Yahoo Finance Sanjeev Gupta thanked minister for key role in securing loans for Greensill
Sanjeev Gupta thanked the Tory minister Nadhim Zahawi for his “personally instrumental” role in enabling Greensill Capital to make taxpayer-backed Covid business support loans, in a letter released by the government.
Greensill collapsed last year, sparking a lobbying scandal involving the former prime minister David Cameron and a Serious Fraud Office investigation into more than £300m of loans to businesses linked to GFG Alliance, the metals conglomerate run by Gupta, under the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
Last year the National Audit Office said the government-owned British Business Bank, which has now suspended government guarantees backing the loans, gave Greensill Capital access to the scheme without subjecting the firm to detailed checks, leaving taxpayers facing a £335m loss.
It has emerged that in October 2020, Gupta sent a letter to Zahawi, then a minister in the business department (BEIS), thanking him for getting the bank to approve Greensill’s access to the loan scheme.
“Since you were personally instrumental in getting the BBB’s approval for Greensill Capital to provide financial assistance under the CLBILS programme, it would be very fitting if you could join us to mark this special moment that provides relief to thousands of workers,” said Gupta in the letter, released after a freedom of information request lodged by the Financial Times.
In the letter, Gupta went as far as inviting Zahawi, who was promoted to education secretary in the autumn, to a “small gathering” at his steelworks in Rotherham to mark the Greensill loan success.
The letter was sent days before a formal investigation into Greensill and the loans to GFG-linked firms was launched.
“The department does not recognise the assertion made in Mr Gupta’s letter that Nadhim Zahawi played a role in securing the bank’s approval to accredit Greensill Capital,” said BEIS. GFG declined to comment.
BEIS stated that Zahawi “did not respond to the letter, nor did he make any subsequent visit to a GFG Alliance site”.
The FoI also revealed that “a text exchange or phone call between Sanjeev Gupta and Nadhim Zahawi took place at an unknown date” in relation to “Covid assistance”, according to the FT.
In the FoI response, BEIS disclosed that there “was no longer an electronic record of the communication stored on the device used by Nadhim Zahawi, which was his personal mobile phone”.
However, according to “information held about the communication” at BEIS, the minister explained to the steel baron that “requests would need to be directed through BEIS officials”, said the FT.
A spokesperson for Zahawi said the decision to accredit Greensill was taken independently by the British Business Bank. “The government was not involved in the decision to accredit Greensill,” he said. “The decision was taken independently by the British Business Bank, in accordance with their usual procedures.”
The spokesperson said GFG’s request for assistance was referred to Zahawi by its local Labour MP, and Zahawi told Gupta that requests would need to be directed through department officials.
“The claim that Nadhim was instrumental in securing approval is little more than flattery from GFG in an overwritten letter from their PR team,” said the spokesperson. “He did not respond to the letter, or attend the event.”
Greensill Capital specialised in supply chain finance, where businesses borrow money to pay their suppliers, but collapsed last March after losing insurance cover for loans issued to its customers.
It emerged that former prime minister Cameron sent 62 text messages to former colleagues pleading for them to help, while earning millions of pounds as an adviser to Greensill. He had also previously lobbied ministers and civil servants across the government to give Greensill approval to hand out Covid loans.
Intensive text message lobbying of ministers and high-ranking civil servants on behalf of Greensill Capital showed a “significant lack of judgment”, an official parliamentary inquiry has found.
The Treasury select committee said it was inappropriate for the ex-prime minister to send 62 messages to former colleagues pleading for them to help the bank, in which Cameron held a “very significant personal economic interest”.
Cameron earned millions of pounds as a boardroom adviser to Greensill, the lending startup founded by the Australian banker Lex Greensill. Cameron last year disclosed a series of text messages lobbying ministers and civil servants across the government to give his employer approval to hand out Covid loans.
A parliamentary inquiry found that Cameron showed a “significant lack of judgment” but did not break lobbying rules. It said: “That reflects on the insufficient strength of the rules.”
In June 2020, Cameron texted Zahawi: “Lex Greensill … says you are being v helpful over HMT and CBILS programme,” according to the former prime minister’s disclosures to the Treasury select committee, which did not include a response from Zahawi.
GFG has previously denied wrongdoing and said it will cooperate with the SFO investigation.
