Cameron lobbied Treasury and Bank of England chiefs for Greensill
On the day that senior Treasury and Bank of England officials revealed how much pressure David Cameron had pressured on them last spring on behalf of Greensill to access emergency lending programs, I want to share the important revelations made these recent weeks that suggest Greensill was heading for collapse. over several months.
These represent the financial side – as opposed to the political side – of this debacle, which has been largely ignored due to widespread outrage at how David Cameron has exploited his connections in government and the civil service to make push for Greensill’s cause.
What I want to focus on is what I see as the big unanswered question, for the eponymous founder of Greensill, Lex Greensill, for David Cameron, for the regulators, for the politicians: how long exactly before Greensill did not formally collapse into insolvency in March did they know worrying state?
This is really important, because throughout last spring Cameron and Greensill lobbied the Treasury and the Bank of England to give Greensill access to taxpayer funding through a major credit program, Covid’s corporate finance mechanism.
Former Prime Minister David Cameron sent emails to senior Bank of England officials on behalf of Greensill Capital, ITV News political reporter Shehab Khan reports
Although their urgent requests to be allowed to use the Covid Business Funding Mechanism were rejected, on June 10, 2020, Greensill received an extremely valuable government guarantee when it was accepted by the British Business Bank – a bank nationalized – as a provider of bill financing through the Coronavirus Large Business Interruption Loan Program. This meant that he could lend money with the risk of loss borne by the state.
Here, then, in no order of importance, are some relevant disclosures that suggest that the Greensill collapse had occurred a considerable time ago.
1) Today in Australia, the creditors of the Greensill holding company voted to liquidate the company. When making the decision, company directors Grant Thornton told creditors they were unable to determine whether Greensill’s holding company had done business while it was insolvent. He said investigations would continue.
2) On March 3, German banking regulator BaFin said of German Greensill Bank that “during a forensic audit, BaFin found that Greensill Bank AG was unable to provide proof of the existence of receivables in its balance sheet that it had purchased from GFG. Alliance Group “. In other words, the regulator feared that the assets supposed to underpin billions of euros of deposits did not exist.
Importantly, GFG Alliance was Greensill’s largest customer. GFG is Sanjeev Gupta’s global group of companies, comprising large and well-known steel mills in the UK. Greensill’s main business was buying bills at a discount and then selling them as commercial paper or bonds to investors. It did this on a large scale for GFG Alliance, providing it with crucial credit over the many years of its expansion.
Billions of pounds of these bond-conditioned bills were purchased by four investment funds set up by bank Credit Suisse, which are in the process of being liquidated.
3) This activity of buying these invoices and selling them packaged as bonds to investors was viable in large part because the risk of non-payment of invoices was insured by a specialist Australian insurer, Bond & Credit Company.
BCC wrote around £ 6 billion in policy for Greensill.
On May 28, 2020, BCC’s Japanese parent company, Tokio Marine, actually killed Greensill’s ability to raise funds in this way. According to an email sent in July by Tokio Marine’s attorney, the insurer informed Greensill on that date in May that he would not be taking any further exposure to Greensill, that there would be no extensions and that “all existing limits on buyers of Greensill have been set. void in our political system. “A few weeks ago, Tokio Marine confirmed that” BCC notified Greensill and its broker in mid-2020 that we would not renew, increase the limits, extend or would not guarantee new policies “.
4) Emails leaked by the Bank of England on Thursday include Lex Greensill warning on March 15 last year that it was becoming difficult to sell the bill-backed commercial paper which was Greensill’s main source of funding. He said that “last week we saw a large number of bond investors who support the asset class take a step back – which means liquidity may well become a major issue.” As a result, on March 16, he asked the Deputy Governor of the Bank of England, Sir Jon Cunliffe, to create a £ 20 billion facility to purchase these bonds, as a safety net. The Bank ultimately refused – despite considerable pressure from David Cameron, who described Greensill as having “the mandate of the UK government” to provide “supply chain finance”.
5) However, as I mentioned earlier, the British Business Bank – another branch of government – has given financial guarantees to Greensill. The British Bank sent me this statement on Thursday. “All accredited lenders are subject to an audit by the British Business Bank to ensure compliance with the rules of the system. In the event of serious non-compliance, the Bank is entitled to take corrective measures. These actions may include terminating the warranty agreement or withdrawing from it. It would not be appropriate to comment further on Greensill’s case given that an investigation is ongoing.
The part that matters is the last sentence, which says the bank is investigating whether Greensill was in “serious breach” of its rules.
I am aware that this is all quite complicated. Sorry. But what these revelations show is that Greensill had been in trouble for some time.
The unanswered question, which a series of surveys around the world is trying to answer, is whether Greensill and his colleagues – including his part-time employee David Cameron – should have been aware and should have disclosed the magnitude of the risks they presented. many months ago.