Taxpayers could be liable up to 335m Pound after the government failed to approach creditor Greensill Capital which collapsed badly, lawmakers said. The Public Accounts Committee report on the British Business Bank’s Covid credit program. Said the company’s approval review was “grossly inadequate.”
Greensill continues to lend £418 million to the company, 80% of which taxpayers could repay if they defaulted on their debt. Former Prime Minister David Cameron were an adviser to the lender that collapsed in March. A government spokesman said he was not involved in Greensill’s accreditation decision. “The decision was made independently of the British Business Bank, following their normal practice.”
The British Commercial Bank was tasked with approving high-end banks and other lenders to provide government-guaranteed loans to troubled companies. When Covid-19 restrictions were first imposed. It’s a multi-billion pound emergency loan line. With the help of Cameron’s advisers, Greensill tried to access several government programs, some of which were denied. Finally, in June 2020, it was approved for two business interruption loans.
Most of Greensill’s government-guaranteed loans went to companies in the Sanjiv Gupta steel empire GFG Alliance.
The bank eventually suspended loan guarantees after Greensill exceeded the £50m limit for the group of companies. Previously, however, lawmakers noted that various ministries and agencies did not share concerns about Greensill and its primary customer, GFG.
The MPs report lists issues raised by the National Crime Agency for part of the GFG Alliance, Bank of Wyelands, and discussed by the Treasury and the Department of Economic. Energy and Industrial Strategy (BEIS), but not with the UK shared Business Bank. “Because they feel irrelevant to the accreditation process, even though Greensill is the main funder of the GFG Alliance.”
Lawmakers said the “lack of information sharing between governments. That hindered the pandemic response allowed Greensill to access the tax-funded system. Putting taxpayers at £335m at risk if Greensill administrators requested a withdrawal.
The British Business Bank has also been criticized for being “lack of curiosity” about media reports challenging Greensill’s credit model and ethical standards.
In May, the Serious Fraud Office opened an investigation into GFG for alleged fraud. And money laundering, including a financing agreement with Lex Greensill.