Monday, September 26, 2011
James Michel needs to tell us where did the Money went!!
From the sunny Seychelles to the misty-grey Isle of Man: how the RBA millions disappeared into financial darkness
Nick McKenzie and Richard BakerNovember 20, 2010
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Secretive banking laws in the Seychelles have made it popular with those who wish to avoid the prying eyes of the tax man or police.
IT WAS a phone call that seemed to shake Ric Battellino to the core. The Reserve Bank deputy governor was used to handling inquiries from the media about economic issues. But Battellino had never taken a call about bribery - let alone allegations that challenged the governance of Australia's central bank.
What seemed to most concern the respected economist about the call from The Age in May 2009 was not just the allegation that the RBA's plastic bank-note maker Securency may be bribing its way to success around the globe. Securency, Battellino was also told, was allegedly sending huge payments to mysterious offshore tax haven bank accounts.
''If this is happening, it is against all the policies and procedures that the RBA has put in place for this organisation,'' Battellino said at the time. He vowed to take action.
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Battellino was good to his word, notifying the chairman of Securency, fellow senior RBA official Bob Rankin, of the allegations. Rankin called in the Australian Federal Police and ordered a limited audit of Securency, a move backed by the other RBA appointees on Securency's board.
But a further logical and prudent step - to immediately stop any further payments to offshore accounts - was not taken.
Confidential Securency documents obtained in the past week byThe Age show that for up to six months after the federal police began investigating the firm for bribery, Securency continued sending huge lump-sum payments to a mysterious front company in an offshore tax haven.
According to a senior corporate sector bribery investigator keeping a watch on the Securency scandal, such transactions should not just have been immediately stopped when police began their probe. They should never have been allowed in the first place.
''Using offshore accounts and front companies is high risk and should only be done for a very good reason. As far as I can see, Securency never had a good enough reason,'' the investigator says.
It is now almost certain that some of Securency's offshore payments were used to bribe corrupt overseas officials and politicians whom Securency needed onside to win bank-note contracts.
The recently unearthed Securency documents - passed by The Age to the AFP - help highlight the two distinct parts of the bribery scandal.
The first part is being investigated by the federal police and involves up to 10 senior Securency employees allegedly breaking Australian or British bribery laws.
The second part of the scandal is not being investigated by any formal probe. This part of the scandal is summed up by a single question: how could extremely bribery-prone behaviour occur under the watch, or with the acquiescence, of the RBA and the other government agencies working hand in glove with Securency?
After all, the RBA doesn't just own half the company. It oversees its operations by appointing its chairman and half of the Securency board.
Government agencies, including Austrade, have also worked closely with Securency overseas, introducing the firm to several of the middlemen now suspected of doing the firm's dirty work.
Police are powerless to probe the second part of the scandal. But most government officials aware of the scale of Securency's corruption believe a broader probe, to look where police cannot, is needed.
Between October and March, the group of islands off the east coast of Africa that comprise the Republic of the Seychelles draw thousands of tourists. Most come to swim in the sparkling turquoise waters and soak up the sun. But not all.
As a renowned tax haven, albeit one slowly meeting international demands for improved accountability, the Seychelles has some visitors who prefer to do their business out of the sun. Secretive banking laws in the country have made it popular with those who wish to avoid the prying eyes of the tax man or police - money launderers, corrupt businessmen, tax dodgers and arms dealers.
This fact alone makes it an odd destination for a firm owned by the Reserve Bank of Australia to wire money, let alone millions upon millions of dollars. But confidential Securency documents show that between 2008 and 2010, Securency sent more than $10 million to a Seychelles front company, SPT Limited. So why was this done?
The Seychelles company is run by a clique of South African businessmen, including a convicted white-collar criminal, whose job it was to help land a series of plastic bank-note deals in Nigeria. Stakes were high. If Nigeria could be persuaded to switch the country's paper currency to plastic notes, then Securency, and the RBA, would make a motza.
The leaked company documents show that the Seychelles company was a vehicle for paying several overseas agents, or middlemen, to get Nigerian officials onside. It is believed that one of the agents was responsible for getting a senior Nigerian politician onside.
This agent, whom The Age is not naming for legal reasons, said in an interview last year - after first denying he worked for Securency - that he was known as ''old Daddy'' by Nigeria's political elite.
The other agents paid via the Seychelles company were responsible for influencing officials in the Nigerian central bank and the country's mint.
The Seychelles front company was given a large cut - 12 per cent- of the value of every plastic bank-note contract won by Securency. The documents show that the company planned to dish out these funds to other parties, sometimes via other offshore accounts or secret trust accounts. The agents ultimately used by Securency to win Nigerian contracts had bank accounts in Europe, the United Arab Emirates and the Isle of Man.
The system set up by the mysterious businessmen behind the Seychelles account worked a treat. As the contracts rolled in during 2008, Securency made payments totalling $3 million to the Seychelles. Even the AFP investigation into allegations that Securency was using offshore companies to bribe overseas officials didn't stop business. In the six months after the investigation began in May 2009, a further $7.25 million poured into the company's accounts in the Seychelles.
The wiring of funds to multiple offshore accounts and front companies will make it extremely difficult for any policing agency to confirm the identity of the end recipients
of the funds. But The Age's investigations, which involve speaking to company insiders, agents and Nigerian government officials and obtaining dozens of Securency files, strongly suggest that Securency's African business dealings were arranged to cover up bribery.
Up to $23 million in suspected kickbacks were paid in connection to Securency's Nigerian contracts, far more than the value of any of the work that was actually done by the agents whose accounts were enriched.
A federal police witness, who used to work for the RBA firm, has told police that a senior Securency manager confided to him that several Nigerian officials were indeed bribed.
It is the likelihood that some of these alleged bribes were paid with money sent by Securency to offshore accounts after police began their inquiry, which raises some of the most serious questions about the RBA's oversight of its bank-note firm.
But the RBA, which has repeatedly declined to answer any questions about the scandal, is far from alone in facing questions about its conduct in respect of the scandal.
Last month, The Age reported that federal government trade agency Austrade helped introduce a Vietnamese agent to Securency, even though Austrade knew as far back as 1998 that this agent had ''family relations in various key [government] ministries''.
Austrade documents reveal it had recorded that this agent had a ''well-connected'' father and a ''father-in-law [who] is minister of interior''.
In hooking this agent up with Securency to help win a deal in Vietnam, Austrade appears to have helped arrange an extremely bribery-prone relationship.
Under Australian anti-bribery laws, it is illegal for Australian companies to provide benefits to foreign officials, their representatives or relatives to obtain improperly a business advantage.
So where did Securency end up paying this Vietnamese agent his millions in commissions? The tax haven of Switzerland.