Public Accounts Committee says due diligence on Greensill woefully inadequate
A report published this morning by the House of Commons Public Accounts Committee says the British Business Bank’s “failure to conduct sufficient due diligence into Greensill Capital” has put up to £335 million of taxpayer money “at increased risk”.
The British Business Bank (BBB) was responsible for approving lenders in their distribution of government backed loans to business at the start of the Covid 19 pandemic.
These included a number of rapidly introduced Covid-19 business support schemes, such as the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme. They offered accredited lenders a government-backed 80% guarantee should any of their borrowers default.
The Public Accounts Committee reports its extreme concern that the BBB was still “very surprised” when it “noticed” Greensill had issued seven loans totalling £350 million to borrowers within the Gupta Family Group Alliance, appearing to contravene its £50 million group lending limit rule.
The Committee says the Department for Business, Energy and Industrial Strategy and the British Business Bank stuck the “the wrong balance between making decisions quickly and protecting taxpayer interests”, which allowed Greensill access to taxpayer-backed schemes despite the concerns apparent even in public media reports.
The case of Greensill bank has already come under scruntiy following the subsequent collapse of the bank, and the role of former Prime Minister David Cameron as an advisor to Greensill.
Dame Meg Hillier MP, Chair of the Public Accounts Committee said: “The British Business Bank only had to read the papers to be aware of serious questions about Greensill’s lending model, over-exposure to borrowers, and its ethical standards – yet it didn’t really start to delve into those issues until the problems were clear and hundreds of millions of taxpayers’ money was already at risk. It professed itself “very surprised” to discover where these taxpayer-backed loans had gone on its watch, in contravention of its own lending and accreditation rules.”
The Committee has also accussed the British Business Bank of being insufficiently curious when identifying where money lent through the schemes, including by Greensill, has ultimately gone. To date some £30 billion has been borrowed under the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme. These scheme require these
