Reserve Bank of Australia Annual Report 2011

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