Bosses banned for £11m Wrekin ruby con

Aaron Morby 8 years ago

Two former Wrekin Construction directors have been handed big bans for under-pinning the failing firm’s accounts with a ruby falsely valued at £11m.

David Unwin and Nicholas Ibbotson were banned as directors for 10 and seven years respectively, after it turned out the giant ruby was really worth just £8,000.

Their disqualifications follows a nine-year ban for a third Wrekin director Peter Greenwood for the same claim, following an investigation by the Insolvency Service.

Shropshire civil engineering contractor Wrekin Construction ran into trouble in 2007 when, despite turning over more than £100m, it suffered trading losses.

Unwin emerged as the contractor’s salvation in July 2007, buying Wrekin from its then owners.

At the end of that year another of his companies called Tamar transferred the ruby gemstone, known as ‘The Gem of Tanzania’, to Wrekin in return for shares.

The 2kg uncut gem had been bought by Unwin a year earlier and was valued as a £300,000 asset in Tamar’s accounts.

When the gem was transferred to Wrekin its book value suddenly soared to £11m, based on a supposed fresh valuation in Italy four months earlier.

Finally struggling Wrekin collapsed into administration in the spring of 2009, owing more than £45m to creditors.

When the administrators tried to sell the gem they found that the £11m valuation document was a forgery and eventually sold the gem for just £8,000.

The investigations by the Insolvency Service also found that in the weeks before the gem was transferred to Wrekin, Unwin admitted in a meeting with the company’s former auditors that there were uncertainties about the gem’s value.

Ibbotson, Wrekin’s finance director, was aware of those uncertainties, but nevertheless told Wrekin’s new auditors that £11m was a genuine market value.

Ibbotson and Wrekin’s Managing Director Greenwood approved Wrekin’s accounts to 31 December 2007, which included the gem without checking the reliability or authenticity of the Italian valuation report.

This gave the impression that Wrekin had a financial surplus of £6.3m, when it was really insolvent.

Unwin was also found to have made  sham payments of  £768,177 and £516,959 from Wrekin to two other companies controlled by him knowing the construction firm was under severe financial pressure and unable to pay its debts.

Pabitar Powar, Head of the Authorisations Team at the Insolvency Service, said: “The purchase of an uncut ruby gemstone by Wrekin was extraordinary and questionable.

“It is clear that the gemstone was included in the accounts to portray Wrekin’s financial position as a sound one, whereas its true position was the exact opposite.

“Directors who recklessly present misleading information in this way damage the confidence of companies to do business with each other and undermine the business environment.

“These bans are a warning to other directors who might act recklessly and without due regard to the interests of creditors, that the Insolvency Service will investigate and remove them from the business environment.”

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