Page 668 - The Case Lab Book
P. 668
If £11 million were its true value then taking the figures
shown in the accounts and ratios its sale would have
alleviated the financial pressure on the company especially
as it was an asset that was not essential to operating
procedures or contributing to output.
WHY WAS THE GEM NOT REVALUED?
Surely it would not have cost that much to have sent the gem to the Instituto
Gemmologico to revalue. This could have been done by Unwin, RBS or the
Auditors – ambiguity solved.
WHY WAS THE GEM NOT SOLD?
Answer – it was a fraud where the £11 million attributed
value was an exaggeration supported by bogus
documentation.
On paper it looked good and formed the basis for acquiring
ownership of Wrekin Construction but it could never be
crystallised into solid cash. The company became a more
creditworthy partner for suppliers, customers and its bank,
RBS. Therefore, its value lay only in its ability, as an entry in
the accounts, to colour financial strength and allow easier
access to fund raising.
