A 2009 investigation by accounting firm KPMG into note-maker Securency discovered material that indicated an employee had raised concerns over possible corrupt payments two years earlier, a parliamentary committee has been told.
At a special hearing in Canberra today, Reserve Bank of Australia governor Glenn Stevens outlined the events that led up to several agents being charged with corruption at its part-owned company Securency, and its wholly-owned subsidiary Note Printing Australia.
In May 2009, Fairfax media reported alleged bribery of foreign central banks by agents of Securency, prompting chairman Bob Rankin to contact the Australian Federal Police and commission an investigation by KPMG.
Earlier internal audits had resulted in the termination of agents.
In October 2009, KPMG informed Dr Rankin it had discovered documents indicating that a former employee of Securency had raised concerns over the use of overseas agents in early 2007.
A progress report to the Securency board in November 2009 confirmed that "forensic work" had discovered material which indicated concerns about possible corrupt payments had been raised by a Securency employee with senior management.
"These concerns had never been made known to the Securency board or the audit department when it conducted either the 2007 or 2008 audits," Mr Stevens told the House of Representatives economics committee.
Charges were laid against several employees of NPA and Securency from July 2011.
The companies have also been charged.
Further charges were laid against Securency in August 2011, and NPA in September 2011.
The charges alleged conspiracy to offer to pay, or pay, a benefit to a foreign official not legitimately due, in four foreign jurisdictions - Malaysia, Indonesia, Vietnam and Nepal.
The use of foreign sales agents at NPA ceased in 2007 as a result of an audit at that time.
"NPA these days operates under a tighter charter to keep its focus more closely aligned with the (Reserve) Bank's core objectives and risk tolerance," Mr Stevens said, adding the bank has changed the composition of the board.
"NPA's principal focus over the years ahead will include the production - later this decade - of a series of upgraded banknotes for Australia."
In the case of Securency, the use of sales agents was discontinued after the KPMG report.
"Policies were overhauled as recommended in that report," Mr Stevens said.
The Reserve Bank has announced its intention to sell its shareholding in Securency.
Two years before the central bank alerted the police of the allegations against NPA, the company's secretary met with then RBA deputy governor Ric Battellino to discuss his concerns about payments to foreign agents.
Mr Battellino asked him to put his complaints in writing, a request that since has led to criticism that the RBA took too long to alert authorities of the claims against the note printing company.
But Mr Stevens today defended Mr Battellino's handling of the case.
"Ric, being the sort of person that he is, if he thought in any area 'there's something I don't understand, I'm going to go find out and satisfy myself that I've got a handle on it'," he said.
"I think in this matter I would say, characteristic of him to not be quite satisfied with easy answers and to want to probe until he felt 'yes, I've got an understanding now and there's a proper process'."
Mr Battellino earlier told the committee the RBA's internal audit committee, which was looking into the allegations, had a "history of dissatisfaction with NPA going back a long time".
But he added those concerns had nothing to do with agents and were to do with matters of business controls, reconciliation and "other ongoing issues".