The head of banknote printer De La Rue yesterday paid with his job for "serious" production errors at one of the company's paper mills.
The departure of James Hussey, who had worked for the firm for 25 years, stunned investors. Shares in the company touched a four-year low after it admitted that it was struggling to gauge the financial consequences of the paper quality problems discovered last month at its plant in Overton, Hampshire. The glitch resulted in shipments of a special type of paper being suspended. Shares closed down more than 10% at 712p.
De La Rue, which supplies more than 150 countries with banknotes or paper to print their own notes, refused to spell out the details of the problem at Overton, making only a coded reference to "quality and production irregularities". The paper affected is not the type used for sterling, dollar or euro notes and the company would not specify the currency or the stage of the production process that was affected, stating merely that the irregularities related only to Overton and that its 17 other mills were not affected.
"We know it's a problem involving a state-printer shipment to one client but the company won't quantify the size of the order involved," said Panmure Gordon analyst Paul Jones. "The fact that it happened nearly a month ago, the company have said it's a serious matter and it's still not been fixed suggests that it's a major problem."
De La Rue sought to reassure its powerful clients, which include the Bank of England, with the promise that it was "confident that neither the physical security nor the security features incorporated in the paper have been compromised for any customer."
In a statement the company said that Hussey had resigned as a result of his own "belief that he must take responsibility" for the failings at Overton, adding: "The company continues to look into these irregularities … which the board consider to be of a serious nature."
Investors were alarmed by De La Rue's inability to report, three weeks after the matter was first made public, how its profitability will be affected. It has promised to update the City as soon as the picture becomes clear but admitted: "Owing to the complexity of the issues, this is unlikely to be in the near future."
Hussey, 48, was managing director at De La Rue's currency division before being promotion to chief executive at the start of last year. A company spokesman said he had not been pressurised into leaving and that no decision had yet been taken on whether he would receive a payoff. Last year Hussey earned a basic annual salary of £325,000 plus a £129,000 bonus.
Jones said Hussey was very well respected in the industry, adding: "You're losing someone with a wealth of experience, someone with a lot of contacts and in this industry it's all about contacts." The interregnum created by Hussey's departure sees non-executive chairman Nicholas Brookes take on the day-to-day running of the company as executive chairman, and Colin Child, the finance director, assume the additional responsibilities of chief operating officer.