Serious Fraud Office probes Gupta firm links to Greensill
CAMERON DEFENDS LOBBYING ROLE AS HE APPEARS BEFORE MPs
BRITAIN’S Serious Fraud Office last Friday (14) launched a probe into steelmaker GFG Alliance, focusing partly on links with its collapsed financier Greensill.
GFG Alliance, owned by British Indian billionaire Sanjeev Gupta, had been Greensill’s biggest customer at the time of the finance giant’s notorious collapse.
GFG said it would cooperate fully with the investigation.
Greensill’s spectacular implosion threatens 50,000 jobs at companies around the world that relied on its financing for their supply chains, including GFG.
It also has rekindled debate on close ties between the upper echelons of British politics and finance, with former prime minister David Cameron quizzed by MPs on his Greensill lobbying role last week. “The SFO is investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct... of companies within the Gupta Family Group Alliance, including its financing arrangements with Greensill Capital UK Ltd,” the SFO said in a brief statement last Friday.
It added that no further comment would be made on the live investigation.
In a separate statement, GFG Alliance said it “is making progress in the refinancing of its operations which are benefitting from... the very strong steel, aluminium and iron ore markets”.
City watchdog the Financial Conduct Authority last week launched its own Greensill probe, revealing that “potentially criminal” allegations had been made about the circumstances of its collapse. The Greensill affair shone a light on Gupta’s own criticised business practices, with the UK government describing the GFG structure as “very opaque” after declining to rescue it.
Greensill Capital, which bypassed strict regulations forced upon traditional banks, specialised in short-term corporate loans via a complex and opaque business model that ultimately sparked its declaration of insolvency in March.
GFG has operations in more than 35 countries, and annual global revenues of about $20 billion (£14bn) according to its website. The group has 35,000 staff worldwide, including 5,000 in Britain where its Liberty Steel division is based.
Last Friday’s news came a day after Cameron insisted he acted appropriately in controversial lobbying for Greensill.
MPs questioned him following months of scandal and revelation about his lobbying ahead of the company’s collapse.
The former Conservative leader, who was an adviser to Greensill and reportedly held lucrative stock options that are now worthless, maintains he was acting in the public good.
“I really believed in the solution that we had and we were putting to government that I thought would make a difference,” Cameron told the virtual Treasury Committee hearing, in his first public appearance addressing the scandal.
“I would never put forward something that I didn’t think was absolutely in the interests of the public good,” he said, adding he was motivated to provide a solution for small business during “exceptional times”.
Cameron, in power from 2010 to 2016, faced a series of damaging claims he improperly and excessively lobbied former government colleagues seeking support for the stricken London-headquartered company early in the pandemic.
Cameron declined to say how much he was paid by Greensill, or how much he would have made from shares he owned if the business had prospered, but said he had “a big economic investment” in its future and wanted the business to succeed. “I was paid an annual amount, a generous annual amount, far more than I earned as prime minister,” he told the Treasury Committee.
Asked if it was fear of losing out on financial gains that motivated him to contact ministers, Cameron said: “That is not what I felt at the time, and it is not what motivated me.”
He said he was motivated by, and believed in, Greensill’s ability to help other businesses and the country during the early stages of the pandemic. At the time he was lobbying ministers, Cameron said he had no sense Greensill was in difficulty.
“I did not believe in March
or April, when I was doing this contact, that there was a risk of Greensill falling over,” he said.
Cameron added that it was difficult for him to have to face parliamentary scrutiny over Greensill’s collapse. “This is a painful day coming back to a place that I love and respect so much, albeit virtually, but in these circumstances,” he said.
“Lobbying itself is a necessary and healthy part of our democratic process, but I accept that there’s a strong argument that having a former prime minister, engage on behalf of any commercial interest, no matter how laudable the motives and cause, can be open to misinterpretation,” he said.
Documents showed last week Cameron and his office staff last year sent ministers and officials 45 emails, texts and WhatsApp messages relating to Greensill, bypassing official channels. Chancellor Rishi Sunak has previously said he “pressured” his staff to look into Cameron’s requests, but insisted they independently assessed the proposals and ultimately rejected them. Prime minister Boris Johnson last month ordered
a senior lawyer to investigate the entire episode.
Australian banker Lex Greensill, the founder of the bankrupt financial company, appeared last Tuesday (11) before the same committee and insisted he took “full responsibility” for its collapse.
“To all of those affected by this, I am truly sorry,” Greensill said.
He also said he would not have described former Cameron as his friend, and only met him a few times during a spell working as an adviser to the British
government.
“I wouldn’t say that Mr Cameron and I were friends,” Greensill told a parliamentary committee. “I met him a couple of times in the time that I worked with the Cabinet Office.”
He also laid blame at insurer Tokio Marine, which withdrew cover to loans issued to Greensill clients amid the pandemic. Creditors, including Credit Suisse and the Association of German Banks, last month placed the Australian parent of Greensill Capital into liquidation.
Switzerland’s second-largest bank – rocked also by the bankruptcy of US hedge fund Archegos – has been forced to suspend four funds with an exposure to Greensill totalling $10 billion. Japan’s Softbank is counting the cost after investing $1.5bn in Greensill two years ago.