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British Business Bank launched an investigation into Greensill Capital before the collapse | Banking

By on April 7, 2021 0

The British public investment bank has opened an investigation into Greensill The capital and loans it made to the Sanjeev Gupta steel empire months before the lender fell under administration, the Guardian has learned.

The news arrives as a former prime minister David cameron was cleared of any potential violation of lobbying rules relating to his efforts to personally influence Whitehall officials on behalf of Greensill.

The British Business Bank (BBB) ​​ordered an investigation into the supply chain finance company in the fall, shortly after approving Greensill as an accredited lender who could grant emergency Covid loans to companies in difficulty in June.

This suggests officials raised internal red flags about Greensill’s lending practices months before his financial woes began to hit national headlines in early March.

The BBB’s own investigation focuses on how Greensill used the 80% government-backed Coronavirus Large-Scale Business Interruption Program (CLBILS) to lend tens of millions of pounds to the GFG alliance of Gupta.

Concerns first surfaced about Greensill’s involvement in the program in October 2020 when the FT reported he had provided tens of millions of pounds in government-guaranteed loans to two of Gupta’s companies, which employed only 11 people. Since then, it has emerged that Greensill has loaned companies linked to Gupta an estimated £ 400million.

Outside law firms have been recruited to help the BBB investigation, which is still ongoing, according to a source familiar with the matter. The question of who will remain responsible if wrongdoing is discovered was complicated by Greensill’s collapse earlier this month.

A separate audit is underway, involving all lenders accredited for CLBILS, a twin program that lends to small and medium-sized businesses, and a 100% government-guaranteed rebound loan program. However, this review – conducted by KPMG – was planned and separate from the Greensill investigation.

The British Business Bank has neither confirmed nor denied that the investigation is ongoing. A spokesperson said: ‘All accredited lenders are subject to an audit by the British Business Bank to ensure compliance with the rules of the system.

“If a serious non-compliance is identified, the bank is entitled to take corrective action. Such action may include termination of the warranty agreement or withdrawal of the warranty. It would not be appropriate to comment on individual cases given trade sensitivities. “

Phantom Chancellor Anneliese Dodds said she was raising “serious and urgent” questions about the process that led to Greensill Capital’s accreditation for the Covid emergency loan program in the first place.

“The Chancellor and the Treasury have the ultimate responsibility for ensuring that public money lent through CLBILS and other Covid loan programs has been managed appropriately and has provided value for money for the taxpayer. British. We need a full, transparent and thorough investigation into the decision to accredit Greensill Capital to the CLBILS program. The public deserves answers.

Greensill directors at Grant Thornton declined to comment. A spokesperson for the GFG Alliance also declined to comment.

Cameron, who was a shareholder in Greensill, was cleared Friday of any potential violation of lobbying rules. The Lobbying Law Enforcement Clerk launched the investigation on Tuesday, after it emerged that the former prime minister contacted Chancellor Rishi Sunak, on his private phone last April as an advisor to the lender.

UK rules require people who directly lobby ministers or senior officials on behalf of a third party to report their efforts on an official government registry of lobbyists. Failure to follow these rules can result in fines of up to £ 7,500 and, in severe cases, even criminal charges.

However, the short-lived investigation concluded that Cameron had not broken the rules.

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“Based on the detailed information and assurances provided, Mr. Cameron’s activities do not fall under the criteria for registration in the Registry of Consultant Lobbyists,” the survey summary explained.

Former Lib Dem leader and business secretary Vince Cable told the Guardian earlier this week that if Cameron hasn’t done anything wrong, lobbying rules should be tightened.

“Cameron didn’t do anything wrong. But the rules should be tightened up so people can’t lobby for business interests in areas where they’ve had ministerial responsibilities once they leave office, which is a pretty broad area for former PMs. . In addition, there are strong arguments in favor of a more transparent register of interests. “

David Cameron’s office declined to comment.