THE Reserve Bank governor, Glenn Stevens, admitted yesterday 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 his recently retired deputy, Ric Battellino denied he had ever told a whistleblower not to mention Note Printing Australia problems with its agents.
While defending the RBA's decision to refer detailed bribery allegations made by a whistleblower in 2007 to law firm Freehills rather than 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,'' Mr Stevens 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 newspaper stories 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:
The 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.
Former treasurer Peter Costello was never briefed about corruption concerns that emerged at NPA during 2007, Mr Stevens yesterday saying it never occurred to him to do so.
The investigation by Freehills into 2007 bribery allegations by NPA was limited in its scope and the agents accused of corruption were 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 2007 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 that the RBA would have called police in 2007 had Freehills advised that it was necessary.
The Freehills report and several other internal RBA documents relevant to the scandal 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 committee members, Mr Stevens and Mr Battellino acknowledged that Freehills did not speak to the agents accused and since charged with bribery. Nor did Freehills have access to their bank accounts or other important information.