Financial Conduct Authority launches probe into Greensill collapse 

The City watchdog has launched a full-blown investigation into bust lender Greensill Capital amid a lobbying row which has dragged in former prime minister David Cameron.

In a letter to MPs on the Treasury Committee, the Financial Conduct Authority (FCA) confirmed it was ‘formally investigating matters relating to Greensill’.

FCA chief executive Nikhil Rathi said it was also ‘cooperating with counterparts in other UK enforcement and regulatory agencies, as well as authorities in a number of overseas jurisdictions’.

Probe: In a letter to MPs on the Treasury Committee, the Financial Conduct Authority, led by Nikhil Rathi (pictured), confirmed it was ‘formally investigating matters relating to Greensill’

Rathi added: ‘A number of allegations have been made in the press regarding the circumstances of Greensill’s failure, some of which are potentially criminal in nature.’

He explained that he was not able to disclose all of Greensill’s interactions with the FCA due to fears that this may prejudice ongoing investigations, including a criminal lawsuit in Germany.

Though Greensill was a significant lender to key British firms such as Liberty Steel, it was not regulated by the Bank of England and was only overseen by the FCA under anti-money-laundering rules.

Even that was done indirectly through a firm called Mirabella, which Greensill paid to be its ‘principal’ under the ‘Appointed Representatives regime’. This meant that Mirabella was regulated by the FCA, and had a duty to keep an eye on Greensill.

The FCA said most of Greensill’s lending activities did not fall under the ‘perimeter’ of things it can supervise, as set by Parliament, so there was little it could have done in the run-up to the firm’s collapse. 

But, following Greensill’s plunge into administration this year, Rathi said it would consider asking for changes to the perimeter.

He said this could include extending its investigation and penalty powers when a firm fails, and making changes to the Appointed Representatives regime. 

Rathi said the FCA would also look at the criteria which firms are judged on for their fitness under money-laundering regulations.

And he suggested that the perimeter could be extended to give it regulatory powers over some types of lending schemes which Greensill offered, such as those extended to the NHS, which allowed staff to get paid early. 

The shockwaves from Greensill’s collapse have prompted scrutiny of the UK’s lobbying rules, after it emerged that Cameron – an adviser to Greensill – tried to persuade Treasury and Bank officials to give the firm access to the Covid Corporate Financing Facility.

Greensill was told it did not qualify, but a timeline published yesterday showed Cameron called, texted and emailed Government and Bank officials more than 50 times between March and June in 2020.

The evidence was released as Lex Greensill, the Australian founder of Greensill, faced a three-hour grilling from the Treasury Committee in his first public appearance since the firm went bust.

Greensill denied he was a ‘fraudster’ and insisted all his firm’s business was above board.

This post first appeared on Dailymail.co.uk