Controversial lender Greensill Capital is scrambling to find a new auditor as it gears up to float on the stock market.
The specialist finance company, which was founded by Australian Lex Greensill and counts former prime minister David Cameron as an adviser, had previously enrolled the little-known Saffery Champness to vet its finances.
But after growing too large and complex for Saffery’s services, Greensill is searching for a larger auditor to do the job.
High flyer: Lex Greensill (main) has close links with former Prime Minister David Cameron (top right) and steel tycoon Sanjeev Gupta (right)
It has not been met with quite the enthusiasm it might have hoped for. Big Four accountants KPMG and Deloitte have turned down Greensill’s invitations, the Financial Times reported, citing a conflict of interest. And BDO, which sits a rung down from the Big Four, has also rebuffed Greensill’s approaches as it tries to clean up its image following its involvement in a series of audit scandals.
Greensill’s difficulty securing an auditor is a setback as it prepares for stock market float, which has been rumoured for several months. When Japanese investment giant Softbank invested last year, Greensill was valued at £2.7billion.
KPMG, Deloitte and BDO declined to comment on why they are reluctant to take the job. But, with auditors under fire following a string of corporate debacles – including the collapse of Thomas Cook and BHS, they have become more picky about which clients they take on.
Greensill has certainly had its fair share of controversies in the nine years since it was founded.
The company specialises in lending to businesses which might otherwise struggle to get a loan from a usual bank.
But its close links to British-Indian steel tycoon Sanjeev Gupta, and his group of companies the GFG Alliance, have caused a series of headaches.
Founder Greensill, 43, grew up on his parents’s farm in Australia and was inspired to set up his business as he saw his mother and father struggling to make ends meet while they waited for their crops to grow.
From those modest beginnings, he has become something of a high flyer.
The financier is now known for his penchant for corporate jets, and owns planes including the luxurious Dassault Falcon 7X and Gulfstream G650.
He has also struck up a close relationship with Gupta.
The steel tycoon is featured on Greensill’s website, singing the lender’s praises, and Gupta formerly owned a stake in Greensill before selling it due to concerns that there could be a conflict of interest.
But the pair last year found themselves at the centre of a scandal which rocked Swiss asset manager GAM.
Tim Haywood, one of GAM’s star fund managers, was suspended in 2018 for ‘gross misconduct’, before being fired in a debacle that brought the investment titan to its knees.
It turned out that Greensill had brokered a number of deals between Gupta and Haywood, who was ploughing hundreds of millions of pounds of clients’ money into Gupta’s endless stream of projects.
A whistleblower at GAM grew concerned about the deals, and Haywood’s closeness to Gupta and Greensill. After an internal investigation at GAM, the firm concluded that Haywood had failed to do enough due diligence on many of the deals.
Gupta was eventually prompted to buy £600m of bonds linked to his own companies back from GAM, so the asset manager could return money to its worried investors.
Greensill also became tangled in a lawsuit with news agency Reuters, over bonds it issued for Gupta. The bonds were secured against a hydro power plant in Kinlochleven – a village located in Lochaber, in the Scottish Highlands – owned by Gupta’s GFG Alliance.
In a statement to the market, Greensill said the Scottish government had approved a guarantee of support for the power plant. In fact, the government had given no such guarantee – leading Reuters to accuse Greensill of misleading the market.
Greensill tried to sue Reuters, arguing it had not intentionally misled anyone, before dropping the case earlier this year. One of Greensill’s German subsidiaries, Greensill Bank, is also being probed by the country’s financial regulator Bafin, Bloomberg reported, over worries it is also too heavily exposed to Gupta-linked companies.
And back in the UK, Greensill has raised eyebrows over its participation in the Government’s emergency coronavirus loan scheme. Hundreds of thousands of businesses are still waiting for a Government-backed loan to see them through the pandemic, after applying to their preferred lender.
But Greensill has quietly handed out tens of millions of pounds in Coronavirus Large Business Interruption Loan Scheme (CLBILS) to two companies connected to Gupta – despite the companies employing just 11 people.
Greensill did not respond to a request for comment, and did not reveal how much it has lent out in total under government coronavirus schemes.