Banknote Printer Claims Staff Faked Test Papers

Banknote printer De La Rue warned today of a hefty profits blow as it revealed investigations into its recent production crisis found staff had "deliberately falsified'' documents.

The group, which prints notes for the Bank of England and 150 other countries, claimed some employees falsified paper specification test certificates for some banknote customers after launching an inquiry into production failures at its UK factory in Overton, Hampshire.

De La Rue has passed its findings on to the Serious Fraud Office and said it was taking disciplinary action against those involved, with a new managing director brought in for the currency division.

The world's biggest banknote printer cautioned the production woes would cost it at least £35 million in lost profits for the half year to the end of September as sales volumes were also affected.

The firm cautioned it was too early to determine the impact on full-year results and on subsequent years as it holds talks with customers and legal authorities.

Chief executive James Hussey has already resigned over the issue, which forced De La Rue to temporarily halt production at the Overton factory.

The group has maintained that despite the production failures, neither the physical security nor the security features in the paper were compromised.

It stressed production had been brought up to scratch and that the group was now ready to resume supply of fully compliant paper.

Nicholas Brookes, chairman of De La Rue, 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.

"The board has put an immediate end to the irregularities that have been identified.''

Shares slumped another 4% on today's profits alert.

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