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Monday, October 3, 2022

British Fraud Unit Is Investigating Gupta and Greensill

A new report from the British Fraud Unit has exposed the links between Sanjeev Gupta and the collapsed financier Greensill Capital. GFG, the parent company of Liberty Steel, was left scrambling to find alternative funding after Greensill failed. Gupta’s companies were among Greensill’s main clients, which has led to concern about the company’s reliance on the firm’s services. Gupta had gained a considerable amount of fame as a steel industry expert by saving several UK steel companies from collapse, but his links to Greensill have raised further suspicions.

Gupta’s commodities empire under investigation

The Serious Fraud Office has launched an investigation into the global metals and steel empire of Sanjeev Gupta and his business associates. The company, Greensill Capital, is connected to the collapse of Liberty Steel, and the investigation is likely to affect thousands of British jobs. The Guptas have not yet commented on the investigation. They have been scrambling to refinance their international operations as a result.

The investigation comes as the company that is providing loans to Gupta’s businesses has been racked by the scandal. The financial institution White Oak Global Advisors LLC, a regulated investment bank, has stated that it is “not in a position to continue discussions” with companies under investigation by the British Fraud Unit. The company also said that the investigations were independent and that it will not comment on the case.

The collapse of Greensill is also threatening the Gupta’s privately held conglomerate. Greensill is insolvent and its main insurer has stopped providing credit insurance for $4.1 billion of debt. Greensill was a lender to Gupta and Greensill, and created portfolios for clients including Credit Suisse. The investigation into Gupta’s UK operations was launched in response to a report by the Financial Conduct Authority.

The SFO has concluded that the Gupta family did not use the PS170 million bailout they requested in March to revive their failing steel company. The investigation is proving vindication to the government’s decision to refuse the PS170 million bailout requested by Gupta’s GFG alliance. Although the SFO has found no evidence that Gupta’s GFG alliance has misused PS170 million in public, the zeal of the Gupta family has helped to save the steel industry in Britain.

A recent report on the Gupta family’s business dealings indicates that the company’s founder Sanjeev Gupta bought a struggling steel plant in France and purchased US$50 million of inventory from the smelter. The sale of cargo to two of Gupta’s companies was funded by Wyelands Bank equity. The transaction reduced the asset’s value by about US$50 million.

Greensill’s opaque accounting

David Cameron, Prime Minister of the United Kingdom, worked for the former owner of the bank, which is under investigation. As a former Greensill executive, he lobbied the government to grant the bank access to the government-backed Covid loan scheme. Greensill continues to trade around the world and is refinancing its operations. It is benefiting from strong steel and aluminium markets and has made progress in refinancing operations. But it remains to be seen whether the investigations are serious enough to warrant further action.

It is not clear what caused BaFin to take action against Greensill, but the bank’s exposure to Gupta’s companies was one reason for the probe. The bank maintained it was transparent with its asset classification, but the investigation revealed that about 90% of its revenues came from non-investment grade borrowers. The scandal came to light after Greensill’s largest client, Gupta’s GFG Alliance, warned that it would collapse into insolvency if it didn’t correct its accounting practices.

The investigation found that Greensill Bank AG had failed to account for the debts of the Gupta and Greensill companies. Greensill’s German Bank subsidiary had lent $435 million to Katerra, a construction startup that later went bust. After the firm had problems, Softbank provided $200 million in rescue capital. The German Bank subsidiary subsequently converted that Senior Debt into 5% equity in the firm, valuing their stake in the company at $435 million.

The investigation has already delayed the Gupta and Greensill alliance’s attempts to raise new finance. The collapse of Greensill has exposed the government’s state-backed loans to Gupta’s company. Gupta and Greensill were in dire financial need and had sought government finance to keep their businesses going. This is just one example of the scandal involving the Gupta and Greensill empire.

The investigation into Greensill and Gupta’s opaque accounting has come at a time when the government is focusing on other problems in the UK. The FRC is also investigating Greensill’s administrator, Grant Thornton. Although the government has said the SFO should not get involved in the case, it said such issues should be dealt with as part of the wider reform of the audit industry.

Gupta’s involvement in lobbying for Greensill

The UK’s Serious Fraud Office has begun an investigation into the Gupta family’s businesses after a letter was published asking the government to intervene in Greensill’s bankruptcy in March. The business had claimed to make supply-chain finance a fine art. However, it collapsed a few months later, and the UK government turned down the family’s plea.

The investigation has thrown into doubt Gupta’s ability to raise new finance. He once claimed to be a saviour of British steel, and his company Liberty Steel went on to take over and turn around a number of struggling UK steel mills. Today, Gupta’s global business group (GGG) has operations in 30 countries and has revenues of around PS20bn.

The scandal prompted the government to introduce a stricter lobbying law. David Cameron, who is the Prime Minister of the UK, testified to parliament about the involvement of Greensill in the lobbying process. Although he claimed that Greensill’s activities were motivated by the need to protect British workers and businesses, the revelations have made his government’s ethics and lobbying procedures more stringent. In fact, the Financial Times revealed that Gupta’s companies had provided Greensill with suspicious invoices, and in response, the company received GFG Alliance invoices for future sales.

The case against Gupta’s companies comes after the collapse of Greensill Capital, a company that provided government-backed loans to businesses. The British Business Bank approved the loans and Greensill was a key part of this lobbying campaign. The two companies also shared a close working relationship. By 2017, nearly three-quarters of Greensill’s net revenue was from Gupta-connected companies.

The SFO has launched an investigation into the Gupta Family Group Alliance’s finance arrangements with Greensill Capital UK Ltd. Although the investigation has only begun, the fallout from the scandal could have devastating consequences for the Gupta family’s business. And the SFO hasn’t made public the details of its investigation. Even before the investigation is concluded, Lex Greensill has apologised for relying on Greensill to support its business interests.

Gupta’s involvement in Wyelands Bank

After the collapse of Wyelands Bank, the Bank of England notified the Serious Fraud Office and the National Crime Agency that the steel tycoon had been involved in the company’s collapse. The investigation has focused on the financial firm’s connected lending and its ultimate beneficial owner, Mr Gupta. However, there is some concern about the Bank of England’s funding of the GFG Alliance.

The SFO opened an investigation into Gupta’s GFG Alliance group of companies, including Liberty Steel, Britain’s third largest steel maker, employing 3,000 people. The SFO is examining allegations of fraud and money laundering in the Gupta family’s finances, as well as the company’s financing arrangements with Greensill Capital. The SFO has been running a covert investigation into Gupta’s involvement in Wyelands since the Bank raised concerns about the company.

Despite the concerns, the investigation is unlikely to lead to criminal charges. Gupta’s involvement in the bank’s collapse may not even be the first. The former prime minister, David Cameron, has lobbied ministers and Treasury officials for loans to Greensill Capital. This could have harmed his own interests. But the disclosure of a high-level fraud investigation could complicate his efforts to restructure his bank.

The Business Committee has a list of 36 questions for Gupta and his companies, including Liberty Steel. The Chairman of the Business Committee, Darren Jones, wrote to Mr Gupta with a list of questions. Although Gupta declined to appear before the committee, he has agreed to submit written evidence. The inquiry is likely to continue until it reaches the end of July, when Gupta and his companies can safely sell off their assets and pay their creditors.

The investigation into Gupta’s involvement in Wylands has been ongoing since 2018. The investigation began in late 2018 and was further expanded in November 2019. In February 2020, the PRCA and the National Crime Agency both launched further investigations into Gupta’s role in the collapse of Wyelands Bank. The case is not yet final and there are still many questions to be answered.

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