Reserve Bank governor Glenn Stevens yesterday admitted it would have been ''prudent'' for the Australian Federal Police to have been told of corruption concerns within one of the bank's currency printing subsidiaries in 2007.
Mr Stevens made the admission during a day-long hearing before federal Parliament's economics committee where he, his recently retired deputy Ric Battellino and assistant governor Frank Campbell were questioned about their handling of a bribery scandal involving RBA subsidiaries Note Printing Australia and Securency.
While defending the RBA's decision to refer detailed bribery allegations made by a whistleblower in 2007 to law firm Freehills rather than the police, Mr Stevens said that, with the benefit of hindsight, police should have been also informed.
''If I review this in my own mind and contemplate whether we might see some parallel set of circumstances, I think that additional step [informing police] would be prudent,'' he said.
''If pressed on this, I would have to say that there should have been more scepticism and more questioning of the management of both companies earlier than there was.''
The RBA only called police to investigate the companies' use of foreign agents in May 2009 after Fairfax revealed corruption concerns within Securency.
Police last year charged Securency and NPA, along with eight former executives, with bribery offences in Vietnam, Malaysia, Nepal and Indonesia.
The charges in Malaysia and Nepal were based on information provided to the RBA by former Note Printing Australia company secretary Brian Hood in mid-2007.
In their most frank account of the bribery scandal to date, the RBA's leadership team yesterday said:
■ Prime Minister Julia Gillard had not requested a briefing on the bribery affair. Mr Stevens said Ms Gillard's predecessor, Kevin Rudd, ''didn't express any particular view'' when briefed in 2009.
■ The former treasurer Peter Costello was never briefed about corruption concerns that emerged at NPA during 2007, with Mr Stevens yesterday saying it never actually occurred to him to do so.
■ The investigation by Freehills into 2007 bribery allegations by NPA was limited in its scope, with the agents accused of corruption never questioned nor their bank accounts examined.
■ Mr Battellino denied a claim made by Mr Hood to another parliamentary committee last week that in 2008 the then deputy RBA governor told him to never mention NPA's agent problems to anyone.
Mr Stevens said it was appropriate for the RBA and NPA board to have relied upon the advice from Freehills.
''I think it was reasonable for them to act in that way, to have a process of independence with a degree of urgency, with serious outside advice and to act as they did,'' he said. ''I don't see much to gain going back second guessing whether they [Freehills] got it right or wrong.''
Mr Stevens said the RBA would have called police in 2007 had Freehills advised that it was necessary.
The Freehills report and several other RBA documents were not made public yesterday because of the ongoing criminal prosecutions of several former NPA and Securency executives in Melbourne.
However, under strong questioning from various committee members, Mr Stevens and Mr Battellino acknowledged Freehills did not speak to the agents accused, and since charged, with bribery. Nor did it have access to their bank accounts or other important information.
Greens MP Adam Bandt read out a small passage from the Freehill's report which focused on NPA's possible exposure to foreign bribery and stated there were ''relevant circumstantial facts that could give rise to that instance''.
The most testy exchange of the day occurred between Mr Battellino and Liberal MP Tony Smith - whose strong questioning at previous committee hearings led to yesterday's special meeting.
Mr Smith pressed Mr Battellino on his testimony before the committee in August last year during which he answered questions about the 2007 corruption concerns at NPA but did not not reveal his meeting with Mr Hood nor Mr Hood's provision of a five-page memo.
However, at a hearing in February this year, Mr Stevens confirmed Mr Battellino had received corruption warnings in writing from a senior NPA manager in 2007. Mr Battellino had retired shortly before this hearing.
Mr Battellino yesterday said he had not mentioned his 2007 meeting with Mr Hood at previous hearings because he had been asked by Mr Hood to keep the meeting confidential.
''I regret putting the interests of the whistleblower ahead of the bank and myself,'' he said.
Asked by Mr Smith why he did not last year disclose his 2007 meeting with Mr Hood when Mr Stevens felt able to do so months later, Mr Battellino said: '' I think Mr Stevens was asked specific questions bout the meeting. I wasn't asked specific questions.''