De La Rue takes £35m hit after staff falsify certificates

7th Sep 2010 10:26

Shares in banknote printer De La Rue fell again after it said that some of its employees had been deliberately falsifying paper specification test certificates for banknotes.The problems will impact pre-tax profits by at least £35m for the first half of the year, the company said. Shipment of affected banknote paper was immediately stopped and all production is now in line with specifications, it said.Last month, De La Rue announced the departure of its chief executive James Hussey saying he believes he should take responsibility for quality and production irregularities at one of the firm's paper production facilities. The shares have fallen sharply since news of the problems emerged.'The behaviour of some of our employees in this matter was totally unacceptable and contravened De La Rue's rigorous standards,' said chairman Nicholas Brookes today. 'We do not tolerate such behaviour and appropriate disciplinary action is being taken.'The measures taken to tackle the problem resulted in increased operating costs and lower volumes, De La Rue said. The £35m hit includes 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, it said.'We are carrying out a very thorough investigation and are keeping our customers and the legal authorities fully informed,' said Brookes. '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.'