SUNDAY TIMES - Our Swedish rands
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Sunday Times STLive By SIBUSISO NGALWA, Nkululeko Ncana, 2011-07-09 23:17:38.0

Our Swedish rands

Cash. File photo.
Image: Reuben Goldberg

The South African Reserve Bank has quietly outsourced the printing of R8-billion in R100 notes to a Swedish company - as hundreds of employees at its Pretoria banknote-making company sit idle.

The move follows the discovery in May last year that a key security feature was missing from the R100 notes being printed by the SA Bank Note Company (SABN). The mistake - which was found in notes dating back as far as 2003 - was due to a fault in one of SABN's machines.

Now a Swedish banknote paper-making and printing company, Crane AB, is producing the R100 notes.

Four insiders told the Sunday Times that the decision to print elsewhere was taken even though the machine had been fixed.

SABN documents indicate that local production of the R100 notes was stopped because the company's bosses were uncertain about the extent of the problem.

And no other notes have been printed since February after the Reserve Bank returned more than R400-million in faulty R10 and R20 notes .

The banknote printing company is a wholly owned subsidiary of the Reserve Bank.

According to insiders, the Reserve Bank feared that details of the faulty notes would embarrass the country ahead of the 2010 World Cup.

Another reason was that it felt the rand could be compromised, especially following the public recall of the old R200 notes early last year.

SABN posted a R23-million loss in the 2010/2011 financial year, despite healthy profits in previous years.

Now concerned workers - who continue to be paid for doing virtually nothing - fear they might lose their jobs.

"People come in, sit there, go to their lunch and then go home. We don't even know when production will resume. It seems like the bosses are running away from the problem," said one.

The SABN employs more than 500 workers. But only one of five units responsible for sorting through the faulty R10 and R20 notes is in operation - resulting in a shortage of these notes in circulation.

To avoid risking security, staff at the company refused to say how much it cost to produce a single R100 note.

They said, however, that notes printed in Sweden were more expensive because of Europe's high labour costs and transportation.

The Reserve Bank is also embroiled in a battle with SABN's former managing director, Musa Mbhele, who was sacked last year.

He had allegedly over-committed the company by contracting to print notes for Zambia and Namibia.

But Mbhele said the former Reserve Bank governor, Tito Mboweni, had personally given him the go-ahead in 2006, as had the SABN board.

Mbhele said he was challenging his dismissal at the Commission for Conciliation, Mediation and Arbitration.

The SABN has since stopped printing the Zambian kwacha and the Namibian dollar.

Reserve Bank spokesman Hlengani Mathebula refused to answer questions related to the outsourcing of the printing of R100 notes.

"It is not standard practice for central banks to disclose where, how and by whom ... currencies (are) produced.

"We are not going to comment ... on internal operational activities," he said.

Asked about the SABN's R23-million loss, Mathebula said this was "fully explained in the annual financial statements".

He denied there were problems with the number of R10 and R20 notes "in circulation" and said the bank was following due process on Mbhele' s sacking.

Economist Mike Schüssler said while it was normal for countries to print their banknotes elsewhere, the issue was whether the currency had been compromised by the security weaknesses.

"The important thing is whether we have made the right security decision and that our currency is safe. Is there somebody counting the notes or is there some system in place to keep that in check?"