De La Rue shares affair is a stain on the public interest

De La Rue shares affair is a stain on the public interest ; There is no doubt that the recent lapses in the quality of banknote-paper production at De La Rue have been an enormous embarrassment. The chief executive James Hussey lost his job, a major contract with the Reserve Bank of India has been placed in jeopardy, and the share price slumped.

But the idea that this is good reason to sell the company, which prints notes on behalf of the Bank of England, leads the world in security printing, and also produces a goodly number of our postage stamps, is faintly ridiculous.Speculators have piled into the stock driving it up 30pc ahead of a cash bid at 905p by smaller French rival Oberthur Technologies. This suggests it is there for the taking.

If it were to be sold it would become just the latest in a long line of UK companies to fall into overseas hands. The loss of De La Rue would be as big a mistake as the sale of Cadbury to Kraft.

For a start De La Rue is one of Britain's oldest public companies and has been trading for almost two centuries. Moreover, until the recent lapse - which is now being corrected with a new chief executive Tim Cobbold (formerly of Chloride) to join shortly - it had a global reputation for quality.

That is why the Bank of England renewed its printing contract for a further five years in May.

We have to ask does the UK, which is not a member of the euro area, really want its banknotes printed by a French private firm with only the minimal amount of transparency?

Moreover, the sale of De La Rue would lead to the loss of market leading security printing technology important not just to governments but to banks and other corporations around the world. Forget any pledges which may be made by Oberthur to preserve De La Rue's plants, research and development capability and jobs.

As we have seen with Cadbury and countless others such promises are rarely worth the paper they are written on. Indeed, it is something of an irony that on the day that the government promises a clampdown on tax avoidance (see below) one of the nation's corporate taxpayers - and there are fewer and fewer of them - could be heading across the Channel.

The last time that De La Rue (then a much more diversified company) came up for sale in 1968 - when it was bid for by the Rank Group - the deal was scuppered by Harold Wilson's government on grounds of 'public interest'.

Some four decades on it is only Britain's permissive attitude to foreign takeovers which has changed - not the public interest.
Tax squeals

We can expect screams of pain from business over the effort by George Osborne's Treasury to introduce a catch-all General Anti-Avoidance Rule. The CBI declared it would not be in the 'interest of government, taxpayers or UK competitiveness'.

Certainly, at a time when tax competition between nations is a live issue the government will not want to do anything to drive more companies - such as WPP and Shire - offshore.

But for the CBI to suggest that such a rule is not in the best interest of taxpayers is poppycock. The unfairness in a tax system in which the ordinary people have no means of avoidance (PAYE is for everyone) whereas employers have every opportunity to minimise payments is manifest.

If the government is successful in bringing in an extra £2bn a year through anti-avoidance measures the nation would benefit. Executives working for companies which are members of the CBI would also be winners.

It might, for instance, hasten the day when the coalition could kill of Labour's poison pill of the 50pc tax rate. Tax avoidance may not be illegal but it is immoral and unethical. The coalition deserves credit for daring to go where previous governments failed to venture.
VT let-off

Former investors in VT must be breathing a sigh of relief that they allowed the firm to be swallowed by engineer Babcock earlier this year. Had they gone along with the initial recommendation of VT's management - and taken over the business services group Mouchel - they would be licking their wounds.

When VT was courting Mouchel in February the company was judged to be valued at 294p a share. But after a series of profit warnings and a re-financing problem with the banks they had tumbled to just 56.5pc at Friday's close.

Now Mouchel says buyers are circling and the shares have climbed 28pc to 72.75p. That is a long way from the near £3-a-share which the board had declared 'wholly inadequate'. It might be reluctant to say no again even at current depressed levels. For the latest updates PRESS CTR + D or visit Stock Market news Today

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