FCA outlines Greensill investigations ahead of public hearings
The Financial Conduct Authority is working with German, Swiss and Australian regulators on investigating the Greensill scandal.
LONDON — The British financial regulator said it was investigating Greensill Capital and also working with other agencies in the country and abroad on inquiries, “some of which are potentially criminal in nature.”
The Financial Conduct Authority’s chief, Nikhil Rathi, made the disclosure in a letter to the Treasury committee of the British parliament, which today begins a series of hearings into the matter.
Lex Greensill, the financier who founded the eponymous firm specializing in supply-chain finance, testifies to the committee at 3:30 p.m. today.
The committee published responses to its written questions from government agencies as well as former Prime Minister David Cameron, who worked as a lobbyist for Greensill Capital. While leading the country, Cameron appointed Lex Greensill as an adviser. Cameron testifies to the committee on Thursday.
In his own letter to the Committee, Cameron said he was not aware that Greensill Capital had been on the brink of failure since roughly the onset of the pandemic in 2020, when he persistently lobbied the Treasury and Bank of England for access to state relief schemes for the firm. “The first time I became concerned that the company might be in serious financial difficulty was in December 2020 following a call I received from Lex Greensill,” Cameron said.
However, in emails previously published by the Bank of England, Cameron told regulatory officials in March 2020 that “the disruption to supply chains and the financing of them is real. In the last week we have seen a great many fixed income investors who support the asset class step back.”
A key part of Greensill’s business model was to repackage the loans it handed out as bonds, or fixed-income securities, and sell them on to investors.
Greensill Capital was not directly regulated by the FCA, but it acted as an “appointed representative” of a regulated firm called Mirabella Advisors, which is now also under investigation, according to Rathi.
The FCA is working with German, Swiss and Australian regulators on investigating the Greensill scandal, Rathi said. “There are other jurisdictions that are considering matters and we will continue also to cooperate with authorities in those jurisdictions under the terms of our international memoranda of understanding.”
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