SNP-GUPTA FILES #3: GFG INVOICES USED IN GREENSILL LOAN RAISE CONCERNS
Businessman given an irrevocable "guarantee" by the Scottish Government linked to suspicious invoice financing amid fraud squad investigation
INVOICE FINANCING between a multinational, a now defunct financial services firm and Credit Suisse is not typically something to catch my attention. But when the multinational is Gupta’s, the defunct financial services firm is Greensill suddenly I take a greater interest.
Dodgy invoices?
For those unaware invoice financing is a method for firms to improve working capital by borrowing money against amounts due from customers. Nothing wrong with this at all, in fact it’s a perfectly normal business transaction. Put simply, when a business sells a good or product to large consumers it’s typically done on credit. Thus the customer isn’t paying up immediately, instead providing an invoice with an agreed due date. But these can often by slow-moving accounts and a business may wish to improve short term liquidity and so can borrow to boost working capital against the ‘amounts receivable’ based on the invoices they possess.
Makes sense, right? So what’s the problem?
The issue arises when we learn that the business borrowing against the amounts receivable is based on potentially dodgy invoices. Worse still, the business accused of flogging the dodgy invoices is the same major business empire the Scottish Government have tied taxpayers to via an “irrevocable guarantee” until 2041.
Beginning to see why this has caught my eye?
The Financial Times has been reporting that Gupta’s GFG Alliance benefited from loans from now-defunct Greensill Capital based on invoices which are suspected of being fraudulent. When Greensill Capital - the primary source of financing for Gupta - collapsed, it went down the sink with a staggering $5bn of exposure to Gupta.
“The Financial Times has seen a series of invoices that Gupta’s Liberty Commodities trading group provided to Greensill in exchange for cash, including documents purporting to show it sold products to four European metals businesses: KME Germany, RPS Siegen, Voestalpine Böhler Edelstahl and Salzgitter Flachstahl.”
But if we contact the firms named on the invoices, six deny having done any business as named on the documents. According to the Chief Executive Ulrich Becker of KME Germany “We have nothing to do with Liberty,” adding “We did not trade with them in the past, we are not trading with them now, and we will not trade with them. We are copper producers and don’t even know what we would have bought from them”
Oh dear.
Things get even worse when these same invoices were later flogged on by Greensill Capital just five months before its collapse to Credit Suisse. Apparently the bank completely failed to spot the suspicious nature of the invoices.
Being blunt Credit Suisse provided an emergency $140m loan to Greensill Capital based partly on invoices to companies denying ever doing the business stated on the documents.
Greenshill Capital let me remind you was where former Prime Minister David Cameron hopped off to work with upon leaving office. It’s also tied up with the Scottish Government via the un-minuted slap-up dinner-dates involving then-SNP minister Fergus Ewing in Glasgow west end.
Enter Scotland, stage right
All of this becomes extremely interesting for us taxpayers living in frosty Caledonia when we realise the SNP government has landed us right in the middle of things.
I have written extensively about the Gupta-SNP-Greensill situation and won’t relitigate the details here. Instead pointing you here and here for a deeper dive should you wish to familiarise yourself with matters.
Since GFG’s primary lender Greensill sank, it’s been scrambling for a new source of longer term financing. Gupta’s empire is also under a serious fraud office probe both here and in France.
This is the businessman that outgoing First Minister Nicola Sturgeon decided was the right man to do business with.
The SNP administration helped Gupta buy the steel plants at Motherwell (Dalzell) and Clydebridge in 2016, in deals it now confesses likely broke state aide laws (oops). They also handed Gupta Scotland’s Lochaber smelter, Hydro plant and huge estates with an enormous £586m “guarantee”. According to documents discovered via a Freedom of Information request taxpayers are tied to GFG via this “guarantee” for a long period to come. Under a subheader titled “exit strategy” it reads
“SG’s guarantee is irrevocable through to 2041.”
Super. Scottish taxpayers are lumped into serious financial exposure with a business empire caught up in serious fraud investigations, whose scrambling for refinancing and potentially caught up in dodgy invoice trading. All thanks to quixotic and ill-considered deals done to spare SNP blushes ahead of elections back in the day.
#ThankYouNicola
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