THE chief executive of the world’s largest banknote printer has resigned after problems surfaced with the quality of some of its paper.

James Hussey quit his position as CEO for De La Rue, which prints notes for the Bank of England and 150 other countries, after production at the mill in Overton was suspended on July 20 because paper quality specifications had not been met.

A statement from the company said Mr Hussey believed “that he must take responsibility for this.”

De La Rue said investigations into the quality of the paper were still being conducted. However, a well-informed source in the village claimed the faults had occurred because cutbacks were made in the quality control department.

The source, who did not want to be named, said staff at the mill had been threatened with the sack if they spoke to anyone outside the company about what had happened.

He added: “The paper has to be absolutely pristine clean and the flow that runs through the machine has to be immaculate. That’s why they make banknotes for 150 countries around the world. It’s extremely difficult to make it that perfect.

“There was a team of people who check that quality and the word is that the line of quality control was removed by orders from above.”

The source said he understood that six people were employed to check the quality of the paper, and that was their sole purpose. But because of pressures on work elsewhere, they had been ordered to work in other areas.

De La Rue refused to confirm or deny whether the quality control cutback claims were true.

Non-executive chairman Nicholas Brookes has now been appointed executive chairman and Colin Child, group finance director, has taken on the additional role of chief operating officer until a new chief executive is found.

Shares in the company have fallen 22 per cent since the problem surfaced, and the company has also warned that sales this year and in 2011 will be “materially lower” than expected.

A statement from the company said: “De La Rue is confident that neither the physical security nor the security features incorporated in the paper have been compromised for any customer, and that the irregularities referred to relate only to testing of paper specifications at the relevant facility.”