But this is something more than the usual bad-loan-to-now-bankrupt-construction-co
No one outside the company has seen the ruby, and the directors of Tamar and of Wrekin refuse to comment. Various ruby experts have said that they had never heard of a ruby of that value, which is many times more than the record sale price of any ruby, the 8.62 carat Graff ruby sold by Christie's in 2006 for $3.6 million. None of the gem experts contacted by the FT had even heard of such a ruby. Some expressed doubts about its existence.
But now, the ruby has turned up for sale on eBay. From the description:
The most valuable ruby in the history of the world, ever! (allegedly)Jonathan Guthrie, columnist for the Financial Times, has written a piece on this as a Sherlock Holmes story.
Here we have for sale an item of unparalleled rarity. In fact it's so rare there are a lot of people who think it doesn't exist!
Ideal collateral for bank lending, helps boost your balance sheet it's a once in a lifetime offer and far better than any government backed lending plan (unless of course you're a bank that is).
Terms of Sale:-
Direct transfer to my off shore bank account in the Cayman Islands.
Sorry I won't take PayPal for this item, the fees would be eyewatering and I really don't fancy getting a chargeback a month or so later.
Payment in company stock or shares not acceptable (what do you think I am a Scottish banker or something?)
Holmes, I see this Gem of Tanzania vexes you
By Jonathan Guthrie
Published: March 18 2009 22:35 | Last updated: March 18 2009 22:35
Mounting the stairs to 221B Baker Street I was perplexed to hear the Kaiser Chiefs’ melody “Ruby” drifting from the half-open front door of my friend Sherlock Holmes. The great detective threw down his violin as I entered. “Confound it, Guthrie!” he expostulated, “I have strained every sinew attempting to solve the mystery of the Gem of Tanzania. Yet the solution still eludes me!”
“It is indeed a puzzle wrapped inside a riddle tucked within an enigma,” I replied, concerned by Holmes’s evident despair. His shirt was without a collar and an empty vial of narcotic was upon the mantel.
Only last Tuesday, Wrekin Construction, a civil engineering business based in Shropshire, entered administration with more than 400 job losses. It blamed Bank of Scotland for its woes, a hackneyed response to current hardship. But the affair assumed a more noteworthy aspect when it emerged that the financial solidity of Wrekin depended on its ownership of the most valuable ruby on the planet.
Picks and mattocks are more usual possessions of a building enterprise. Yet a note tucked away in accounts covering the last nine months of 2007 recorded that Wrekin owned an £11m ruby called “the Gem of Tanzania”. This helped raise net assets from a negative £7.6m to a positive £6.3m. As a result, the company became a more creditworthy partner for suppliers, customers and its bank, RBS.
The acquisition of the fabled jewel had coincided with the takeover of the long-established family business by the Derbyshire building magnate David Unwin Sr. Wrekin paid his vehicle, Tamar Group, £11m in interest-bearing preference shares rather than in coin of the realm.
The plot thickened when a vigilant Financial Times reader, Mark Whittington, dug out the accounts of Tamar from Companies House. He found it carried the Gem of Tanzania on its balance sheet in 2006 at a value of £300,000. But a revaluation in 2007 increased the stone’s worth to £11m.
Eminent gemmologists are adamant that they are no more familiar with the Gem of Tanzania than with the Green Eye of the Little Yellow God, the jewel described in the popular music-hall recitation. The most valuable verifiable ruby of recent times is the Graff Ruby, sold for $3.6m in St Moritz two years ago. Besides, the Italian gemmological institute to which the revaluation was attributed was closed on the day in question.
Nor, it appears, are administrators from Ernst & Young in possession of the jewel. A picture plays on the mind’s eye of pinstriped investigators searching desperately among the scaffolding at Wrekin’s depot for an old coffee jar labelled: “Gem of Tanzania – Do Not Throw Out”.
On Wednesday Mr Unwin told the FT in a statement that the ruby was “real” and that it was “on its way back” to the administrators. Asked in an interview with ContractJournal.com Peter Greenwood, joint managing director, denied he had ever used the ruby as a paperweight. An advertisement for the Gem of Tanzania has meanwhile appeared on Ebay. This promotes the jewel as “ideal collateral for bank lending” and promises “a signed valuation from Sir Fred Goodwin”. Holmes suspects satiric intent. The highest bid so far is £12.50.
The role of RBS is indeed intriguing. According to a former Wrekin representative, the bank had lent the company £2.8m from a £4.25m overdraft facility. A supplier said RBS’s apparent confidence had encouraged him to trade with Wrekin. The bank will not disclose whether it verified the existence and value of the ruby. If it did not do so, the ignorant could wrongly assume that this august financial institution is, at the margins, somewhat badly managed.
Wrekin’s auditor, Ashgates Corporate Services, has not yet explained what steps it took in this regard. The small Derby firm replaced the Big Four practice KPMG after Tamar bought Wrekin.
One can only wonder what other conundrums will be thrown up by the epidemic of company collapses. Many directors, bankers and accountants will be critically recalling their actions – or inactions – during the time of plenty. They may blench over how some of these actions may appear in the penurious and recriminatory present, if brought to light through a company administration.
The Mystery of the Gem of Tanzania will doubtless be resolved when the jewel is discovered and professionally valued at £11m or so. Then Mr Unwin and his associates will receive the acclaim they deserve for pulling off the lapidary investment coup of the century. Until then, Holmes will struggle with the depression of spirits that afflicts him when he cannot bring a case to a satisfactory conclusion. If the affair hinged on a few flakes of Balkan cheroot ash, he would be making rapid progress. But, frankly, Sherlock knows diddly about private company accounting. Financial Times readers are better informed, and are drawing their own conclusions.
Copyright The Financial Times Limited 2009
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