Credit Suisse Ignored Trafigura Warning of Suspect GFG Invoice
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Credit Suisse Ignored Trafigura Warning of Suspect GFG Invoice

According to a report in Financial Times, commodities trading house Trafigura had warned Credit Suisse over a suspect invoice from GFG Alliance in July

According to a report in Financial Times, commodities trading house Trafigura had warned Credit Suisse over a suspect invoice from GFG Alliance in July 2020. The so-called receivable, the Financial Times reported, indicated that Trafigura owed money to Liberty Commodities, the metal trading arm of Gupta’s conglomerate. Financial Times reported “The accounts concerned suggested that Liberty Commodities had raised financing from Greensill against a USD 30 million invoice to Trafigura, meaning that investors in Credit Suisse’s funds should have made a return when the invoice was paid. But Trafigura executives told the lender that they did not think this invoice was genuine.”

Prior to going bust in March, Greensill, GFG’s main financier, would lend money to clients and take invoices from their suppliers or customers as collateral. It would then sell on these loans to funds, chiefly those run by Credit Suisse. Credit Suisse bankrolled Mr Gupta despite warnings’ from colleagues elsewhere at bank

Financial Times in a latest report said that details have emerged of Credit Suisse's direct relationship with steel magnate Mr Sanjeev Gupta. As per Financial Times report “Credit Suisse was known to have indirect exposure to Gupta via Greensill, which packaged loans into notes acquired by the Swiss bank’s funds. When Greensill collapsed in March, Credit Suisse was confronted by the fact that a big slice of the debt may be bad, including loans to GFG. What was not widely known until now, however, is that Credit Suisse also had a significant direct relationship with Gupta. A string of former executives at the Swiss lender have revealed to the Financial Times how its private bankers and global leadership courted the metals magnate, offering him VIP treatment that extended far beyond the trip to St Moritz.”

Financial Times report said “Forging a deep relationship with the Indian-born industrialist, Credit Suisse ignored warnings from concerned corporate clients and its own bankers.” A former senior executive in the bank’s Australia business who cited unease over loans to Gupta as a reason for his resignation told Financial Times “The decision to finance entrepreneurs like Gupta at any cost was the wrong decision. It was a lot of capital going to a highly risked situation.”

Financial Times added “The revelation that Credit Suisse handed Gupta everything from a mortgage on a trophy mansion to a private audience with its then chief executive, will further anger its clients who are facing potentially billions of dollars of losses. Some of those clients are expected to sue Credit Suisse, alleging failures in the way the funds were managed. And the Greensill troubles come as the bank is reeling from another risk management scandal over its work with Archegos, the collapsed family office.”

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