De La Rue says staff falsified banknote tests

De La Rue, a banknote printer, on Tuesday claimed some of its staff had deliberately falsified tests on its banknote paper.

The printer, which is conducting an investigation into irregularities identified at its Hampshire paper production facility, said: "It has now been established that some of the company's employees have deliberately falsified certain paper specification test certificates for a limited number of customers." Banknote paper specifications have a large number of detailed parameters. De La Rue said the investigation had found in certain cases that a small number of them had fallen marginally short of specification.

"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," Nicholas Brookes, the executive chairman of De La Rue, said. "The board has put an immediate end to the irregularities that have been identified and has appointed a new managing director for the currency division."

The irregularities impacted a central bank, thought to be the Reserve Bank of India, with which De La Rue has a contract to produce the paper upon which its banknotes are printed. The notes are printed in India. The irregularities also forced the departure of James Hussey, the printer's chief executive, in August.

De La Rue supplies banknote services to countries including the United Kingdom, Singapore, Sri Lanka, Saudi Arabia, Kuwait and Iraq. The firm also produces other secure documents, such as cheques and passports.

In its latest Annual Report, De La Rue said 85% of its employees understood its values of "honesty, teamwork and dedication".

De La Rue said it had reported its findings to the relevant law enforcement agencies.
"We are carrying out a very thorough investigation and are keeping our customers and the legal authorities fully informed," Brookes said. "The company reiterates that it has not found anything to suggest that either the physical security or the security features in the paper have been compromised and that the matters uncovered relate only to the certification of paper specifications at the relevant facility."

The printer also said, for the first half of the current financial year, the adverse impact on the group's profit before tax was likely to be at least £35m. This included some one-off costs such as stock write-offs, professional fees, rectification and production trial costs as well as some slippage of currency volumes into the second half. The operating profit of the currency division in the year to April 2010 was £95.3m.