'Wrekin ruby' business bosses handed bans

The Shifnal-based company had used a ruby, known as the Gem of Tanzania, to balance its books.

It was stated in a document, later found to be forged, that the gem was worth £11 million. It was eventually sold for just £8,000 after the company collapsed in 2009.

David Unwin, 65, of Widnes, and Nicholas Ibbotson, 56, of Sutton Coldfield, have been banned from being company directors for 10 and seven years respectively.

The disqualifications come after the 2011 disqualification of a third director, Peter Greenwood, for the same claim and follow investigations by the Insolvency Service.

Wrekin Construction was set up in 1960 and by 2007 its annual turnover was more than £100 million, although it had incurred trading losses and had a deficit on its accounts of £7.6 million.

The investigations found that Mr Unwin bought Wrekin Construction in 2007 and that December used another of his companies, Tamar Group Ltd, to transfer a ruby gemstone known as The Gem of Tanzania to Wrekin in return for shares.

The gem, which was uncut and weighed approximately 2kg, had been bought by Mr Unwin in 2006 and included as an asset in Tamar's accounts at that time, at a value of £300,000.

When the gem was transferred to Wrekin's accounts in December 2007 its value was shown as £11 million, based on a valuation supposedly carried out in Italy four months previously.

The company collapsed into administration in March 2009 with losses of more than £45 million. When the administrators tried to sell the gem they found that the document showing the £11 million valuation was a forgery and it sold for £8,000.

Investigations by the Insolvency Service also found that in the weeks before the gem was transferred to Wrekin, Mr Unwin acknowledged in a meeting with the company's former auditors that there were uncertainties about the gem's value.

Mr Ibbotson, Wrekin's finance director, was aware of those uncertainties, but nevertheless told Wrekin's new auditors that £11 million was a genuine market value.

Mr Ibbotson and Wrekin's managing director Mr Greenwood approved Wrekin's accounts to December 31, 2007, which included the gem as an asset worth £11 million, without checking the reliability or authenticity of the Italian valuation report.

In the course of the investigations, Mr Unwin gave differing explanations as to how he came by that valuation report.

By including the gem as an £11 million asset in the accounts to 31 December 2007, Wrekin gave the impression that it had a financial surplus of £6.3 million, whereas its true position was an insolvent one.