British Government Pushed for COVID Loans to Greensill Capital
The Guardian reported that British Business Bank’s head of operations told the parliamentary scrutiny committee that UK’s Department for Business, Energy and Industrial Strategy had asked for multiple progress updates on Greensill Capital’s application to the coronavirus large business interruption loan scheme. The British Business Bank’s Chief Operating Officer Mr Patrick Magee told MPs that the Bank, which was in charge of vetting lenders before they could issue Covid loans, received eight email inquiries about the Greensill application from officials within the Business, Energy and Industrial Strategy deal team. The BBB ended up approving Greensill for the scheme in June 2020. However, Mr Magee insisted that they were not influenced by the business department’s constant queries. He told “We reached our own balanced commercial decision in light of the eligibility criteria of the scheme.”
The Guardian understands that the emails were sent over a four-month period, after Greensill’s application to the scheme on 23 April 2020. While Business, Energy and Industrial Strategy initially asked for progress updates on Greensill Capital’s accreditation, later emails asked whether Greensill would be allowed to offer loans worth more than GBP 50 million, which required special permission and was ultimately denied.
The fact that Business, Energy and Industrial Strategy, then run by Mr Alok Sharma, was inquiring about Greensill’s success in the second-largest Covid loan scheme will raise further questions over Greensill’s sway in Westminster, which is already grappling with the largest lobbying scandal in a generation. However, a Business, Energy and Industrial Strategy spokesperson said “BEIS officials engage regularly with British Business Bank as the Department responsible for business finance. All decisions taken by the British Business Bank are made independently of ministers in accordance with the Bank’s usual procedures.”
Greensill Capitals was hoping to lend hundreds of thousands of pounds to its customers through the programme, which came with an 80% government guarantee that meant it would only have to cover 20% of the losses if borrowers failed to repay their debts. Greensill Capital reportedly handed GBP 400 million of those loans to one of its largest borrowers, the Liberty Steel owner GFG Alliance, in a move that may have breached scheme rules and is now being investigated by the British Business Bank.
British Business Bank ultimately suspended Greensill’s government guarantees in October 2020, just four months after its application was approved. It launched an investigation into how it had been distributing loans to one of its largest customers, GFG Alliance, the loose umbrella of companies owned by the metals magnate and Liberty Steel owner Mr Sanjeev Gupta. That investigation is on going.