Australia's corporate watchdog badly bungled its handling of one of the nation's biggest bribery scandals by failing to interview a single relevant witness and misspelling the lead police investigator's name in emails, leaving crucial correspondence stalled or unread.

The Australian Securities and Investments Commission announced in March that it would not act on a referral by the Australian Federal Police to investigate the Reserve Bank banknote scandal, despite the federal police and government lawyers finding compelling grounds to do so.

The Herald can reveal that so strong is the evidence of possible corporate malfeasance that before referring the matter to ASIC, the police considered taking the rare step of getting a special delegation from the Gillard government to investigate corporate law offences.

ASIC's failure to conduct the most basic investigation has not only infuriated senior law enforcement sources in Canberra but left a big part of the corporate corruption scandal untouched. It has also sparked questions about whether the political sensitivities that could flow from a probe that ensnared serving and former Reserve officials has influenced ASIC's conduct.

The Liberal MP Tony Smith said he intended to grill the ASIC chief, Greg Medcraft, about the issue and the independent senator Nick Xenophon questioned ''the extent ASIC has been blind-sided by the fact that these allegations involve subsidiaries of the Reserve Bank.

''It seems extraordinary that given the seriousness of these allegations and what is at stake, that not one relevant witness has been interviewed by ASIC.

''This is serious enough to warrant a special taskforce from ASIC. If they need more funding from the government, they should get it,'' Senator Xenophon said.

A senior legal source aware of evidence implicating some of the directors of the allegedly corrupt Reserve subsidiaries Securency and Note Printing Australia said it was very strong and included the reckless approval of payments to a suspected corrupt arms dealer and to front companies in known tax havens.

Yesterday the Herald revealed that several directors of both companies, including top Reserve officials, were told of explicit bribery and corporate corruption concerns in 2007 but chose not to call police.

It was revealed in court yesterday that a corruption whistleblower, Brian Hood, was made redundant in 2008 by the top Reserve official Bob Rankin after Mr Hood repeatedly raised corporate corruption concerns.

Australian corporate laws prohibit reckless conduct by directors and the victimisation of whistleblowers.

ASIC's task of starting an inquiry was made vastly easier after the police gave it boxes of evidence related to possible corporate charges identified during the police probe of criminal bribery offences.

But it is understood ASIC investigators did not question a single director, or interview a single relevant witness, about the material police provided.

Documents obtained by the Herald under freedom-of-information laws reveal ASIC only twice corresponded in writing with police about the scandal before deciding not to launch a formal probe.

In July last year, a senior ASIC investigator emailed the head of the police taskforce investigating Securency and NPA to seek advice. ''The deputy chair of ASIC has requested that I inquire of the AFP as to the scope of its investigations and the charges that have been laid, before ASIC makes any decision as to whether we need to investigate anything arising from this matter," the ASIC investigator wrote.

"ASIC would not want to duplicate any work that the AFP has already undertaken so it would be appreciated if you could assist ASIC in determining whether it should commence any investigation."

But the investigator misspelt the email address of the police officer, calling him Roland Pike instead of Rohan Pike. This meant Mr Pike did not receive the initial email.

In the email, ASIC also mistakenly wrote that the police were ''given delegation by the minister to prosecute Corporations Act offences as part of their investigation", despite the fact that this was not ultimately given to the federal police by the government. ASIC declined to release the only other correspondence between it and the police, emails sent in March just before it announced it would not investigate directors of the Reserve firms. Police have charged Securency, NPA and eight former executives with criminal bribery offences but no action has been taken against the directors.

Mr Medcraft has yet to explain publicly the basis for his decision not to investigate, despite promising more openness about watchdog decisions.

An ASIC spokesman said a thorough assessment of the material provided by the police had been done before it was decided not to investigate. He declined to answer specific questions.

Watchdog Failed Basic Probe Of Banknote Scandal

The Reserve Bank governor, Glenn Stevens, his former deputy and the whistleblower who exposed alleged corruption inside the Reserve's subsidiaries will all be called to testify about the scandal before Federal Parliament.

In a development that will intensify pressure on Mr Stevens, a joint parliamentary committee intends to grill the governor, his former deputy Ric Battellino and Brian Hood, the former RBA banknote executive turned police witness.

The revelation that the trio have been called to the October 4 joint committee comes after explosive evidence was aired yesterday in a Melbourne court about how the RBA had allegedly persecuted Mr Hood after he became a whistleblower.

The three men will appear before the joint committee on the Australian Commission for Law Enforcement Integrity, which is examining Commonwealth agencies' exposure to overseas corruption.

The decision to call the men to testify comes after a series of reports in the Herald revealing:

Growing evidence that contradicts Mr Stevens' previous parliamentary testimony that the first the Reserve knew of corruption inside its banknote firm Securency was after the Herald's 2009 expose´.

Senior officials, including Mr Battellino and assistant governor Frank Campbell, were told about alleged corruption inside Note Printing Australia and Securency in 2007.

The mistreatment of whistleblowers, including the Reserve's decision to force Mr Hood out of his job at Note Printing Australia in 2008 after he had raised repeated corruption concerns.

Mr Hood yesterday testified at the criminal committal of several former Securency and NPA executives facing bribery charges.

The federal police began an inquiry as a result of the media expose´ in 2009, two years after Mr Hood told Mr Battellino about his allegations in June 2007.

Mr Hood said yesterday that Mr Battellino had "listened intently" throughout a detailed briefing, which included allegations that a Malaysian agent working for NPA and Securency had admitted paying bribes.

"We discussed all the matters … that's why it took 90 minutes," Mr Hood said.

When asked by defence barrister Jason Gullaci whether he stood by his claim that he had been forced out of his job by RBA assistant governor Bob Rankin in the face of contradictory evidence, Mr Hood told the court that his job had been ''scrapped".

In an email to police in 2010, aired in court, Mr Hood revealed he was considering suing the RBA over his claimed mistreatment, saying: "My career has been damaged in the process … I am of the view that the RBA/NPA treatment of me was harsh."

The Reserve Bank declined to comment yesterday.

RBA Governor Called To Testify Before Parliamentary Committee

from Crikey …..

ATO whistleblower in court: 'they sabotaged my complaints' …

Chris Seage, a tax consultant and former ATO audit manager, writes:

AUSTRALIAN TAXATION OFFICE, WHISTLEBLOWER PROTECTION, WHISTLEBLOWERS

A senior lawyer in the Australian Taxation Office has sensationally claimed that high-ranking senior executive service officers within the bureaucracy sabotaged her whistleblower complaint and demanded she see a psychologist within five weeks of lodging the complaint.

Serene Teffaha, a senior tax technical specialist of 12 years standing, is suing the ATO in the Federal Magistrates Court under the Fair Work Act 2009, alleging eight adverse actions as a result of lodging a whistleblower complaint she was entitled to make under the Public Service Act. The allegations in the court writ, obtained by Crikey, calls into question whether amendments to the public service whistleblower protection laws currently before the parliament are strong enough to protect whistleblowers.

In 2011, Teffaha and four other senior colleagues lodged the whistleblower complaint with David Diment, a first Assistant Commissioner of Taxation, alleging various issues about the conduct of the ATO’s high-profile pursuit of high-wealth individual Australians worth between $100 million and $250 million a year. Some of the issues identified lack of resourcing in the area to handle the large volume of objections to the assessments as a result of audit action and the lack of technical knowledge held by ATO staff to properly deal with complex matters emanating from the audits.

The complainants believed that taxpayers were being disadvantaged by not having their issues dealt with in a fair and professional way. At risk were current and imminent objections her team was involved in where the tax in dispute was nearly half a billion dollars in revenue. After the whistleblower complaint was lodged, Teffaha and the other complainants allege they have been the subject of bullying by tax office big wigs. Teffaha has been on stress leave since last year and has not returned to work.

In a bizarre twist to the saga, Crikey understands that last month the ATO made an offer of $250,000 cash as a settlement offer to Teffaha on the condition she withdraw her court action. In an email from a senior officer to Teffaha, of which Crikey has a copy, he says:

"If you wanted to be put in the same financial position as you would have been had you drawn a salary for 3 years then my understanding is that would be the equivalent of around $250,000 'cash in hand' today. The fact that I have worked closely with you and have seen first-hand the qualities you can bring to the workplace means that I am in a very good position to provide you with the statement/reference. Ultimately I think that statement may be of greater assistance to you in rejoining the workforce in a job you're well-qualified for than the outcome of any court proceedings.

"Anyway, let's keep the channels of communication open and continue our constructive discussions about this matter. I'm really glad we can talk about this because, frankly, I think it's only the lawyers that would benefit if we keep going down the formal, legal path. And I think the sooner we can bring this to a mutually acceptable conclusion, the better it will be."

Teffaha rejected the offer as she did not consent to the ATO condition barring her from taking personal litigation against ATO senior officials including David Diment. Teffaha told Crikey: "The Commonwealth and its agencies are entering into confidentiality and release agreements designed to exonerate senior public officials from their unlawful conduct using taxpayers' funds. This is a serious breach of the Commonwealth Model Litigant Rules."

Within five weeks of lodging the complaint, the ATO wanted to refer her to a psychologist and within eight weeks she was referred to a psychiatrist due to the belief she was suicidal. In April 2011 Assistant Commissioner Toni Balik met with Teffaha and the other complainants and expressed the view she was suicidal, according to the court document. Teffaha denies the allegation that she made any threat of self-harm then or at any other time. She told Crikey that four other complainants at the meeting would dispute the claim.

The court document alleges that Diment: 

·                  Has seriously breached the relevant laws, policies and procedures in handling a whistleblower investigation by carving out significant points from the complaint and commissioned a formal external investigation into the substance of the allegations;

·                  Assigned Margot Rushton, Assistant Commissioner, from the same area of the alleged wrongdoers to handle the WB complaint without Teffaha's consent;

·                  Conspired with others to fix the outcome of the whistleblower complaint before investigation (the pre-determined decision that there was no substance to the allegations was handed down on September 8, 2011);

·                  Singled her out from the other complainants and told her not to enter ATO work premises while the investigation was taking place;

·                  Bruce Quigley, a second Commissioner of Taxation and the second-highest ranked officer in the ATO, promised Teffaha a permanent transfer out of the problem area but Deputy Commissioner Greg Williams, assistant Deputy Commissioner Richard Collis and Rushton sought to deny Teffaha this permanent transfer and insisted she remain in her position, reporting to them, while she was experiencing hostility and bullying from them.

Teffaha says the public interest disclosures made in the whistleblower complaint have since been validated by the Inspector General of Taxation's review into the ATO's compliance approach to small business released on April 24 this year.

When confronted with bullying and being victimised, Teffaha turned to the Tax Commissioner Michael D’Ascenzo for help. In May 2012 she wrote an impassioned letter telling him:

"As a committed public servant, when I saw issues that undermine the integrity and work practices of the ATO, I tried to do my part to flag and improve the issues. As a result, the ugly, abusive managerial style currently entrenched in the ATO culture was laid bare for all to see ...

"In an attempt to resolve the various issues that confronted me, I reached out to a number of external scrutineer agencies including the Australian Public Service Commission, Comcare and the Fair Work Ombudsman. Unfortunately, I discovered that they are part of this process of abuse and have collaborated in protecting the perpetrators. Whistleblowers need scrutineer agencies with meaningful powers to intervene and make authoritative decisions, when necessary."

D’Ascenzo has never responded. Shane Reardon, the acting-second Commissioner of Taxation, told Crikey:

"The ATO cannot comment on individual employee matters or circumstances. In particular it is not appropriate in this case as the matters detailed in the complaint are currently the subject of proceedings before the Federal Magistrates Court. We have a detailed guide for our staff (a Corporate Management Practice Statement) which sets out how the ATO manages whistleblowing."

Protection for whistleblowers is covered under section 16 of the Public Service Act. It states that an employer must not victimise, or discriminate against, employees because they have reported breaches (or alleged breaches) of the code of conduct to them. Amendments currently before Parliament increase the powers of the Australian Public Service Commissioner to determine complaints, other than whistleblower complaints, which ironically continue to be determined by agencies. Effectively, whistleblower protections remain unchanged.

Teffaha today remains on stress leave without pay. She says the ATO refuses to suspend or sack her, nor make any finding of misconduct against her. She is surviving on savings and with the help of her family while she waits for the commencement of her court action.

"The whistleblower laws are a joke," she said. "If someone had told me the truth back then, I wouldn't have lodged the darn thing. But I don't regret what has happened. The community has a right to expect that public service agencies that serve them don't sweep information under the carpet and don't engage in conduct of this type against dedicated and professional employees. I am committed to realising this expectation."

Today (Monday, 4 February 2013), in the County Court of Victoria, a legal gun will be held to the head of journalists.

Forced before the Court to reveal the identity of a source will be Australia’s hottest and most prolific two man investigative team, Walkley Award winners Nick McKenzie and Richard Baker of The Age. They are journalistic gamechangers.

They do what ASIS can’t or won’t do.

They do what ASIO can’t or won’t do.

They do what the Australian Federal Police can’t or won’t do.

They do what State police can’t or won’t do.

They do what Customs Police can’t or won’t do.

They do what ASIC and other regulatory bodies can’t or won’t do.

They do what politicians can’t or won’t do.

They do what anti-corruption bodies can’t or won’t do.

They write what other media can’t or won’t write or publish or even acknowledge.

And, among other things, they write what the Reserve Bank of Australia doesn’t want us to know about. Corruption. Dirty money.

I have great respect for McKenzie and Baker, and not just because Richard Baker was my student when I taught Ethics and News Reporting at Deakin University. I make no claim whatsoever on his formidable talents.

My students invariably teach me more than I teach them.

I believe journalism is a vocation and it is the nearest thing to religion that I know.

One of the more sacred Commandments of Journalism, is that of protecting our sources.

Even if such protection for sources was not enshrined and sanctioned in our Code of Ethics, most of us would instinctively do this.

Ethics Rule Number 3 [IA emphasis]:

Aim to attribute information to its source.  Where a source seeks anonymity, do not agree without first considering the source’s motives and any alternative attributable source. Where confidences are accepted,respect them in all circumstances.

Shooting the messenger is still a favourite pastime of despotic regimes and corporate institutions and their lawyers, who use various types of silencers on their weaponry, aimed at those who light even a candle to disturb the dark of corruption.

Messengers great and small have to somehow be able to withstand the ill winds sent to extinguish that goodly light, and to cup that fragile flame with bare hands to protect it.

Two hundred and sixty-two years ago next week, in a speech relating to agriculture in the House of Commons on February 11, 1851, Benjamin Disraeli uttered a favourite touchstone quote:

“… Justice is Truth in action.”

Disraeli was a staunch and fearless defender of a free press, despite the fact that so often he was glassed by the media and the British establishment for his Jewishness.

Six years earlier, in a speech at the 1845 Printing Trade Festival, he told the assembled workers,

“The press is not only free, it is powerful. That power is ours. It is the proudest that man can enjoy. It was not granted by monarchs, it was not gained for us by aristocracies ; but it sprang from the people, and, with an immortal instinct, it has always worked for the people.”

On September 17 last year, in Independent Australia, under the headline ‘Dirty Money and the RBA’, I wrote that the grotesquery of corruption within our banking systems seems endless, with vaultlines leading to the Reserve Bank of Australia.

‘The corporate sanctioned muck of fraud, bribery, collusion, mutual scrotum and back scratching could not exist without corrupt bedfellows in the national executive elite.

It could not flourish without the rich and powerful and those who aspire to be like them, or without the various regulatory and policing bodies, institutions, the judiciary, the legal system, state and federal governments and people who are prepared to lie before they buy and sell silence — such are their shares and stock in trade.

I referred to a September 15, 2012 expose by Richard Baker, Nick McKenzie and Maris Beck on the disgraceful and dismal performance of ASIC:

On Saturday, Australians wake up to yet more explosive revelations in Fairfax publications that, in an ongoing saga, compounds all and more of the above:

Australia’s corporate watchdog bungled its handling of the nation’s biggest bribery scandal by failing to interview a single relevant witness and misspelling the lead police investigator’s name in emails, leaving crucial correspondence stalled or unread.

The Australian Securities and Investments Commission announced in March that it would not act on a federal police referral to investigate the RBA bank note scandal, despite the AFP and government lawyers finding compelling grounds to do so.

The Saturday Age can reveal that so strong is the evidence of possible corporate malfeasance that prior to referring the matter to ASIC, the federal police considered taking the rare step of getting a special delegation from the Gillard government to investigate corporate law offences.

ASIC’s failure to conduct the most basic of investigations into the matter has not only infuriated senior law enforcement sources in Canberra, but left a major part of Australia’s worst corporate corruption scandal untouched. It has also sparked questions about whether the intense political sensitivities that could flow from a probe that ensnared top serving and former RBA officials has influenced ASIC’s conduct.

It is a ploy of fraudsters, banks and their lawyers and police and others included, to deliberately do the following: misspell a name, incorrectly date a letter, incorrectly address a letter, delay service, fabricate service — as I can attest in my own experiences with the National Australia Bank.

The article … is the latest in an outstanding and ongoing investigation that even in its early days should have prompted an immediate response from our government and the authorities — and the mainstream media.

Last year, [2011] with a two-part article published in The Age on August 11 entitled ‘RBA held evidence of bribery / Who knew what when’, Baker and McKenzie won a Walkley Award for their painstaking work.

On the same night, Wikileaks founder Julian Assange also won a Walkley for the most outstanding services to journalism.

He was in good company.

In my article I acknowledged the fine work by Baker and McKenzie and their paper:

Baker and McKenzie have led this forensic investigation and both they and The Age are to be congratulated not only for their services to journalism, but also because of their services to the Australian people.

They have done what the Board of the Reserve Bank, the Government, the police and ASIC have all failed to do, have refused to do and that is, to investigate and act on the matter.

But where is everyone? Where are our political guardians? And I don’t mean just for today?

Where were they months and years ago, when Baker and McKenzie first held a Securency note to the light to see if it was fair dinkum?

The Age quotes Independent Senator Nick Xenophon as questioning “the extent ASIC has been blindsided by the fact that these allegations involve subsidiaries of the Reserve Bank”.

“It seems extraordinary that given the seriousness of these allegations and what is at stake here, that not one relevant witness has been interviewed by ASIC,” Senator Xenophon said. “This is serious enough to warrant a special taskforce from ASIC.”

Well, I reckon you’re on the money, Senator.

But where was Prime Minister Gillard? (Without question I am not referring here to her private sadness and absence from the public stage. Like millions, I empathise so very much with her at this yuck time and wish her and her family great strength and have only kind thoughts, my condolences and no platitudes)

Where was Attorney General Nicola Roxon?

Where was former Prime Minister Kevin Rudd?

Where is Foreign Minister Bob Carr?

Where was former Greens Leader Bob Brown and where is Christine Milne?

Where is the Leader of the Coalition Tony Abbott? He should be punching the lights out of the Reserve Bank of Australia and ASIC — metaphorically of course.

Where is Bob Carr’s jealous rival for the top job? Julia Gillard only has to lose one more shoe (two so far) and he’s hoping he’ll be a shoe-in. We’re talking globe-winning treasurer here, Wayne Swan.

Doesn’t he care?

Where’s Coalition Treasurer Joe Hockey?

And where’s the Finance Minister Penny Wong?

Where’s the Chairman of ASIC, Greg Medcraft?

Where’s the Commissioner of the Australian Federal Police, Tony Negus?

Where’s the Director-General of ASIO, David Irvine?

Where’s the Director-General of ASIS, Nick Warner?

Well, there you go girls and boys, I’ve given you the starter pack for Reserve Bank of Australia Investigation 101. Now go forth and multiply, as I tell my students.

Oh, and I think I’ve spelled the names correctly.

But I know what you’re thinking. That I haven’t mentioned the Chief of the Reserve Bank of Australia himself, Glenn Stevens.

The fact is, the disgraceful and entrenched misconduct of some sections of the RBA were done in the name of the Australian people. Once again, we have been ill-served.

The moral and political cowardice of ASIC is offensive in the extreme. Who do we turn to when our corporate watchdog appears to have been debarked.

What I want to know is, whose is the tail that wags the watchdog?’

Another complication in this Court case involving Age journalists arises out of corporate boardroom incest and perceived conflicts of interest.

The Age is owned by Fairfax Media Ltd and its chairman is Roger Corbett. But Corbett also continues to hold not one but two positions with the Reserve Bank. As well as being the RBA Chairman of the Remuneration Committee he is also a member of the Reserve Bank Board Audit Committee.

On Friday, Louise Connor, the Branch Secretary (Victoria) of the Media Alliance sent out a rally call for journalists to gather in support of Baker and McKenzie and the protection of  journalists’ confidential sources, at 9.30 am in the forecourt of the County Court of Victoria on the corner of William and Lonsdale Streets:

Both journalists are members in good standing of the Media Alliance and are therefore bound by the Journalist Code of Ethics to respect their confidential source’s anonymity “in all circumstances”.

The pair have won Walkleys for their investigative reports into alleged bribery at the Reserve Bank banknote subsidiary Securency. The case before the court relates to former banknote executives accused of bribery.

On January 1 new “shield laws” came into operation in Victoria that finally recognise Media Alliance members’ ethical responsibility to protect confidential sources. However, the bribery case commenced before the new laws became operational.

This latest assault on press freedom echoes the 2005 case involving Herald Sun journalists Michael Harvey and Gerard McManus who, as Media Alliance members bound by the Code, refused to reveal a source and were subsequently convicted of contempt of court and fined $7,000. Subsequently, shield laws introduced at a Federal level and now being rolled out across the states to ensure journalists will never again be convicted for doing their job ethically and responsibly.

The Media Alliance calls on all Victorian journalists to rally in support of our colleagues and to protest this latest attack on press freedom.

I’m with Disraeli on this one, and I’m with my journalist brothers too.

I am Nick McKenzie and Richard Baker.

I would hope we all are, on this dangerous assault on truth and justice, journalists, sources, informants, whistleblowers and freedom of the press – and our obligation and ability to place such information where it rightly belongs – before the people.

Justice is indeed truth in action. But both appear to be estranged, of late.

Tess Lawrence served two terms as elected President of the Freelance Section (Victoria) of the then AJA (Australian Journalists Association).

Courageous journalists being forced to reveal sources

 

postscript …..

 

Fairfax investigative journalists Nick McKenzie and Richard Baker had a small win in a Melbourne court yesterday. Their barrister told the court that a previous ruling agreeing that the magistrate had the right to order the disclosure of their confidential source has been appealed.

The two award-winning reporters with The Age have been fighting a court order to reveal a confidential source since mid-December 2012. Magistrate Phillip Goldberg concluded that with the matter before the Court of Appeal, he could not ask McKenzie and Baker the crucial question: who was the source for your article published on December 8 last year?

McKenzie and Baker have pursued the Note Printing Australia/ Securency story for years in which it is alleged, among other things, that executives used bribes to secure note-printing contracts in Asia. These are powerful allegations that go to the very top of the Reserve Bank of Australia (RBA).

RBA governor, Glenn Stevens, has denied any wrongdoing or cover up of corruption. Some of these executives have now been charged and in their December 8 story McKenzie and Baker claimed that an Indonesian businessman, who allegedly assisted in getting the contracts, has agreed to give evidence against the NPA/Securency executives. The main source in the story was not disclosed.

Good journalists do not grant anonymity to sources lightly, as it lowers the credibility of their story. However, at times a source could potentially be harmed if named and the various ethical codes guiding journalists are very clear. If you have granted anonymity to a source, you never reveal the identity. The reason for this is simple: trust. Sources in possession of controversial information would not speak to reporters if they doubted that the confidentiality agreement would be honoured.

The other main consideration when keeping a source confidential is the public interest in publishing the story. There is little doubt that the alleged corruption and maladministration in the NPA/Securency case is of the utmost public interest.

Unfortunately this case is just one in which various Australian governments have decided to pursue whistleblowers and media “leaks”. The last similar case was that of Michael Harvey and Gerard McManus. The two Herald Sun journalists were informed by a source in the Department of Veterans’ Affairs that the Commonwealth had decided not to increase veterans’ pensions. The then Howard government had decided it was not in the public interest to disclose this. The public servant who provided the information to Harvey and McManus thought differently.

The department decided to find the leak and the two reporters were subpoenaed to disclose their source to a court. They repeatedly refused and were found in contempt of court and fined $7000 each in 2007. To find the whistleblower, the Commonwealth was prepared to cause a bit of collateral damage along the way and “shoot the messengers” – Harvey and McManus.

The case made it clear beyond doubt that the conflict between the ethical codes of journalism and the law (in the guise of contempt of court) was unsustainable. It could be argued that it eroded trust in natural justice. This forced the Commonwealth to start work on the Evidence Amendment (Journalists Privilege) Act 2011, commonly know as shield laws for journalists.

In 2008, a raid on the Sunday Times in Western Australia contributed to a similar law being passed in that state.

Laws providing some level of protection of journalistic sources are now operational in all jurisdictions apart from South Australia, the Northern Territory and Queensland (low-level protection for sources and journalists in Queensland is offered by the Public Interest Disclosure Act, 2010).

Unfortunately for McKenzie and Baker, the Victorian law came into effect on January 1, 2013. It is not retrospective and, hence, does not apply in their case. How effective these laws are remains to be seen. None of them have as yet been put to the test. Critics of the laws have pointed out that they do not reach far enough, as it is up to the proceeding magistrate/judge to decide if the shield law will apply in each individual case. This means the law gives the journalist a right to argue that the law should apply, but it’s not a firm legal right yet.

It could be argued that the shield laws to protect journalistic sources are only addressing the symptom and not the cause for this information bottleneck. The cause can be found in the various criminal codes of the states, territories and the Commonwealth. Section 81 of the Western Australian Criminal Code allowed the raid of the Sunday Times in Perth. It reads:

A person who, without lawful authority, makes an unauthorised disclosure is guilty of a crime and is liable for imprisonment for 3 years.

The equivalent section in the Commonwealth Criminal Code states:

A person who, being a Commonwealth officer, publishes or communicates, except to some person to whom he is authorised to publish or communicate it, any fact or document which comes to his knowledge, or into his possession, by virtue of his office, and which it is his duty not to disclose, shall be guilty of an offence.

The maximum jail term is two years, and these sections apply to any form of information passed on by a public servant.

This is the real reason, in most cases, why journalists are dragged before courts to give up their sources. These sections in our criminal codes are outdated, draconian and not worthy of a mature liberal democracy. No number of whistleblower protection acts or shield laws for journalists can be truly effective as long as these sections remain unchanged.

McKenzie and Baker will appear again in court. Whether they will be asked to reveal their source is still unclear. Perhaps the magistrate will act in the spirit of the new Victorian shield law. Then again, he may not. If so, Australia will have shot another couple of messengers

Journalists McKenzie and Baker go unshielded before demands to reveal sources

The Reserve Bank of Australia is meant to maintain stability in the nation's financial sector. It is supposed to be above reproach in its behaviour.

But is it?

Why did bank-appointed officials and employees break sanctions in Iraq and cosy up to Saddam Hussein through a "front man"? Why did a former Deputy Governor and other directors hand-picked by the Reserve Bank to safeguard its subsidiary companies from corruption, end up - over a decade - overseeing some of the most corruption-prone business practices possible? Why did they allow millions of dollars to be wired to third parties in foreign countries, including an arms dealer, in order to win banknote contracts in deals police now allege involved bribery and corruption?

Next week on Four Corners two whistleblowers-turned star police witnesses from RBA companies, Note Printing Australia and Securency, reveal for the first time how they discovered bribes were allegedly being paid... and how the most senior figures in Australia's worst corporate corruption scandal got away with allegedly egregious governance failures.

"That someone can get away with it so blatantly, a board, and a chairman... you know it, it's not right."  Whistleblower

For the past four years the Governor of the Reserve Bank, Glenn Stevens, has maintained that neither he nor officials knew about the alleged payments before 2009. We find out exactly who knew what and when.

Until now the Federal Police and the corporate watchdog, the Australian Securities and Investments Commission (ASIC), have been unwilling to investigate board members of the Reserve Bank companies, despite evidence that some of them allegedly failed in their duties, allowing corruption to flourish. 

"This is the worst corruption scandal in our history, not because of the amount of money that's been involved, but because the most respected institutions of our country have failed to discharge their responsibilities to the public." Dr David Chaikin, Associate Professor, Faculty of Economics and Business, Sydney University

COVER UP, reported by Nick McKenzie in a joint Four Corners /Fairfax Media investigation and presented by Kerry O'Brien, goes to air on Monday 30th September at 8.30pm on ABC1 . It is replayed on Tuesday 1st October at 11.35pm . It can also be seen on ABC News 24 on Saturday at 8.00pm,

A Reserve Bank of Australia subsidiary used a frontman to liaise with Saddam ­Hussein’s brother-in-law in an illegal effort to supply plastic bank notes to the Iraqi government while it was subject to United Nations sanctions, according to confidential RBA files.

Two whistle-blowers who became police witnesses in the Reserve Bank-note bribery scandal have also broken their silence about the failure of the Australian Securities and Investments Commission to investigate the directors of two allegedly corrupt RBA ­companies, Note Printing Australia and Securency.

In 2011, Securency and Note Printing were charged by the federal police with bribery offences related to alleged payments to overseas officials. Court orders prevent recent developments regarding the charges against the companies from being reported.

The companies’ former directors, who were appointed by the Reserve Bank, have never been investigated for allowing corruption-prone business practices to flourish for 10 years.

A whistle-blower and former top NPA executive, Brian Hood, also challenged Reserve Bank governor Glenn Stevens’s parliamentary testimony about the scandal from 2010 to 2012, which he said “wasn’t the truth”.

Mr Hood claimed the long-standing chairman and ex-RBA deputy governor, Graeme Thompson, and other directors, including former NPA director Mark Bethwaite and former RBA board member Dick Warburton, agreed to conceal from Nepali authorities secret commissions NPA paid to an agent in Nepal for help winning polymer bank-note contracts.

Confidential bank documents reveal that in May 1998, NPA launched a secret project code-named Delta to secure $80 million that Iraqi President Hussein had “already allocated” to buy Australian plastic note technology.

Reserve Bank officials working for NPA said the funds could potentially be accessed by funnelling the money through a Jordanian bank “with the green light of SH [Saddam Hussein]”.

A frontman was used by Reserve Bank officials to cover up NPA’s decision to use a notoriously corrupt middleman, Saddam’s brother-in-law and bodyguard, Arshad Yassin, as a facilitator to sell notes to the Iraqi regime.

A legal expert and Sydney University associate professor, David Chaikin, who reviewed the Project Delta files for Fairfax Media, said they showed a “very strong prima facie” case that RBA officials involved in the Iraq trip breached UN sanction 661, which banned ­Australians from engaging in any business dealings “which promote or are calculated to promote” the sale or supply of any goods to Iraq.

When Project Delta was launched, the Reserve Bank was responsible for upholding the sanctions. The project was known to top RBA bank-note officials, including Mr 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 a senior Australian diplomat, John Hines, from the Department of Foreign Affairs Middle East branch, learned of it and wrote a furious letter to NPA warning that its “informal meeting with Saddam Hussein’s brother-in-law may have already breached Australia’s obligations in international law”. He complained NPA had ignored repeated requests to provide details to the government about its plans in Iraq.

The fact that an RBA representative travelled to Iraq using “an Australian Official Passport” only adds to the potential for embarrassment to the government,” Mr Hines wrote.

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 first aired in the media.

Reserve Bank’s secret link to Saddam exposed

ASIC’s inaction on RBA scandal indefensible

RBA In Saddam Notes Deal

So, “bribery, corruption & cover-ups in Leighton Holdings' international construction empire were rife & known to top company executives & directors, according to internal company files”.So what? Who cares? This is Australia & “we’re open for business”, to every kind of crooked racket that money can buy.If our supposed corporate regulator, ASIC, doesn’t give a toss about the bribery & corruption reaching to the most senior levels of the nation’s central bank, why would it care about the activities of a construction company?Even after the latest allegations were aired this week, the best ASIC can do is say “it’s not our problem”, whilst the gang that can’t shoot straight, the AFP, wring their hands & say they don’t have enough resources to investigate, whilst squandering tens of millions of dollars pursuing Peter Slipper to the ends of the earth!!And not a peep out of our freshly-minted federal Attorney-General, Senator George Brandis, who is doubtless way too busy working on his book collection & dance techniques to have time for such paltry matters.Poor fellow my country.