News of fraud hits Southern Business

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SHARES in Southern Business Group, the photocopier leaser, fell 17p to 113p yesterday as the company admitted that six of its salesmen had fraudulently altered meter readings to inflate their commissions. Neil Redding, the director responsible for the sales staff, has resigned.

Roger Limpenny, Southern's finance director, said: 'This is very regrettable, especially after we had made an awful lot of statements and put in a lot of effort to clean up the industry.'

Two years ago Southern introduced a code of conduct for its sales force after its selling methods were criticised. It was the first photocopier company to introduce a cooling-off period like those used by the life insurance and pensions industries.

That had not stopped what Mr Limpenny called 'isolated incidents' of salesmen registering higher meter readings to make it look as if customers were using more copies than they had originally contracted for.

That resulted in customers, including hospitals and local authorities, paying a one-off extra charge for copies that they had not actually used and meant that some took out new contracts with higher minimum copy volumes than they needed.

Southern charges customers, and pays its salesmen commission, on the basis of a minimum number of copies that the customer undertakes to pay for regardless of whether or not they are used. The practice has been widely criticised for being more expensive than leasing machines or buying them outright.

Mr Limpenny admitted that it was in the interests of salesmen to convince customers they were using more copies and to sign unnecessarily demanding contracts. He said that all readings are now checked by telephone with customers.

All the salesmen were employed by Benworth, a subsidiary of Southern. Some were dismissed, although the company says others left the company before the practice came to light and have kept their inflated commissions.