In-house interview: Danger money

Through boom, crash and revolution, banknote printer De La Rue keeps the world’s currencies flowing under the watchful eye of intrepid legal director Douglas Denham.

Where does money come from? No, the answer is not magic money trees. In fact, commercial banknote printer De La Rue churns out sterling for the Bank of England from a site in the less immediately poetic Debden, Essex.

Producing billions of banknotes every year, the Basingstoke-based firm has rolled off more than 150 national currencies in the past five years. But where does that money go? And what happens when a revolution breaks out? We asked De La Rue’s commercial legal director, Douglas Denham about the modern money-making business – and what on earth happens to the readies in a warzone.

Financial target

At the height of the Libyan revolution in 2011 Denham found himself on a propeller plane flying into the Libyan city of Benghazi. De La Rue had been the incumbent printer of Libya’s currency but when Colonel Gaddafi was toppled in October the UN imposed sanctions and the money was seized.

“It was an intense six months for the legal team as we effectively had two competing governments – the National Transitional Council (NTC) and the Gaddafi regime – both claiming their appointees were the lawful representatives of the Central Bank of Libya, and they wanted their notes back,” explains Denham, who joined De La Rue as a legal adviser 18 years ago. “We had to decide who the lawful government was, who was in control of the central bank and who was recognised by other governments. We had to balance the challenges of public international law and the ‘recognition characteristics’ of the legal government with our contractual legal responsibilities and potentially new people coming into power.”

These are an unusual set of questions for a lawyer – questions that do not get answered from a comfortable office in Basingstoke.

After the sanctions were put in place Denham flew to Benghazi with Hogan Lovells partner Jeremy Brittenden, who was advising the NTC on a bid to have 1.86bn Libyan dinar (£948m) flown back to the country.

“When the pilot told us we were going to have to do a ‘corkscrew’ landing because of the risk of missile attack, it brought home to me the realities and dangers of war,” Denham recalls. “We were then warned that our biggest risk on the ground was between vehicle and destination – we could get shot at between the plane and our car, or between our car and our hotel – it was very out of the ordinary for a lawyer to be in that situation.”

Maybe so, but for De La Rue’s small legal team – consisting of Denham, who reports to general counsel Ed Peppiatt, two lawyers, one trainee and two support staff – there are very few ordinary situations on their travels.

Denham has visited more than 30 countries since joining the business and has travelled everywhere from Mongolia – “where it was -40 degrees in the night” – to Haiti, “where my hotel room walls were covered in bulletholes.”

He has advised on the production of banknotes after political change, including the new Libyan notes in February and the new Iraqi dinars printed in 2003.

“From Mongolia to Malawi, Chile to China I’ve been fortunate enough to experience a range of courts, lawyers, cultures and people that I probably otherwise would never have done,” says Denham, who qualified at Ketchen & Stevens in Edinburgh before joining legacy Lovells (now Hogan Lovells) for his English solicitors transfer exams. “I remember being sent to Haiti in the late 1990s and, because I hadn’t done my homework before leaving, thought it lovely that I was being sent to the Caribbean.

“Well, the pilot dropped us off and then took off again instantly because one of their other planes had been shot down on landing. The roads had been blown up all the way from the airport to the capital and when I got there, my hotel room walls were full of bulletholes. Now when I travel, I pay a good deal of attention to my destination.”

Up the rebels

In Libya the NTC successfully bid to have frozen money released to a branch of the Central Bank of Libya for humanitarian purposes. The money was flown back to Libya by the RAF overnight, with enough cash – 200 million banknotes – to fill several planes.

“We ended up moving the contract over to the NTC,” adds Denham. “The challenge is making sure you deliver the currency to the right people – if you don’t, it’s a huge liability.”

De La Rue turned to Baker & McKenzie for external legal advice on this job, led by London-based partner Sunny Mann. The mandate no doubt helped the firm a year later, when De La Rue opened up a four-month tender for a preferred supplier for work outside the UK and US. Bakers won.

Although the contract is not strictly exclusive, it means that much of the work that previously went through 80 firms in 150 countries now goes through Bakers.

“The challenges prior to the tender were maintaining relationships, quality assurance and pricing with firms across such a wide jurisdiction,” explains Denham, who will not name the firms that pitched but admits there were at least four. “We had a range of measures we used in a scoring matrix to judge the competing firms, including cultural fit, geographic spread, their understanding of our requirements and pricing a set piece of work.”

Bread and butter

It marks a big win for Bakers, but not all De La Rue’s legal work involves flying into warzones in vulnerable propeller planes.

“Since the Bribery Act, risk and compliance have become a big part of my day job too,” says Denham. “I worry that we’ve talked about the exotic side of my travels, rather than the more mundane bits!”

Maybe so, but at least he has shown us that you get more interesting answers if you ask where money goes to rather than where it comes from.

Article originally published in The Lawyer, 12 August 2013.

This is a guest article. The thoughts and opinions in the piece are those of their author and are not necessarily the thoughts of the Certified Collectibles Group.

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