De La Rue's boss quits over bank-note scare

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The Independent Online

The chief executive of De La Rue, the world's biggest producer of bank notes, has quit with immediate effect, following "serious irregularities" with paper production at its factory in Hampshire.

The announcement of James Hussey's resignation wiped more than 10 per cent off the value of De La Rue yesterday, as its shares fell by 82.5p to 711.5p. Mr Hussey had been made chief executive only last year, although he had been at the company for 27 years.

De La Rue, which prints notes for the Bank of England and 150 other countries, first revealed the "quality and production irregularities" relating to the testing of paper specifications on 20 July but yesterday described the problems as being of a "serious nature". The paper concerned is not used for sterling notes.

However, it provided no further guidance on the financial or operational scale of the problem and when it will be resolved, adding that further clarification is "unlikely to be in the near future".

De La Rue has suspended related production at its Hampshire factory, next to its headquarters. But the company stressed that neither the physical security nor security features incorporated in the paper have been compromised. Still, it has already warned that paper production and sales this year will be "materially lower". Following Mr Hussey's resignation, De La Rue's non-executive chairman, Nicholas Brookes now has executive responsibilities. Colin Child, the group's finance director, has taken on the additional role of chief operating officer. Both will retain these positions until a new chief executive is hired.

Paul Jones, an analyst at Panmure Gordon, said the longer that the uncertainty over its production continued, "the more concerned shareholders should be, and clearly the resignation of chief executive James Hussey suggests the impact of these problems could be significant".

He added: "While the immediate financial impact may be relatively limited, we remain concerned that the reputational damage may be ongoing both operationally and in stock-market terms."