DE LA RUE & THE DRACHMAS: A likely story?

Banknote printer De La Rue’s CEO has cried off from the G20. Did he do so to oversee Drachma deliveries? Or is the company facing an imminent takeover danger?

James Hussey…personal advisor to Oberthur Chairman

There’s been a lot of tweeting, nodding and winking today ever since the Daily Telegraph’s Ben Brogan noted that banknote printer De La Rue’s CEO Tim Cobbold had cried off the Mexico G20 talking shop. “Uh-oh,” Ben tweeted cheekily. The suggestion, obviously, was that Cobbold was staying home to get a rush order from Athens out of the factory door.

I think this is unlikely – but it doesn’t make the story any less intriguing. As Tim has said himself in the past, it usually takes six months between an initial order being placed by a central bank or government, and the notes being delivered. Doing the job in three weeks simply isn’t possible without taking massive quality control risks. This does not, of course, mean that the notes aren’t already printed in Overton, and simply waiting for the word from Athens. Or Berlin. Several times earlier this year, De La Rue refused “to either confirm or deny” they were printing Drachmas; which, to most suspicious hack minds, means they were.

But if that was the case, it seems unlikely they’d think it necessary to have Tim Cobbold cancel working the room in Mexico just to oversee the Despatch Department at the Hampshire plant. Perhaps more relevant is the fact that, just a week ago, former De La Rue CEO James Hussey joined voracious head-to-head competitor Oberthur. And thereto lies one helluva tale.

When in 2010, ‘irregularities’ were found at the De La Rue printing plant, the company was forced to temporarily halt production at its Overton factory on July 21 of that year.  The initial corporate line was that ‘concerns about the quality of banknote paper’ had brought things to a halt, and that only one customer was involved. But then De La Rue abruptly announced that it was calling in the Serious Fraud Squad….and that several De La Rue clients were ‘involved’.

The next part of this yarn depends on how one defines the term ‘involved’. The SFO probe focused on clear evidence that De La Rue staff had faked certificates verifying the quality of banknote paper. What was never revealed was precisely why they’d been doing this. But what’s abundantly clear is that Chief executive James Hussey quit. He did not get a payoff in any shape or form.

That’s pretty unusual in senior corporate circles. But a Hussey ally denies any wrongdoing on the former CEO’s part.

“James believes with some justification that he was made a scapegoat,” he says, “And, well, just generally shafted for something that was nothing to do with him”.

However one interprets what happened, the SFO investigation petered out with minimal publicity. And now James Hussey has turned up at major competitor Oberthur Technologies. But here the tale takes another twist: for last year, Oberthur was behind a series of failed bids for De La Rue.

Suddenly, this begins to look like something well worthy cancelling a Mexican fiesta for. Here we have a spurned former CEO taking up a senior position at a competitor who has tried to board the De La Rue ship before now. Here we also have – do we? Who knows? – a leader spurned who might have commercially advantageous information – perhaps incriminating secrets? – well capable of damaging De La Rue’s core business…in a sector where sphincter-tight secrecy is 95% of the game.

Tim Cobbold cited ‘personal reasons’ for staying in Britain this week. He’s telling the truth: he clearly regards this situation as very personal indeed. De La Rue’s annual report reveals that Cobbold has a clause in his contract that allowing him to resign at one month’s notice “in the event of certain corporate actions” – specifically, if the company is taken over. He would be entitled to a payment equivalent to one year’s salary of £113,000, as well as benefits, such as a pension and company car, worth £40,000. His finance director Colin Child has a similar deal.

So yes, Benedict Brogan is right to go “Uh-oh” on Twitter. This could well be one to watch very closely indeed.

If you found this interesting, you’ll probably also enjoy The Dangers of Spanish banking Consolidation


22 thoughts on “DE LA RUE & THE DRACHMAS: A likely story?

  1. Printing- €10,000.00, €100,000.00, €1,00,000.00 and 10,000,000.00 notes.
    €1 old = €10,000.00 new!


  2. At least one Greek economist has come up with a similar idea, months ago (i think i can point to the relative URL but it will be in Greek language.
    The proposed idea is that Greece converts to Drachma.
    1 New Drachma = 1000 Euros.
    Greek Central Bank goes printing madly, all foreign debts are paid :-)


  3. FOR SALE : Large quantity of Greek Euros. Never been used. Selling due to unforeseen circumstances. No Germans.
    Apply : Tim Cobbald, De La Rue.


  4. ΠΩΛΕΙΤΑΙ: Μεγάλη ποσότητα του ελληνικού ευρώ. Ποτέ δεν έχουν χρησιμοποιηθεί. Πώληση λόγω απρόβλεπτων περιστάσεων. Δεν Γερμανοί. Εφαρμογή: Tim Cobbald, De La Rue.


  5. Interesting post, John…Thank-you ! A slightly patriotic streak rings gentle alarm bells at a French owned company taking over De La Rue, who as I understand, print all our UK Sterling Banknotes….Possibly Nelson and Wellington might be turning over in their graves at the prospect ?

    Anyway Oberthur Technologies seem to be doing OK in their 2010 activities report….at least from a very perfunctary quick skim on my part.

    Although this might be relavant……..
    “The Security Printing division recorded a remarkable increase of 50% of its banknotes activity. In 2010, the overall revenue of this division progressed by more than one third in comparison with 2009.”

    One wonders therefore why a busy French banknote printing company might be seeking yet more capacity at this time….suggestions anyone ?

    I do hope to hell that they are running their business backed by a sound French Bank (is there such a thing anymore ?), particularly if they might be taking over printing all our UK Sterling !


  6. Its like being in the European tinderbox of spring/summer 1914. You know something bad is going to happen, some flashpoint that will kick the whole thing off but nobody knows what the spark will be and exactly when the final tipping point will be reached. The anticipation and suspense or awful and the politicians are just fiddling around.


  7. I always thought these G20 summits were for the heads of governments so I was surprised to hear this man was invited in the first place. What is the significance of him being there. In essence, the man is just a printer, surely?


  8. This shambles was entirely avoidable. If itleads to war, methinks it’ll be between the political elites of each country and their own citizens. ie civil unrest. It might become the European Spring!


  9. @BT.’the European Spring’.Not Egypt,I hope, which is about to descend into civil war.Civil unrest?In spades in Greece,and coming soon in Spain(youth unemployment).So, where does that leave us.The Greek bust is going to take out a couple of German and French banks( not Barclays, but I would not touch them with a bargepole).The good thing is that the coming UK house price adjustment(DOWN) is going to get rid of these ridiculous TV progammes about ever rising house prices,and their associated tosh about mere domestic possessions.Could be an interesting summer,apart from the weather.


  10. I don’t know what’s on the cards for De La Rue but Deutz Power Systems, for so long the engine of choice in the regional economy, is about to put a leg out of bed unless it agrees to shorten its name by three letters. Our chief mechanic sir (Paul Whitehouse sir), has checked her over sir and says there’s localised overheating, excessive oil consumption and reverse is shot sir. Has sir got far to go? Otherwise a full rebuild will be required to include the replacement of bent conrods, valves etc. if the parts are available. Otto (Nikolaus) would not have been pleased.


  11. Trust you’re being ironic, MC: the rooms in Mexico will be packed with business, and Heads of State who want rush jobs done.


  12. @JW. I was aware that there are movers and shakers on the periphery but expected them to be arms dealers, big pharma and the like; policy influencers and cash supporters. I didn’t see de la Rue in quite that bracket.
    The “rush jobs” aspect is interesting.


  13. Day by day, i realise that the patience and rational sense of the people here, is consumed by the monster of unemployment. Unemployment is reaching tremendous numbers. If this is not reversed, i expect serious public unrest towards the end of the year.


  14. Pingback: BREAKING…German Supreme Court rules against Merkel on ESM. Will she now recognise the Rule of Law? | A diary of deception and distortion

  15. After working for De La Rue for 18 years they are not the company they used to be but their ability to prevent theft inside a security business is still unbelievable . Having helped to recover several thousands of pounds of stolen stamps I can testify to this. Then there was the fraud that was in the region of 1 million pounds, dodgy paper that was not James Hussys fault as far as I can see. Currency shipped to Lybia when we where helping to stop a despot kill his own people, people loosing their jobs in the last 18 months for theft from supposedly secure sites . Then there have been multiple cock ups when restructuring their business costing hundreds of thousands of pounds due to the employment of idiots with arms full of qualifications and no practical idea of what to do with them . Though I can think of a few things they could do with them so Greece……
    Go elsewhere if you do ever need currency otherwise it wil be….
    Delivered late
    Printed incorrectly on the wrong paper
    Find it’s way into pockets it doesn’t belong to
    Or someone will take what you paid for it and spend it on something else…….


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