Australia’s Sticky Plastic Money Trail

The Australian government’s efforts to contain the regional political fallout from the country’s first big foreign bribery trial has boomeranged, with Indonesian President Susilo Bambang Yudhoyono demanding to know why his name has been mentioned in an unusual blanket suppression order issued by the judge who will hear the case.

As Asia Sentinel reported on July 30, the case is also resonating in Malaysia, where the names of the current prime minister, Najib Razak, and his two predecessors, Abdullah Badawi and Mahathir Mohammad, are listed in the court order. In a third country, Vietnam, the names of top Communist Party figures are also listed. (See: Australia ‘Gags’ a Massive Banknote Scandal)

The suppression order, which itself is not supposed to be mentioned by the Australian media partly on grounds of “national security” and preserving key international relationships, was obtained and published on July 29 by Wikileaks. The case, involving two Reserve Bank of Australia subsidiaries, Note Printing Australia and former subsidiary Securency, has since been given wide coverage overseas and has leaked back into Australia despite authorities’ efforts to keep it bottled up.

Beyond those three countries, in committal hearings a Securency document listed agents in 17 countries: Bangladesh, India, Angola, Botswana, Dubai, Madagascar, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Uganda, China, Argentina, Uruguay, Nigeria and Chile. In other testimony, the names of Chinese central bankers and Nepalese officials have emerged, along with a long list of individuals connected to the case.

“I haven't seen a country which involves an agent where they [Securency] did not commit bribery,” Australian Federal Police agent Rohan Pike told the court.

The order contains the names of the seven accused, all former executives Note Printing Australia Securency who were allegedly involved in bribing foreign officials to secure sales for Australia’s technology to make hard-wearing and relatively counterfeit-proof polymer bank notes.

In addition it lists local fixers as well as the political leaders and officials in the three Asian countries. The explosive case involves not only widespread bribery but the purchase of the services of prostitutes for government leaders, bankers and others.

As well as Indonesia’s Yudhoyono, his predecessor as president in 2001-2004, Megawati Sukarnoputri, and her minister for state-owned enterprises, Laksamana Sukardi, are listed. On Thursday, Yudhoyono was quoted by Jakarta media as saying: “I ask that Australia issue a statement that both [former president] Megawati [Sukarnoputri]] and my names are unstained, and so they do not defame other Indonesian officials. We want to hear directly from Australia.” In response, Australia’s Department of Foreign Affairs and Trade put out a statement headlined: “Suppression orders: Securency court proceedings”, saying the case “names a large number of individuals.” However, it said, “The naming of such figures in the orders does not imply wrongdoing on their part,”

“The Australian Government obtained suppression orders to prevent publication of information that could suggest the involvement in corruption of specific senior political figures in the region, whether in fact they were or not. The government considers that the suppression orders remain the best means for protecting the senior political figures from the risk of unwarranted innuendo … The government stresses that the Indonesian President and the former President are not the subject of the Securency proceedings.”

The alleged bribery efforts came after the Australian central bank spun off its innovative plastic banknote business into the two subsidiaries with a commercial mandate to go out and seek international business. The alleged offences occurred between 1997 and 2005. Although internal whistle-blowers tried to alert the Reserve Bank’s top executives in 2007, their evidence was not referred to the Australian Federal Police until after an exposé in The Age newspaper in April 2009.

Allegedly when the former company secretary of Note Printing attempted to alert officials that the two companies were using overseas agents whom he suspected of paying bribes, he said he was told “You don’t fit in, f---k off.”

Ten former executives of Securency and Bank Note Australia were charged. In committal hearings before a Melbourne magistrate last year, extensive evidence and testimony was presented by the police. Securency’s former chief financial officer, David Ellery, pleaded guilty to one charge of false accounting and was given a six-month suspended sentence after agreeing to testify for the prosecution. Charges were dismissed against two others. Seven now face trial in the Victorian Supreme Court in proceedings expected to start next year. If found guilty they face jail terms up to 10 years and fines of $66,000 for each offence.

In addition, both Securency, now sold off to its former 50 percent shareholder Innovia, owned by the British private investment group Arle Capital Partners, and Bank Note Australia were charged as companies with contravening the foreign bribery provisions of federal criminal code on the basis that senior managers acted as the “mind and will” of the companies, and that the companies received a benefit in the form of contracts to print bank notes.

The companies face fines of a mere A$330,000 as the offences were committed before the maximum penalty was raised in 2010 at the time this case came to light. Australian corporations could now be liable for fines the greater of either A$11 million, three times the value of the benefit obtained, or, if the benefit cannot be determined, up to 10 percent of their annual turnover in the 12 months before the offence. Both have pleaded guilty, but this too is subject to a suppression order inside Australia.

Evidence has also emerged of activity in China, Indonesia and Nepal. One key figure was a long-time Jakarta influence-peddler based in Singapore, Radius Kristanto. He agreed to extradition in August 2013 and has become a witness for the prosecution, through his evidence at the Melbourne committal hearing was sometimes confused.

Kristanto claimed to have started his work for Securency in 1998, delivering “donations” in four suitcases of cash to then President Suharto’s “right-hand man,” whose name has not yet emerged. Bank Indonesia, whose officials received laptop computers and expensive golf games from Kristanto, later issued a commemorative note using the polymer technology, but it is unclear under whose authority. At one point in 1999 Kristanto’s commission for a successful deal was put at A$4.77 million (US$4.43 million).

Kristanto has also confessed to bribery in China, passing US$150,000 in cash via a “Mr Kuok” who claimed to be “family of a senior [Communist] party member” and make an introduction to a “senior government minister.” Kristanto said he banqueted People’s Bank of China officials at five-star hotels and took a delegation down to Australia’s glitzy Gold Coast resort. The PBOC gave Securency a contract to produce a commemorative note in 2000.The then head of the Chinese government's banknote printer, Gu Daoming, reportedly told him and two Securency executives the contract “was only a small step and if everything went well there would be larger contracts.” Gu, now retired, has admitted meeting Kristanto but denied any knowledge of “Mr Kuok” or the money.

Kristanto has also testified he negotiated in Vietnam in 2004 with Securency's local lobbyist and agent, Anh Ngoc Luong, who then claimed he was a colonel in his country's internal security agency. The current president of Vietnam, Truong Tan San, the former central bank chief Le Duc Thuy (under whom Vietnam switched to Securency’s notes), Communist Party general secretary, Nong Duc Manh, and Prime Minister Nguyen Tan Dung are all listed in the new suppression order. The Vietnamese have given Canberra zero cooperation in the case.

The Securency connection with Malaysia dates first to 1998 when a 50 ringgit polymer note was issued to commemorate the Commonwealth Games, and then to 2003, at about the time Abdullah Ahmad Badawi took over from Mahathir. Agents recruited among a familiar cast of Kuala Lumpur middlemen are said to have offered inducements up to RM100 million (US$31.2 million) to secure a big contract for a five ringgit note.

The Malaysian Anti-Corruption Commission launched a formal investigation in 2009, and have charged some local figures including an ex-assistant governor of Bank Negara Malaysia, the central bank. Australian police have been given access to evidence leading back to the bribe-givers, but the Malaysian authorities have kept the money trail in the other direction under close wraps. Abdullah has previously said any suggestions of his involvement were unsubstantiated and false.

The India connection saw Securency hired as its agent in New Delhi the well-known Aditya Khanna and his firm DSSI Group. Khanna was investigated by the Central Bureau of Investigation in 2006 after he was named in the Volcker Report for the United Nations into abuse of the Iraq oil-for-food program before Saddam Hussein was toppled. He was said to be close to Natwar Singh, the former Indian external affairs minister tainted by the scandal.

Included in the Victorian Supreme Court suppression order is an affidavit by a senior DFAT official, Gillian Bird, which presumably gives background on the alleged middlemen and their political connections in Kuala Lumpur, Jakarta and Hanoi.

The hasty effort to placate Yudhoyono comes as relations were getting back to normal after Edward Snowden’s leak of US National Security Agency material last November, showing Australian spy agencies were tapping the cell phones of the Indonesian president and his wife in 2010. That made Yudhoyono recall Indonesia’s ambassador from Canberra until recently.

Foreign bribery has been an explosive issue for an Australia that liked to think of itself as an honest, even naïve player in the international market. The bubble of innocence has now been popped.

There was the AWB (the privatised Australian Wheat Board) involvement in the Iraq scandal on top of an earlier fishy wheat sale to India. In 2004 Canberra caused outrage in Hong Kong for refusing to extradite two Australian construction executives charged with cutting corners in the foundations of a metro station. Now the continuing scandal is on the doorstep of one of the most respected national institutions, the central bank.