Editor’s note: This article was first published in November 2010, before Nueva Rumasa’s later collapse. The outlook that this isn’t going to end well, and the state of the company, describe that moment only.
As I’ve mentioned before, I put my trust in Nueva Rumasa back then, as did some other investors, because whatever else you may say, José María Ruiz-Mateos has always had a “knack” for doing business, one way or another.
Obviously, the little news we get about Nueva Rumasa these days is about unpaid wages to its workers and unpaid bills to its suppliers, and that’s not good for its existing investors, let alone for new ones.
Without getting into the controversy over whether Nueva Rumasa raised this capital to “swindle” Spain, which I don’t think makes much sense, what has happened is the Orwellian effect, in which false rumours end up becoming reality.
Nueva Rumasa came very close to achieving its goal: rebuilding Nueva Rumasa into the empire it once was. Few people believed in that goal, and their distrust has now been borne out.
It’s bad enough that news of unpaid debts is all over the papers, but unpaid suppliers are even worse, because they will end up cutting off the supply of raw materials, which could force Nueva Rumasa to close early. As a result, our stakes are now at risk.
We have no first-hand knowledge of the problems Nueva Rumasa is going through, nor of the solutions it has planned to get the company back on its feet. In short, we know absolutely nothing, and that lack of knowledge leads to distrust. And without trust we have nothing, because this kind of investment was based expressly on trust.
So, far from Nueva Rumasa’s idea being a scam, it is going to leave some investors feeling scammed, and others… well, we already knew that investing carries risks, and we can always write this down in our notebook as one of the mistakes we mustn’t make again.
I feel sorry for Nueva Rumasa and I feel sorry for the investors, but with no plan for moving forward in sight, this isn’t going to end well, and the workers will be the hardest hit.
Featured image: Strakhov, CC BY-SA 4.0, via Wikimedia Commons.
