Page 29 - How Not To Cook The Books Article

Conclusions

The issues facing Wrekin Construction were catastrophic.

Fraud was seen as the solution to the company’s problems but it carried
the seeds of Wrekin’s destruction highlighting the relationship between
financial health and strategic health.

The Frain family had mismanaged the business. For example, in a

period of business ambiguity they invested for example, in building
training facilities at a time when competitors were employing cheaper
sub-contractors. This might have been both a social and ethical decision
garnering the plaudits of society but it inevitably contributed to the
financial collapse of Wrekin whose finances could not sustain such a

social experiment.

David Unwin was the key player in the Wrekin Ruby fraud. It was he who
personified the company and represented it. It was he who orchestrated
the frauds as a means of solving the increasing insolvency problems.

By introducing the Gem of Tanzania in exchange for interest bearing
preference shares he effectively ensured that he would receive
performance payments first and foremost as well as investment
protection.

Wrekin Construction was facing an environment that was becoming
more volatile as the financial crisis deepened. If their claims were to be
believed they had enough contract work to see them through the next
few years.

In terms of turnover Tamar was less than half the size of Wrekin and
would have had to be very well run, given the economic and financial

climate if it were to survive. Furthermore, rationalisation of some form
would have been if not necessary, then certainly prudent in terms of
efficiency and effectiveness. Internally, there seems to have been little in
the way of a strategic plan or the management to implement it.