De La Rue Investigated in U.K. by Serious Fraud Office over South Sudan Corruption

A collection of burgundy red British passports. Photographer: Chris Ratcliffe/Bloomberg

De La Rue Plc, the more than 200-year-old banknote and passport printer, is being investigated by U.K. prosecutors over allegations related to corruption in South Sudan, prompting a 16% fall in its share price and demands for executive bonuses to be clawed back.

In a statement on Tuesday, the company said it intends to cooperate with the Serious Fraud Office but couldn’t predict the effect of the probe at such an early stage. The prosecutor confirmed the investigation, saying that it will also look into "associated persons." The shares slumped as much as 17% in London trading to their lowest since October 1998.

"This provides more evidence that bonuses should be repaid," Crystal Amber Fund Ltd. investment adviser Richard Bernstein, who is leading a shareholder protest against executive remuneration at De La Rue, said by phone. "The only people who are not suffering here are the board of directors who have enriched themselves."

Bernstein’s comments refer to a meeting on Thursday during which shareholders are due to vote on the 2.4% increase in Chief Executive Officer Martin Sutherland’s 502,000 pound ($624,600) basic salary, his pension contribution and his bonus.

Executive Pay

De La Rue last week contested Crystal Amber’s claims that its performance has declined, saying in a statement that like-for-like performance demonstrated growth across revenue, operating profit and earnings per share. Two proxy institutional shareholder services, ISS and the Investment Management Association, have echoed Crystal Amber’s criticism of De La Rue’s executive pay. Crystal Amber has a 6.4% stake in the company, according to Bloomberg data.

The world’s biggest printer of banknotes, which has suffered from increased competition and pricing pressures, won the contract to supply the South Sudan pound, when the African nation became independent following a split with the north in 2011. The firm, which started out in 1813 when Thomas de la Rue started printed a newspaper on the island of Guernsey, now it says that it works with two-thirds of the countries in the world, including the U.K.

The SFO is the U.K.’s top white collar crime prosecutor. In recent years it has taken on top-tier banks, mining companies and industrial giants.

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