Banknotes come apart at the seams
THE new Nelson Mandela banknotes — rolled out with such fanfare in November last year — have been found to be defective in that an important security feature literally comes apart at the seams.
The security thread is the most visible feature on a banknote and is meant to be embedded in it. However, the security thread on the new notes can be easily lifted off — and insiders with intimate knowledge of how the notes are produced warn that this could make them a “counterfeiters’ haven”.
When the notes bearing the face of South Africa’s first black president were introduced, South African Reserve Bank governor Gill Marcus boasted that they had enhanced security features that would make them difficult to forge.
But two insiders said the new notes were substandard and an embarrassment to the country.
“What doesn’t make sense is how the notes, with such an obvious defect, passed through the banknote company’s quality assurance department,” said the insider.
The banknotes are printed by the Pretoria-based South African Bank Note Company — a wholly owned subsidiary of the Reserve Bank — and a Swedish company.
The Pretoria plant prints R10 and R100 notes. The other denominations — R20, R50 and R200 — are printed in Sweden. The thread on the notes is produced by a German company.
The Reserve Bank has admitted to what it called “isolated complaints” about the defective security thread on notes “of lower denominations”.
“This is as a result of the over-circulation of these banknotes,” said spokesman Hlengani Mathebula. He added that the bank notes were produced to the highest international security standards.
But the Sunday Times has seen a R200 note, the highest denomination, with the thread lifting off it.
The latest controversy regarding the new South African banknotes follows soon after the printing company had to destroy 3.6 million R100 notes last year, when it was discovered that their serial numbers had been duplicated locally and in Sweden.
The company lost close to R2-million in the process.
In 2010, Marcus decided to outsource the printing of 80 million R100 notes of the previous design to the Swedish company, after it was discovered that a key security feature was missing because of a faulty printing machine at the Pretoria plant.
Last week, Marcus announced that the Reserve Bank suffered a loss of R1.27-billion in the 201213 financial year, largely owing to the cost of producing the new notes. It had cost the Reserve Bank R1.56-billion to produce the new notes.
The Pretoria printing company also continued to record a loss — R70 000 in the financial year ending March 31 2013, having lost R145-million in 2011-12 and R23-million 2010-11.
The company’s financial statements for last year indicated that 700 million Mandela notes would be produced in the financial year that ended on March 31 2013.
The Sunday Times was told that the rush to introduce the Mandela notes — apart from honouring the 94-year-old statesman — was also driven by the embarrassment the bank faced with the old R100 notes.