Steel magnate Sanjeev Gupta and collapsed lender Greensill Capital are accused of exploiting a taxpayer-backed Covid support scheme to extract over £400 million in loans. Earlier this week, the media reported that Gupta used the Australian banker to borrow eight times the limit set by the government's coronavirus large business interruption loan scheme (CLBILS).
While the scheme guarantees 80 per cent of loans from accredited lenders, up to a maximum of £50 million per group, Greensill is reported to have used supplier finance to eight state-backed loans of £50 million each to Gupta's GFG Alliance and companies linked to him. However, the government's British Business Bank (BBB) withdrew guarantees for the loans three weeks ago after noticing the breaches.
According to the Sunday Times, Greensill is challenging the removal, claiming approval for the borrowing spree. The news broke at a time when Gupta seeks new financing for his Alliance after last week's Greensill collapse. The company has 35,000 people and trades around the world. This is not the first time Gupta has leveraged money from the government. The 49 year old tycoon has long been amassing huge chunks of state support through his high friends in high places; Former prime minister and Greensill advisor David Cameron being one of them.
Scottish first minister Nicola Sturgeon handed him a 25 year government guarantee in 2016 worth £575 million linked to a Highlands aluminium smelter and hydro-electric plant. He also received an additional £7 million to buy two Scottish steelworks.
Gupta's total CLBILS borrowing remains unclear as borrowers are in no way obliged to register charges at Companies House. Last year, The Financial Times had reported that two metal trading companies linked to Gupta had borrowed from the CLBILS: Simec owned by his father Parduman, and Aar Tee, run by his partner Ravi Trehan.
