Market NewsCommentThe Sweet Smell of Putrefaction

The Sweet Smell of Putrefaction

A chum very kindly invited me to the Chelsea Flower Show the other day. As I have been known to potter around in the garden for rather long periods of time, I was much looking forward to it.

The show itself is quite spectacular, or I should say what I saw of it was quite spectacular.  

Despite going on the day reserved for members and guests of the Royal Horticultural Society, I felt it was rather how I imagine feeling if I actually experienced getting the rush hour underground in Tokyo where people are employed to shove more people on board.

In this case, I do not know if it is greed and avarice that are driving the overselling of tickets to the point where frankly it is nigh impossible to really see anything properly and or comfortably, or simply just how all great events get killed by overarching demand.

Anyway, all I do know is that, as far as I am concerned, what is and should be a wonderful experience was left less than flat.

To then be told that those dear friends of mine, the management of Gem Diamonds have apparently called in McKinsey Consultants to try, as it was put to me, to dig them out of a hole, struck a cord.

As I have rattled on pretty endlessly the story of Gem is one of the great tales of wealth destruction. 

I won’t bother to go over the various numbers I have trundled out over time, but it might be worth remembering their achievement in breaking the gold standard in share value depreciation from launch at £9, oodles of profit from their Letseng mine pouring in the coffers to be thrown away with all the skill that they clearly do not have in running any mining operation (e.g., Ellendale, Ghaghoo, Cempaka, DRC, CAR, Angola and of course Letseng) to have a share price as at the last time of looking at 90 pence, and that after the massive dilution in 2009 to raise a $100 million or so to stop them going bankrupt.

Letseng and all those lavish overheads, in this context let’s not forget the eye watering rewards for the, lets be kind, ‘incompetent’ directors, so I am told is burning cash like the melting ice cream I tried to eat whilst walking around the Flower Show on one of those relatively rare scorching English summer days.

One sure sign all is not well has been the news of the directors jumping ship such as that chap from the tank regiment, or Mr Plod Ashworth…

In some ways this news should give me pleasure, confirming what I have been writing about for a long time; but the real tragedy is all those jobs that are needlessly at risk.

I simply cannot understand why shareholders have not arrested this wealth destruction ages ago.

The evidence of what was happening was clear for all to see, and even if it was not, sometime ago I did take the trouble to write to all the major shareholders individually to raise a few red flags.

It is not surprising but still sobering to think that many of these shareholders sell themselves as being competent to manage other peoples’ money.

Unlike the Flower Show where it is a pity that what is so special has become overwhelmed by its own success, but however crowded still was encompassed with the delightful scents of all the flowers, with Gem it is only the smell of putrefaction with which one is left.

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