RBA drops stake in accused Securency
THE Reserve Bank has sold its 50 per cent stake in Securency, a firm alleged to have bribed foreign officials to secure note-printing contracts.
In a scandal that has put growing pressure on parts of the central bank, Securency and another subsidiary owned by the RBA, Note Printing Australia, are accused of paying bribes to win overseas note-printing contracts.
The central bank on Tuesday said it would receive $64 million after offloading its share in the firm to UK film manufacturer Innovia, which already owns the other 50 per cent of Securency.
The RBA announced its intention to sell its stake in Securency in 2010, once the firm had established itself as a viable long -term supplier.
The Reserve said it would retain ownership of Note Printing Australia, which had entered into a contract to supply Securency with polymer material that would be used to make "Australia's next generation of banknotes".
It comes after RBA governor Glenn Stevens last year appeared before a special hearing of the parliamentary economics committee to answer questions over the affair.
It has been alleged that senior officials at the Reserve Bank were told of the allegations by a whistleblower in 2007, but the bank did not call the federal police until 2009, after Fairfax Media published the allegations.
The sale came as the Reserve released the findings of an independent review into its oversight of Securency and Note Printing Australia by Cameron Ralph, a consultancy.
The report found the Reserve's board had given "reasonable consideration" to the governance arrangements at the firm, and the board had taken "appropriate" action where the firms were not performing in line with its expectations.
"Clearly, with the benefit of hindsight, there could have been more oversight applied to the activities of the companies, which may have detected earlier the alleged illegal payments. But that does not mean that the bank's oversight at the time was inappropriate," the report said.
Innovia Films CEO David Beeby said the Reserve Bank had always intended to part with its stake at some point. "The RBA has been an outstanding and committed partner in this joint venture," he said in a statement.
"It has always been their clearly stated policy to grow the business to the point where it would be divested once it held a strong position in the market, and that time has certainly arrived."
Despite the Securency affair, the federal government expressed full confidence in Mr Stevens, and dismissed calls from the Greens and key independent MPs for a judicial inquiry into the bribery allegations.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free