British Business Bank’s due diligence on Greensill Capital “woefully inadequate”

20 November 2021

BBB ‘very surprised’ to “discover where hundreds of millions of taxpayer-backed loans had gone on its watch”

In its report published today the Public Accounts Committee says the British Business Bank’s “failure to conduct sufficient due diligence into Greensill Capital” as it applied to be a lender under the Bank’s business support schemes has put up to £335 million of taxpayer money “at increased risk”.

The rapidly introduced Covid-19 business support schemes, including the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), offered accredited lenders a government-backed 80% guarantee should any of their borrowers default.

Following the BBB’s own review and conclusion that its independence was not compromised in its decision to accredit Greensill, the PAC 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 (GFG) Alliance, appearing to contravene its £50 million group lending limit rule.

The BBB launched an investigation into Greensill’s compliance with the scheme rules five months before the financier entered administration. More than a year later this is still ongoing.

The Committee says “lack of information-sharing across government has once again hampered sound decision-making” in the government’s response to the pandemic, with both BEIS and the BBB striking “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.

Chair's comments

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.”

Further information

Image: PA