Deals with Saddam Hussein

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The Reserve Bank used a frontman to secretly liaise with Saddam Hussein's brother-in-law and bodyguard in an illegal effort to sell plastic banknotes to the dictator at the height of United Nations sanctions, according to confidential RBA files.

The revelation comes as two RBA whistleblowers-turned-star police witnesses in the Reserve banknote bribery scandal break their silence about the failure of the Australian Securities and Investments Commission, to investigate the ''untouchable'' directors of two allegedly corrupt RBA companies.

The two polymer banknote firms, Note Printing Australia and Securency, face criminal charges for allegedly paying kickbacks to win contracts. But the firms' former directors, who were appointed by the Reserve, have never been investigated for allowing corruption-prone business practices to flourish for 10 years.

In the know: Former long-standing NPA director Mark Bethwaite.


Whistleblower and former NPA executive Brian Hood has publicly challenged RBA governor Glenn Stevens' parliamentary testimony from 2010 to 2012 about the scandal, saying it ''wasn't the truth''.


A joint Fairfax Media-Four Corners investigation can reveal that allegedly corrupt practices spread - with the knowledge of some directors - many years before Mr Hood and a second whistleblower, James Shelton, raised concerns that ultimately led police to charge the two RBA companies with bribery in 2011.

Confidential bank documents reveal that in May 1998, NPA launched the top-secret project code named "Delta" to secure $80 million that Saddam had ''already allocated'' to buy Australian plastic note technology. Reserve officials working for NPA said these funds could potentially be accessed by funnelling them through a Jordanian bank ''with the green light of SH [Saddam Hussein]''.

The Reserve officials used a frontman to cover up NPA's use of the corrupt middleman, Saddam's brother-in-law and bodyguard, Arshad Yassin, as a facilitator.

David Chaikin, a legal expert and an associate professor at Sydney University, who reviewed the Project Delta files for Fairfax Media, said they showed a ''very strong prima facie'' case that the RBA officials involved in the Iraq trip had breached UN sanction 661.

The sanction banned Australians from business dealings ''which promote or are calculated to promote'' the sale or supply of any goods to Iraq. When Project Delta was launched, the RBA was responsible for upholding the sanctions.

Project Delta was known to top RBA banknote officials, including former long-standing NPA director Mark Bethwaite. A Project Delta file faxed to Mr Bethwaite in 1998 states that Arshad Yassin's involvement in the secret deal was ''critical as all decisions on this project will be taken by SH [Saddam Hussein]''.

Project Delta was stopped in September 1998 after Australian diplomat John Hines from the Department of Foreign Affairs' Middle East branch, learnt of it and wrote to NPA warning that its ''informal meeting with Saddam Hussein's brother-in-law might have ''breached Australia's obligations in international law''.

Project Delta was never made public because Mr Bethwaite and other NPA directors kept it secret in 1998, and again in 2009, when the corruption allegations involving NPA and Securency were aired in the media. Rather than stopping all high-risk business practices when Project Delta was wound down, NPA and Securency directors embraced bribery-prone activities, including paying foreign agents huge sums in return for their convincing overseas officials to award contracts to the Reserve's banknote companies.

But the federal police and ASIC have never investigated the former directors of the two firms, including the long-standing chairman and former Reserve deputy governor Graeme Thompson, for overseeing these high-risk practices.

ASIC has not interviewed a single witness or suspect since it decided last year not to conduct a formal inquiry. ASIC made the decision after reviewing documents gathered by the federal police probe, despite the fact that the AFP bribery inquiry never investigated directors for alleged corporate offences.

In his first public interview, former NPA company secretary Brian Hood alleges that not only did some former directors allow highly risky business practices to occur, they covered up suspected corruption.

Mr Hood also revealed that Mr Thompson and other directors, including Mr Bethwaite and former RBA board member Dick Warburton, agreed to conceal from Nepali authorities the secret commissions NPA had paid to an agent in Nepal in return for his help winning polymer banknote contracts.

"The inaction by ASIC has been astounding. The parent organisation [the Reserve Bank] and the boards of directors have all got their responsibilities. Clearly there has been failings … and they should be investigated," said Mr Hood, who was the NPA's company secretary between 2004 and 2008.

The Reserve Bank still owns all of NPA but sold its half share in Securency this year. The RBA, Mr Thompson, Mr Bethwaite and Mr Warburton declined to answer questions.

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