Australia ‘Gags’ a Massive Banknote Scandal

The Australian government has issued an unprecedented blanket gag order prohibiting anyone in Australia from reporting the names of the current or past leaders of Indonesia, Malaysia or Vietnam “or their relatives and other senior officials” in connection with a multimillion dollar bribery case apparently involving contracts for bank notes in each of the countries.

It isn’t known how the Southeast Asian leaders, totaling 17, are connected to the bribery case, which has been called the biggest scandal in Australian history. But they include three Malaysian prime ministers – Mahathir Mohamad, Abdullah Ahmad Badawi and current Premier Najib Tun Razak – as well as former Finance Minister Daim Zainuddin and former international trade and commerce minister Rafidah Aziz. It also includes Abdullah Badawi’s sister-in-law, Puan Noni.

The gag order also includes two Indonesian presidents, Megawati Sukarnoputri and current leader Susilo Bambang Yudhoyono and the current Vietnam President, Truong Tan San as well as lesser officials.

In June, seven senior executives of the Reserve Bank of Australia, the country’s central bank, were secretly indicted on allegations that partly owned subsidiaries, Securency and Note Printing Australia, had paid bribes to government officials of the three countries and others to obtain contracts to supply polymer banknotes. The scandal has been percolating in all of the countries behind the scenes for months if not years.

“This is the worst corruption scandal in our history, not because of the amount of money that's been involved, but because the most respected institutions of our country have failed to discharge their responsibilities to the public," Dr. David Chaikin of the University of Sydney Business School told the Sydney Morning Herald.

Australia began experimenting with plastic banknotes with holographic devices to guard against forgery as early as 1968. The notes were considered more durable, more environmentally friendly and less likely to carry dirt and disease. They were released in Australia in 1988. Securency was formed in 1996 as a joint venture between the bank and Innovia Films to market the technology overseas. By 2009, Securency was exporting to 25 countries, with more than three billion polymer notes in circulation. Apparently, if news reports are to be believed, marketing them required considerable ingenuity. Not all of the countries named in the gag order have the plastic banknotes.

The gag order was made public by Julian Assange, the Australian who heads Wikileaks. He called it “the worst [gag order] in living memory.” The Australian government, Assange said in a press release, “is blindfolding the Australian public to cover up an embarrassing corruption scandal involving the Australian government.”

The gag order document specifically bans the publication of the order itself as well as an affidavit affirmed last month by Australia's representative to Asean, Gillian Bird, who has just been appointed as Australia's Permanent Representative to the United Nations. The gag order effectively blacks out the largest high-level corruption case in Australia and the region, Assange said.

The scandal blew open in 2012 after running behind the scenes for as long as a decade, with bribes allegedly paid in countries as far away as Nigeria, the United Kingdom, Spain and Latin America as well as the three Southeast Asian nations. In a case that has been described as having security implications, it was believed that Securency, whose interest has since been sold by the Australian central bank, offered sexual favors in addition to bribes.

For instance, the Melbourne-based Age reported that one of the most senior Securency managers allegedly secured an Asian prostitute for a visiting deputy governor of an unnamed foreign central bank in 2007. The witness, a Securency employee, gave the Australian Federal Police his diary in which he recorded the middleman telling him in 2007 that the ''governor would be very happy if the commission [payment] was increased."

The Age reported that agents had been paid almost A$50 million in commissions since 2003. After the audit's release, according to The Age, two top executives left the company.

Records made public by the Sydney Morning Herald showed that in 2007, Reserve Bank assistant governor Frank Campbell was told how Securency had engineered a dodgy business deal to hide a $492,000 payment to an allegedly corrupt Malaysian arms dealer. The arms dealer's company wrote to Campbell demanding further payments, stating it had convinced the ''Prime Minister and the Malaysian cabinet'' to give out contracts. Abdullah Ahmad Badawi was the Malaysian prime minister at the time.

The Reserve Bank, the paper reported, “unwittingly or otherwise  hampered the federal police bribery inquiry by failing to inform police for several months in 2009 of incriminating documents it held regarding its subsidiaries' activities. At the same time the RBA was withholding crucial documents, senior RBA officials approved Securency transferring millions of dollars offshore in payments that authorities now suspect included large bribes.”

Although Reserve Bank officials said they had no idea of the corruption concerns involving Securency, confidential files indicated that as early as 2007 the Reserve Bank was told that Securency was seeking to hide inflated contracts and that the issue was also raised at a Note Printing Australia board meeting in September 2007 attended by Reserve Bank officials.

Fairfax, the publisher of the Sydney Morning Herald, revealed in June 2007 that what was described as an explosive memo had been sent to the central bank alleging that bribes had been paid to win contracts to peddle the currency notes.

Nonetheless, there was no sign of enforcement activity on the part of Australian authorities despite multiple reports in other countries.

The last known blanket suppression order of this nature was granted in 1995 and concerned the joint US-Australian intelligence spying operation against the Chinese Embassy in Canberra, Assange said in his prepared release.

"The concept of 'national security' is not meant to serve as a blanket phrase to cover up serious corruption allegations involving government officials, in Australia or elsewhere,” Assange said. “It is in the public interest for the press to be able to report on this case, which concerns the subsidiaries of the Australian central bank. Who is brokering our deals, and how are we brokering them as a nation? Corruption investigations and secret gag orders for 'national security' reasons are strange bedfellows. It is ironic that it took Tony Abbott to bring the worst of 'Asian Values' to Australia."