The Wrekin Ruby

March 16, 2009 5:21 AM

When Wrekin Construction went into administration last week, it blamed the Royal Bank of Scotland for demanding repayment of an overdraft. However, the 2007 accounts show that among the assets of the company is a ruby it called the "Gem of Tanzania". Wrekin had bought the stone off one of its shareholders for £11m worth of shares - more than four times the record for a single ruby at auction.

The valuation ostensibly came from an Italian gemological institute. It denies all knowledge of the stone:

Note 13 of Wrekin’s 2007 accounts states: “The fair value of the ruby gemstone was determined by a professional valuer at the Instituto Gemmologico Italiano (sic) based in Valenza, Italy, on 31 August 2007.”

Loridana Prosperi, a gemologist at the head office of the Istituto Gemmologico Italiano in Milan, said: “That is impossible, because we were on holiday on August 31 2007.”

She said IGI never assesses the price of gemstones, only the quality – and the Valenza office does not even do that.

posted by Electric Dragon (20 comments total)

(Note that it's pronounced "REE-kin" after the Shropshire hill.)
posted by Electric Dragon at 5:22 AM on March 16

Is any business transaction performed in Italy an honest one? Maybe my view is colored after just reading 'Gomorrah'. But that book sure does make it seem like the entire country is being run by criminals.
posted by billysumday at 5:28 AM on March 16

I look forward to reports a few months from now that the ruby has been retrieved safe and sound from a Nazi camp in the ruins of Xanadu by the Royal Bank of Scotland's dashing in-house archaeologist.
posted by No-sword at 5:33 AM on March 16 [3 favorites has favorites]

This reported that Wrekin bought the ruby from shareholder Tamar Group for a “fair value” of £11m paid in interest-bearing preference shares. The transaction revived Wrekin’s parlous balance sheet, making it easier to stay in business.

I will never ever ever understand finance. How would paying $$$, even if for a the ruby eye of an eastern idol, revive a balance sheet? Well, I guess you could pay $$$ for something that was "really worth" $$$$$$. But that's the opposite of this case.
posted by DU at 5:53 AM on March 16

My, my - what a creative way to siphon off massive amounts of cash from the company. Bravo!
posted by Jeremy at 6:15 AM on March 16

How would paying $$$, even if for a the ruby eye of an eastern idol, revive a balance sheet?

They didn't pay in cash, they paid in shares, albeit preference shares. So the ruby is on the balance sheet as an asset, whilst the shares have massively depreciated in value (this is a building company in the worst recession for who knows how long).
posted by pharm at 6:27 AM on March 16

I look forward to reports a few months from now that the ruby has been retrieved safe and sound from a Nazi camp in the ruins of Xanadu by the Royal Bank of Scotland's dashing in-house archaeologist.

Rubies always make me think of "Ali Baba Bunny".

In fact, when they build the Bush Presidential Library, I can think of no more fitting quote to be inscribed over its entrance - as a symbol of everything his administration stood for - than: "It's mine, you understand? Mine! All mine! Down, down, down! Go, go, go!"
posted by Joe Beese at 6:56 AM on March 16 [1 favorite has favorites]

To avoid some confusion, let me point out that The Black Prince's Ruby is not, in fact, a ruby, but a spinel, which is more common. A true ruby is slightly harder and more dense than a spinel, and they have slightly different color qualities, caused by different optical properties (a true ruby is dichroic while a spinel is singly refractive).

To compare this supposed gem with The Black Prince's Ruby is slightly misleading - were it the size of TBPR, 170 carats (34 g), it would be an unheard of size for a cut ruby. The largest rough ruby I can think of would be the Maung Lin Ruby, a supposed 400 carat monster that was cut into two stones, one 70 carat, one 45 carat, and a third uncut piece of unknown size, sometime before 1880. The two cut stones are now lost, and very well may have been destroyed. There have been other, larger crystals found, but in general they have been deemed too flawed to cut. The largest cut modern (non star) ruby I can think of is the Mandalay Ruby at 48 carats. The largest star I can think of is the monster Neelanjali Ruby, a double star of a whopping 1,370 carats, but of very poor color quality.
posted by strixus at 7:02 AM on March 16 [9 favorites has favorites]

This is why I read blogs/message boards rather than traditional news sites. Facts vs truthiness.
posted by DU at 7:16 AM on March 16

Jeez... a giant, mysterious gemstone that nobody has ever seen before? For fuck's sake… do they let you put unsecured loans from Leprechauns on your books as well? "Why yes, Mr. Solicitor, the loan was from a R. Stilskin, payable in gold straw."
posted by Civil_Disobedient at 7:17 AM on March 16 [3 favorites has favorites]

strixus: Every now and again, I contemplate cultivating an interest that would make me more mysterious and sophisticated at the sorts of dinner parties I don't dress well enough to be invited too. Gemology and the lapidary arts is at the top of the list...
posted by Slap*Happy at 7:32 AM on March 16

Presumably they'll find it hidden in the nest of the Giant Rat of Sumatra.
posted by Flitcraft at 7:48 AM on March 16

Don't be so snide, Civil_Disobedient. The bank had no reason to doubt that Wrekin's board's daughters could really spin flax into gold. Everyone knows that the flax market only goes up!
posted by No-sword at 8:13 AM on March 16

Is any business transaction performed in Italy an honest one? Maybe my view is colored after just reading 'Gomorrah'. But that book sure does make it seem like the entire country is being run by criminals.

Per the articles linked, Wrekin Construction is based in Shropshire. Wrekin supposedly bought the ruby from Tamar Group Limited, a Derbyshire construction firm.

So far, still in the UK.

A note in the accounts claims the valuation was done at the I.G.I.

OH SHIT IT'S THE ITALIANS MAFIA SAME DIFFERENCE!!!

In other words, without further details (i.e. the actual valuation or further details thereof), yeah, I'd say you're having a bit of post-Gomorrah confirmation bias.
posted by romakimmy at 9:02 AM on March 16

There's a construction company called "Wreckin' Construction"? Maybe there should be a name change as part of the deal.
posted by Electrius at 9:07 AM on March 16

It will be interesting if the ruby never turns up. Did it ever exist? How could they imagine they could get away with this level of fraud?
posted by dhartung at 9:24 AM on March 16

So, Wrekin didn't just 'buy' the stone from 'one of its shareholders', it bought it from one of its shareholders (Tamar Group) which happens to be a company owned by the same person that owns Wrekin, and run by his son. Did the auditors even think to look at that?

Oh, and I found it quite amusing that I first read this not logged in and the ad below the article was "Exquisite Jewelry Items To Fit Your Budget. Save Up to 95% Bid Now!" Wonder if they have an exquisite ruby the likes of which have never been seen before?
posted by valleys at 9:48 AM on March 16

Did the auditors even think to look at that?

I'm sure the Royal Bank of Scotland's auditors did.
posted by mediareport at 10:07 AM on March 16

Did it ever exist?

Schrodinger's catseye ?
posted by y2karl at 12:28 PM on March 16 [1 favorite has favorites]

The gem had been valued at a mere £300k on previous owner Tamar's books just a year previously.
posted by Electric Dragon at 10:13 AM on March 18