Audit Reveals that Greensill Potentially Broke COVID Loan Rules
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Audit Reveals that Greensill Potentially Broke COVID Loan Rules

The Sky News reported that UK’s National Audit Office investigation revealed that Greensill Capital potentially broke the rules of British government's

The Sky News reported that UK’s National Audit Office investigation revealed that Greensill Capital potentially broke the rules of British government's Coronavirus Large Business Interruption Loan Scheme, lent seven loans of GBP 50 million to companies with connections to the Mr Sanjeev Gupta Family Group Alliance, owner of Liberty Steel. The NAO report says it was made clear to Greensill that there was a maximum lending limit of GBP 50 million per borrower group. Despite this, seven of the eight CLBILS loans made by Greensill were to companies in Mr Gupta's business empire, totalling GBP 350 million. Six of the GBP 50 million loans were made on the same day ie 30 September 2020.

The report also sheds light on how unusual the lending pattern was. Although lenders were allowed to lend up to GBP 50 million, most did not, and the average loan under CLBILS was just GBP 3 million. In fact only 17 of 698 CLBILS loans were for the maximum amount, eight of which were lent by Greensill, making it the fifth-largest lender on the scheme by value.

The NAO's investigation did not explore the firm's links to government but it did report on the unusual interest taken by the Department for Business, Energy & Industrial Strategy into Greensill's accreditation as a lender. The report details how updates on the accreditation process were repeatedly requested, with eight email enquiries sent over 19 weeks.

The National Audit Office said that the British Business Bank had been in a hurry to get money to businesses as quickly as possible and this meant it didn't necessarily have the time to question Greensill further before accrediting it as a lender. It explained that the bank placed greater reliance on audit checks after it accredited lenders rather than due diligence before, in order to speed up the process. However, it was given credit for acting quickly and decisively when suspected breaches had been made.

Coronavirus Large Business Interruption Loan Scheme was set up by the British government to help struggling businesses at the onset of the pandemic and the government committed to guaranteeing 80% of the loans under this scheme.

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