ALEX BRUMMER: Sanjeev Gupta takes centre stage

Anyone tuning into David Cameron’s less than riveting testimony before the Treasury Select Committee might have concluded that Greensill Capital was a brilliant supply chain finance firm providing technology and innovation to Britain’s top companies and Whitehall. 

As part of his ‘due diligence’, the former prime minister repeatedly trotted out the blue-chip names of Astrazeneca and Vodafone as good reasons to believe in his Aussie mate Lex Greensill. In seeking to big up Greensill’s fintech credentials, he invoked online banks Revolut and Monzo. 

Just because a company goes into administration, Cameron assured MPs, ‘it doesn’t mean the whole thing was a giant fraud’. 

Making a point: Throughout David Cameron’s testimony to MPs, the names of Sanjeev Gupta (pictured), Liberty Steel and GFG barely passed his lips

Throughout his testimony, the names of Sanjeev Gupta, Liberty Steel and GFG barely passed his lips. 

This, despite the fact that the empire run by Gupta was Greensill’s biggest client and at the core of everything which subsequently went wrong. Cameron may be confident that Greensill’s failure was just a bankruptcy like any other, but enforcers take a different view. 

The Serious Fraud Office reveals it is looking at suspected fraud and money launder ing, conduct of the business of companies within the GFG Alliance, including financing arrangements with Greensill. That’s a long list of areas of interest.

In addition to the SFO intervention, City regulator the Financial Conduct Authority is pressing ahead with its probes into Greensill Capital UK, Greensill Capital Securities and the oversight of the latter by its ‘principal’ Mirabella Advisers. 

Given the allegations, and the number of inquiries now going on into Greensill and its labyrinthine relationship with Liberty and GFG, a former prime minister might have been more circumspect in his assurances of the bona fides of his former associates. The SFO decision to launch an investigation into GFG, and by implication Liberty, will almost certainly speed the impending collapse of firms in the Gupta constellation. It will hasten a race by creditors to gain control of physical assets. Wind-up orders are already before the UK courts. In Australia, Citibank, Credit Suisse and Softbank are among those who have gone to the bench in an effort to protect their interests.

There is nothing simple about any of this. In Britain, Liberty tends to be thought of as a coherent group. It actually consists of a loose confederation of as many as 24 firms linked by common ownership and the thread of Greensill financing.

Uncertain ownership, a lack coherence and governance at the group are the core reasons for the decision by Business Secretary Kwasi Kwarteng to refuse an emergency taxpayer loan of £170m. 

That should not be taken as a sign that HMG is disinterested. Kwarteng’s knowledge of the complexities of command, control and credit arrangements within the ramshackle Gupta realm makes intervention tricky. His approach is likely to be piecemeal stepping in if steel capacity is in danger. 

Main concern would be a collapse of the Stocksbridge plant near to Rotherham. The factory is seen as critical to the Government’s levelling up agenda, and it likes the green credentials. If it ends up in the hands of the Official Receiver, as seems likely, Kwarteng would likely support jobs and production pending a rescue. This was the procedure used to keep the British Steel plant at Scunthorpe alive before it was sold to China’s Jingye in January 2020. 

What is most remarkable about the whole Greensill-Gupta scandal is how little attention was paid by Cameron and regulators to warnings flashing red. Auditor of Greensill in the UK was the modest firm of Saffery Champness. Yet the collapsed bank was the fulcrum of a complex set-up that stretched across several Continents, requiring huge skills to audit. In this it had something in common with GFG companies, many of which were audited by the micro firm of King & King, based in a Wembley shopping centre. Having the top four or five audit firms on board offers no guarantee of safety. But reaching right down the ladder, where capacity is limited, offers even less. 

In recent high-profile cases the SFO has chosen to reach Deferred Prosecution Agreements (DPAs) with the corporations concerned, before going after individuals. 

That is not the likely approach to the implosion of Liberty where the financial resources for a negotiated settlement don’t exist. 

More direct routes to justice may be required. 

This post first appeared on Dailymail.co.uk