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The Reserve Bank of Australia

The Reserve Bank of Australia is a Government agency, and is Australia’s central bank and printing
agency. It came into being on 14th of January, 1960 as Australia's central bank and banknote issuing
authority, when the Reserve Bank Act 1959 removed the central banking functions from the
Commonwealth Bank. The Bank has the responsibility of providing services to the Government of
Australia in addition to also providing services to other central banks and official institutions. It
currently consists of the Payments System Board, which governs the payments system policy of the
Bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the

Both Boards consist of members of the Bank, the Treasury, other Australian government agencies,
and leaders of other institutions that are part of the economy. The Governor of the Reserve Bank is
appointed by the Treasurer and the staff are public servants, as it is not a commercial bank. Note
Printing Australia and Securency are subsidiaries of the Reserve Bank.

Code of Conduct for Reserve Bank Board Members


The powers and duties of members of the Reserve Bank Board are set out in section 10 of the
Reserve Bank Act 1959. The Act says relatively little, however, about the conduct of members,
beyond stating that they hold office subject to good behaviour. In pursuing the Bank's legislated
goals, members recognise their responsibility for maintaining an unparalleled reputation for integrity
and propriety in all respects. Hence they agree to adhere to this Code of Conduct.

General Principles

Members shall observe the highest possible standards of ethical conduct. They will avoid any action,
or inaction, which could in any way impair the Bank's capacity to carry out its duties, or compromise
its standing in the community and its reputation for integrity, fairness, honesty and independence.

Legal Requirements

Members must by law meet the general obligations of directors of statutory authorities, as set out in
the Commonwealth Authorities and Companies Act 1997 (CAC Act). This explicitly states that
directors must:

 discharge their duties with care and diligence;

 act in good faith, and in the best interests of the Bank;
 not use their position to benefit themselves or any other person, or to cause detriment to
the Bank or any person;
 not use any information obtained by virtue of their position to benefit themselves or any
other person, or to cause detriment to the Bank or any person; and
 declare any material personal interest where a conflict arises with the interests of the Bank.

The relevant sections of the CAC Act (sections 21–27) form part of this Code.

On appointment, each member signs a Declaration of Secrecy, as required under the Reserve
Bank Act. This commits members to maintain secrecy in relation to the affairs of the Board and the
Bank. They promise not to divulge any information in any way except as agreed by the Board or
under compulsion or obligation by law. The declaration forms part of this Code.


Taking as given that members are bound by the provisions of the CAC Act and the Declaration of
Secrecy as above, this Code further provides that members will observe the following:

The confidentiality of information – including in the Board materials, and in the discussion at the
meeting – must be strictly maintained, including after members have left the Board. Members shall
also avoid any situation where they might be perceived as having acted with the benefit of
knowledge not available to the general marketplace.

Conflicts of interest, whether of an actual or potential nature, and whether involving a member's
personal or business affairs, shall be promptly and fully disclosed. Members furnish annually a
confidential statement of private interests to the Treasurer. The Treasurer has provided a class order
under section 27K of the CAC Act, enabling members to discuss and decide monetary and financial
stability policies. This order does not extend to other matters which may come before the Board. In
the event that a member becomes aware of a conflict of interest associated with a particular issue
facing the Board other than one involving monetary or financial stability policies, the member must
immediately disclose it to the Board, as required in the CAC Act, which also sets out how such
conflicts are to be handled. Major changes to the interests stated in the annual declarations should
be promptly disclosed to the Treasurer. Members considering taking on a material interest which
might present, or might be perceived as presenting, some risk of conflict with their role as a Board
member shall consult the Governor before committing themselves.

A member is not permitted, under section 17 of the Reserve Bank Act to be a director, officer or
employee of an Authorised Deposit-taking Institution. Under this Code, a member shall not be a
director, officer, employee, or have any material financial interest in any private company operating
in Australia whose main business is the provision of finance.

Members shall take great care in financial transactions for personal account. Members shall not use
information gained in their activities as a Board member and not generally available to the market
place, for purposes of carrying out private financial transactions, whether directly or indirectly via
third parties, or whether conducted for their own account or for the account of a third party.

In order to avoid any possibility of perceived conflicts that could damage the Bank's reputation,
members shall exercise due care in accepting from third parties entertainment, travel or
accommodation, or any other benefit which is offered solely or mainly on the basis of membership
of the Board.

Members generally shall refrain from public commentary about current Australian monetary policy
issues, respecting the confidentiality of Board discussions. Members who, in the ordinary course of
their activities outside the Reserve Bank, have occasion to discuss economic policy matters
generally, shall do so on the basis that the views so presented are personal or affiliated with another
institution, not the Bank. The Governor and Deputy Governor will on occasion need to speak on
monetary policy issues as part of their official duties, but in doing so shall still respect the
confidentiality of the Board discussions.

The Governor and Deputy Governor shall adhere not only to this code but also to the Reserve Bank
staff code of conduct.

Where questions of interpretation of this Code arise, members shall consult with the Governor.
Where issues arise which cannot be specifically foreseen in this Code, members shall be expected to
exercise sound judgement and behaviour consistent with the General Principles outlined above.
Members shall, where appropriate, consult with the Governor and, if necessary, the Treasurer.

The Current Scandal

Note Printing Australia and Securency develop printing technology and print Australian currency.
However they also sell this note printing technology to other countries. Those who use inferior
paper notes, for example. In 2006 the firm won major contracts with several banks in Nepal,
Malaysia, Vietnam and Indonesia, and it has since been revealed that the millions of dollars were
paid to agents who secured those contracts with bribes.

Brian Hood was company secretary for Note Printing Australia in 2007 when he uncovered evidence
of these bribes and corruption. He sent a detailed five page memo to Reserve deputy-governor Ric
Battellino, including admissions by two agents of paying bribes, provisions of false documents to
foreign central banks and inflation of contracts to hide commission. Other board members and
senior bank officials including NPA deputy-governor Graeme Thompson and assistant governor Frank
Campbell see Hood’s bribery evidence. Mr. Hood is told ‘never’ to mention it again.

Rather than going to the federal police, the Reserve Bank asks law firm Freehills to examine whether
illegality has occurred. Freehills apparently advises the bank that there is not enough evidence to go
to the police. Nevertheless, NPA is told to sack all its agents.

In 2008 Brian Hood is fired. He is told his position is ‘untenable’ and forcibly resigned. Victimising a
whistle blower is a criminal act and another charge against the Reserve Bank.
In 2009 the federal police investigate serious corruption concerns at Securency and NPA. The
Reserve Bank withholds documents such as Freehill’s report and Hood’s memo for several months.

2011 – Reserve governor Glenn Stevens tells the parliamentary committee that no one at the Bank
knew about the corruption at Sercurency until The Sydney Morning Herald’s 2009 report. Police
charge eight former NPA and Securency executives with Australia’s first foreign bribery offences, and
both companies are charged. The Herald reveals documents that show the bank’s knowledge of the
bribery in 2007.

2012 – Stevens remains adamant that the Reserve Bank acted in good faith. He declares that the
bank provided relevant material to the police in a timely fashion. Court orders prevent publication of
developments in criminal cases against Securency and NPA. Committal hearings for executives begin.
Pressure grows on government to hold broad enquiry into the affair. Records now show that up to
$492,000 has been paid to a Malaysian arms dealer. Calls for a Royal Commission continue to be


Reserve Bank of Australia Webpage

Sydney Morning Herald, Friday, 14th of September

SMH, Tuesday, 11th September

Brisbane Times webpage

SHM webpage

Google News