Page last updated at 07:14 GMT, Monday, 19 October 2009 08:14 UK

BBC exposes truth behind 11m gem

By Nick Lawrence
Producer, Inside Out West Midlands

The Star of Tanzania
Mr Unwin believed the Star of Tanzania ruby to be worth 11m

The man who propped up construction firm Wrekin with what he claimed was an £11 million ruby had a criminal conviction, the BBC has learnt.

David Unwin received a 12-month suspended prison sentence in 2002 for the theft of £1.2m of plant equipment, a BBC Inside Out investigation found.

The programme also discovered that 30 businesses controlled by him had been liquidated or gone into administration.

He used the gem - now thought to be worthless - to boost Wrekin's finances.

It was entered as an asset on the West Midlands-based firm's balance sheet in 2007 in order to allow it to carry on trading, even though it was insolvent.

However, it has been widely reported the ruby, also known as the Gem of Tanzania, could be almost worthless.

The Uttoxeter-based businessman was handed a 12-month suspended prison sentence in 2002 at Stoke Crown Court for theft after he sold more than £1m worth of plant equipment that was owned by a number of finance companies.

However, in a statement to the programme, he claimed that the 10 counts of theft related to practice common in the construction industry.

'Forgery'

Wrekin collapsed in March, when Royal Bank of Scotland withdrew banking facilities and it emerged the £11m valuation attached to the Gem of Tanzania was a forgery.

Mr Unwin claims he is likely to emerge as a victim of fraud and blamed a "third-party valuation" for the forgery.

When questioned about why he believed the ruby to be worth £11m, when it had appeared in his Tamar Group company accounts just 12 months earlier valued at £300,000, Mr Unwin explained: "I did not believe the gem had increased in value 30-fold in 12 months.

"I believed it to be worth a lot more when I bought it."

Forensic accountant David Black told the BBC that the £11m ruby valuation "certainly helped improve the credit rating of Wrekin at the end of 2007".

"[Instead of] trading almost while insolvent with the hope of being able to trade out, it looks as if it had traded out."

As a result, suppliers continued to trade with Wrekin, racking up millions of pounds of unpaid bills believing they were dealing with a solvent business.

'Extraordinary' indebtedness

When administrators were called in earlier this year, more than 80 county court judgements had been registered against the failed construction firm.

Mr Unwin blames Wrekin's problems on the downturn and claims that in the nine months to December 2007, he turned an £8.2m trading loss into a £1.6m profit.

Describing the scale of indebtedness and number of creditors as "extraordinary", debt recovery solicitor Darren Davoile explained how there was a "black hole" in the system which allowed businessman with multiple business failures to carry on trading.

"Until there are restrictions on the amount of directorships you might be able to give… it is going to continue to happen for the near future."

Mr Unwin claims to be one of the biggest losers in the Wrekin fallout.

"In this recession I have, by gambling all my business interests in making Wrekin succeed… lost almost everything," he told Inside Out.

"As to whether that makes me an unsuccessful businessman depends on your attitude to risk. I have had spectacular successes and I have had fairly spectacular failures."

The full report can be seen on Inside Out (West Midlands) on BBC One at 1930 BST on Monday, 19 October.



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