A HIGH-RANKING Australian embassy official had a secret affair with a Vietnamese spy accused of receiving up to $20 million in suspected bribes from a subsidiary of the Reserve Bank.
Senior trade commissioner Elizabeth Masamune - who held a top secret Australian security clearance - met Colonel Anh Ngoc Luong, a top official in Vietnam's state intelligence network, in the early 2000s, when she was based in Hanoi.
At the time, Colonel Luong was working with the Reserve firm Securency to win a huge plastic banknote contract with Vietnam's central bank.
Last year Colonel Luong was accused in court by Australian prosecutors and federal police of receiving up to $20 million in suspected bribes from Securency.
Diplomatic sources have confirmed that while Ms Masamune was encouraging Securency to make substantial payments to Colonel Luong in return for his help in winning contracts, she was intimately involved with him.
Ms Masamune did not declare the details of her relationship with Colonel Luong to the Department of Foreign Affairs and Trade or Australia's intelligence agencies.
As Australia's most senior trade official in Vietnam, Ms Masamune would have received classified Australian government briefings regularly. When contacted last night, Ms Masamune made no comment.
A senior diplomatic source said Australia's spy agencies listed Colonel Luong as a colonel in Vietnam's spy agency, the Ministry of Public Security. He is known to be part of the inner circle of the Prime Minister, Nguyen Tan Dung, and a "bagman" for top Vietnamese officials.
It is understood that when Securency executives complained about the large amount of money it was paying to Colonel Luong, Ms Masamune told them it was the price of doing business in Vietnam.
The revelation of the affair will reignite pressure on the Prime Minister, Julia Gillard, to set up a broad inquiry into the extent to which senior Austrade and Reserve officials supported or covered up bribery and engaged in other improper behaviour.
The Deputy Opposition Leader, Julie Bishop, yesterday said she would seek answers from the Trade Minister, Craig Emerson.
''Given the seriousness of the allegations, it's vital the government disclose its full knowledge,'' she said.
Ms Masamune was one of several Australian officials who directly or indirectly facilitated Securency's allegedly improper dealings, which prosecutors have claimed involved the payment of multimillion-dollar bribes in Vietnam, Malaysia and Indonesia.
Austrade assisted Securency and Note Printing Australia, another Reserve subsidiary, in 49 countries between 1996 and 2009. NPA is alleged to have bribed officials in Malaysia, Indonesia and Nepal.
The Herald first reported in December documents released under the Freedom of Information Act detailing how Ms Masamune - now based in Sydney as Austrade's general manager for east Asian growth markets - knew in 2001 of Securency's financial dealings with Colonel Luong.
Committal hearings for alleged bribery offences committed by up to eight former Securency and NPA executives are due to begin in Melbourne today.