>it after tax <strong>of</strong> $2.0 million in 2010, on revenues <strong>of</strong> $128.7 million. These results<br />
compare with a pr<strong>of</strong>it <strong>of</strong> $24.1 million and revenue <strong>of</strong> $172.5 million in the previous year. The <strong>Reserve</strong> <strong>Bank</strong><br />
equity accounts for its interest in Securency.<br />
On 23 November 2010, the <strong>Reserve</strong> <strong>Bank</strong> and Innovia Films announced their intention to undertake a joint<br />
sale <strong>of</strong> the company, after having been made aware <strong>of</strong> strong interest from potential buyers and following<br />
Innovia’s decision that it wished to sell its half share in the company. A sale process has commenced.<br />
Proceedings against NPA and Securency<br />
In July <strong>2011</strong>, charges were laid against NPA and Securency, which, in summary, allege that between 1999 and<br />
2003, the two companies and a number <strong>of</strong> individuals had engaged in conspiracy to bribe foreign public<br />
<strong>of</strong>ficials in Indonesia and Malaysia. In August <strong>2011</strong>, a further two charges were laid against Securency for similar<br />
alleged conduct relating to Vietnam in the period between 2001 and 2004. A number <strong>of</strong> former employees <strong>of</strong><br />
the companies, including two former chief executives, were also charged. The <strong>Australia</strong>n Federal Police (AFP)<br />
stated on 1 July <strong>2011</strong> that the charges against the companies result from the alleged actions <strong>of</strong> former senior<br />
managers <strong>of</strong> the companies.<br />
These charges follow an investigation that resulted from a referral to the AFP by the Board <strong>of</strong> Securency when<br />
allegations were raised by the media in May 2009 about Securency’s use <strong>of</strong> overseas agents. The AFP’s inquiries<br />
were subsequently widened to include the use <strong>of</strong> overseas sales agents by NPA. The companies’ Boards and<br />
the <strong>Reserve</strong> <strong>Bank</strong> have extended their full support to the AFP inquiry and continue to do so. The companies are<br />
considering, in consultation with the authorities, their responses to the charges laid against them.<br />
The Governor issued a statement on 1 July <strong>2011</strong>, saying that the <strong>Reserve</strong> <strong>Bank</strong> deeply regrets that the<br />
governance arrangements and processes in the companies at the time were not able to prevent or detect the<br />
alleged behaviour that led to the charges. That statement noted that, over recent years, the <strong>Reserve</strong> <strong>Bank</strong> and<br />
the two companies have taken numerous steps to tighten controls and strengthen governance:<br />
••<br />
those charged had all left the companies prior to the charges being laid;<br />
••<br />
the use <strong>of</strong> sales agents has ceased at both companies;<br />
••<br />
policies and procedures at both companies have been overhauled; and<br />
• • the <strong>Reserve</strong> <strong>Bank</strong> added executive resources in the currency area and replaced its representatives on<br />
the Boards <strong>of</strong> the two companies, drawing all <strong>of</strong> its appointees from the <strong>Bank</strong>’s executive or the <strong>Reserve</strong><br />
<strong>Bank</strong> Board.<br />
ANNUAL REPORT <strong>2011</strong> | Currency<br />
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