De La Rue staff faked banknote quality tests

Reputation of 200-year-old firm at risk as inquiry findings are handed to fraud office

The troubled banknote producer De La Rue confirmed yesterday that a number of its employees had falsified paper quality reports for some of its 150 clients, and that the findings of the investigation have been passed on to the Serious Fraud Office (SFO).

The 200-year-old firm said that an initial inquiry had uncovered evidence that a "limited number" of employees had "deliberately falsified certain paper specification test certificates for a limited number of customers". De La Rue did not give details, adding that the investigation was ongoing.

Any questions over the probity of De La Rue's work are likely to hit its reputation as a trusted partner of a number of governments around the world that depend on the company to help anti-forgery measures.

In a statement yesterday, De La Rue's executive chairman, Nicholas Brookes, said: "The behaviour of some of our employees in this matter was totally unacceptable and contravened De La Rue's rigorous standards. We do not tolerate such behaviour and appropriate disciplinary action is being taken."

Mr Brookes took over executive control of the company last month when the former chief executive James Hussey – the son of the former BBC chairman Marmaduke Hussey – resigned after the quality problems came light. He had worked for the company for his entire 25-year career.

It is understood that as part of the investigation, there have been two other resignations at the company: the managing director of its currency business, whom the group declined to name yesterday, and a more junior official. Since the three departures, Keith Brown has been given the job of heading the currency unit. The finance director, Simon Webb, also stepped down in May.

The problems are thought to be related to the company's printing and shipping facilities in Hampshire, while reports, which the company has not confirmed, suggest that the banknote paper in question had been designated for the Reserve Bank of India. De La Rue's contract with the central bank accounts for up to a quarter of its profits.

De La Rue said yesterday that the crisis was estimated to cost the company £35m of profits in the first half of its financial year, adding that it was impossible to say what the final effect on the balance sheet would be. The group's shares fell by 3.2 per cent, to 681p, making it one of the worst performers on the FTSE 250.

"The only good news here is that at least we have some clarification on exactly what has been going on," Paul Jones at Panmure Gordon said. "But the details do show that there is some seriously bad news. When the problems were disclosed in July, I downgraded by £12m in the half year, and I thought at the time that that might have been a bit harsh. Now it seems that it is much worse than that. But the major problem is that this is a company that has built its reputation over many years, and now faces customers who will want to check absolutely everything. Whichever way you look at this situation, it is not good."

Despite the last few weeks being among the worst in the company's long history, the SFO praised its actions yesterday. "We're not launching a full inquiry at this stage," a spokesman said. "The company reported this situation to us, and good for them for doing so. We are monitoring it closely. At this stage the inquiry is still ongoing, but they have shared the early results with us."

Banknotes, and the paper they are printed on, are designed to very detailed specifications, largely to prevent forgery. De La Rue has long lauded its record and the number of countries that have long relied on its services.

The company's shares have lost about a quarter of their value in the last three months as the details of the quality problems have dripped out.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor