Article: Sanjeev Gupta’s GFG Alliance faces scrutiny from UK’s Serious Fraud Office

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Sanjeev Gupta’s GFG Alliance faces scrutiny from UK’s Serious Fraud Office

Stuart Burns , 18 May 2021

The UK’s Serious Fraud Office (SFO) has gone public investigating charges that Sanjeev Gupta’s GFG Alliance (Gupta Family Group Alliance) holding company and subsidiaries, such as Liberty Steel, has been involved in fraud, fraudulent trading and money laundering.

As such, that has almost certainly put the end to refinancing efforts, at least for parts of the group in the UK.

Greensill provided what is termed supply chain trade finance. Essentially, they paid GFG’s suppliers and funded the group prior to securing payment months later from GFG’s customers.

The SFO had been tracking GFG for a year, apparently. But after the Financial Times revealed in April a series of companies named on invoices that GFG sent to Greensill in exchange for cash had denied ever doing business with Gupta’s group. Gupta later told the Financial Times that one such company had been listed as a “prospective” customer. GFG provided financing on that basis, he said.

Interesting concept … what finance do you need for a “prospective” customer?

Greensill is said to be exposed to GFG to the tune of some $5 billion when it collapsed in March, leaving its backer Credit Suisse facing huge losses. Credit Suisse provided funding to Greensill on behalf of clients through a fund that collateralized such trade finance debts and yielded attractive return.

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