The papers are all agog with reports about Ryan Schembri’s disappearance after his ratcheting up debts to the tune of €40 million. Every day we are presented with another instalment of the ‘Meat Mogul’s Downfall’ saga. There are interviews with the doleful creditors smarting because there’s no chance in hell of seeing their money again.
Then there’s the consultant, a business partner, suppliers and people reeling from the fall-out from the collapse of Schembri’s business.
They all say they didn’t have any inkling there was anything untoward going on until the bottom fell out of the business.
The huge amount of money involved, the fact that Schembri has gone AWOL with wife and minor son in tow and the rumours about money-lenders have propelled this particular story to the front pages, eclipsing other cases which bear some similarities.
It remains to be seen whether Schembri will be found and whether civil liability or criminal wrongdoing will be proved in court, however there are some observations to be made about these types of cases.
Firstly, the market in Malta is what it is – relatively limited and crowded with local and overseas competitors.
It is not easy to amass a fortune in this kind of scenario. It takes time, brains and a dollop of good fortune to build up a hugely profitable and solid business.
Even then, a sustainable expansion takes place slowly. When a relative newcomer to the market – such as Schembri – starts opening outlets on every corner and taking out expensive leases you have to wonder how he did it.
The media reports mention his lucrative meat import business and Libyan supermarkets, but I don’t know. They would have to be giving away fillet steak for free in Brazil for Schembri to cover the cost of purchasing it, shipping it, paying other expenses and still turn a profit.
Unfortunately many people want to believe that fortunes may be made overnight, leading to sham businesses and mountains of debts
Moreover, it’s not as if the Maltese feast exclusively on meat products and there weren’t any other meat importers competing with Schembri.
Any way you look at it, it doesn’t pan out. The profits he was supposed to be making to sustain the ever-expanding business couldn’t be coming from the meat importation operation.
And while there may be many bona fide investors or creditors who hold out the hope that Schembri has stumbled upon the secret of making a fortune from meat, maybe people should be a bit less gullible.
In these last years there have been a number of meat importation businesses that have floundered spectacularly. The Tyson Butcher case springs to mind.
A few years ago, Tyson Butcher, owned by Jonathan Pace, was a regular fixture on television stations advertising greatly discounted meat and frozen products. It was a move that made little marketing sense as he would have to recover the hefty costs of advertising (at one point he was ordered to pay €47,000 to one television station alone), and it was unlikely that consumers from the other end of the island would chug over to Żejtun to buy their sausages and frozen chips.
Tyson Butcher eventually went bankrupt and its owner was first accused of attempted murder and then was shot and killed. A tragic end to what appeared to be a local success story.
But that’s really the crux of it all, and the lesson to be learnt from the Tyson and Schembri stories – the outward trappings of wealth and business success do not necessarily reflect a solid business.
The villas, the cars, the ostentatious lifestyles, the constant expansions are not always indicators of a thriving business.
Increasingly we are seeing that they are based on debt, loans or worse.
Ultimately the old adage about something which seems too good to be true probably not being true is applicable to these cases.
Unfortunately many people want to believe that fortunes may be made overnight, leading to sham businesses and mountains of debts.
cl.bon@nextgen.net.mt