Costello hits out at RBA for silence on bribery

THE former federal treasurer Peter Costello says the Reserve Bank should have told him and police - instead of covering up - of a June 2007 memo detailing evidence of foreign bribery by one of its subsidiaries.

The Herald can also reveal that a senior federal police officer told a parliamentary committee earlier this month ''knowledge of the foreign bribery itself was made known to the Reserve Bank executive some years before the AFP actually received it''.

Following yesterday's report that the RBA covered up the memo from police and Parliament, Mr Costello has revealed that as treasurer he, too, was never told of corruption concerns by the Reserve Bank governor, Glenn Stevens.

''Any agency of government that becomes aware of evidence of criminal activity has a duty to inform the relevant minister and to take the evidence - if it is credible - to the law enforcement authorities,'' Mr Costello writes in the Herald today.

The 2007 memo, sent to the then deputy governor Ric Battellino detailed alleged payment of bribes by agents working for the RBA subsidiaries Note Printing Australia and Securency. But the RBA did not tell police of these concerns until after the Herald exposed the corruption in 2009. Instead, it called in the law firm Freehills to investigate. The Freehills report, which the RBA won't release, apparently found no evidence of illegality.

The RBA's failure to alert police in 2007 was highlighted this month when the Federal Police Commander, Chris McDevitt, told a parliamentary committee - in comments not reported until now - that the RBA knew of corruption years before 2009.

In the same hearing, Commander McDevitt said ''Commonwealth agencies have a responsibility to report all serious allegations of corruption to the AFP'' and that ''most of the time agencies are very happy to hand them over to us''.

Federal police last year charged Securency and NPA, along with eight former executives, with bribing officials in Vietnam, Malaysia, Indonesia and Nepal. The 2007 memo by the then NPA company secretary Brian Hood referred to bribery in Malaysia and Nepal.

The contents of the memo also appear to contradict testimony given by Mr Stevens to a federal parliamentary committee last year when he said no one at the RBA knew anything about bribery concerns until the Herald's May 2009 report.

The RBA has released a statement defending its decision not to refer the 2007 bribery concerns to police and denying its senior officials gave misleading testimony. ''The bank rejects the implication that the governor or other officers of the bank have misled the committee,'' it said.

Pressure is building on Mr Stevens and the bank to face a parliamentary inquiry into the handling of the scandal and the involvement of other government agencies such as Austrade.

The Greens and the independent senator Nick Xenophon today will call for a Senate inquiry into the affair and an order for Mr Stevens to table all relevant documents.

Mr Stevens is likely to face questioning by the House of Representative's economics committee tomorrow.

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