Insolvency Service reportedly puts Greensill bosses on notice

According to Sky News, the unit that investigates corporate collapses has submitted questions to its founder Lex Greensill and former colleagues in recent days. And while this step is a procedural one, it shows that the Insolvency Service’s inquiry into the conduct of directors at the business prior to collapse is now at a detailed stage. 

Falling under the Company Director Disqualification Act, investigators have three years from the date of a company’s collapse to issue disqualification proceedings. Greensill’s insolvency took place in March 2021, meaning the Insolvency Service has until March 2024 to bring proceedings. 

Business directors can face bans lasting between two and 15 years where misconduct has been identified. 

This news comes as the state-owned British Business Bank has said it has “terminated” guarantees on the supply chain finance firm’s loans to large businesses after an investigation into its lending practices. 

The removal of guarantees on £400m worth of loans from the financier was paid to companies linked to steel magnate Sanjeev Gupta. According to the Financial Times, the British Business Bank guaranteed the loans in 2020 as part of Covid support packages. 

It’s also investigating £15m of loans Greensill made under a separate scheme for small firms. The bank is yet to make a decision on whether to suspend the guarantees on these facilities. 

In addition to this one of the firm’s creditors, Credit Suisse, has told its clients that its efforts to recover billions lent to Greensill will cost it $291m (£242m). According to the Financial Times, it expects legal and advisory fees - as well as the cost of propping up Greensill’s “skeleton staff” would cost more than twice its previous estimate of $145m (£120.6m). 

The collapse of Greensill Capital, amongst other things, exposed apparent weaknesses in lobbying rules in Westminster - with former Prime Minister David Cameron lobbying the government on behalf of the company to change rules to allow it to join the Covid Corporate Financing Facility scheme. 

Off the back of this, the parliamentary committee of the Public Administration and Constitutional Affairs Committee recently announced it will be examining how effectively the 2014 Lobby Act is regulating lobbying activity. 

MPs will also consider the government’s wider lobbying transparency regime looking at compliance with the requirement for departments to disclose ministers’, senior officials’ and SpAds’ external meetings. 

These are supposed to be published quarterly, though have often been delayed, and the descriptions of the purpose of the meetings have been criticised for a lack of detail and for inconsistency between departments. 

Commenting on the inquiry, the committee’s chairman William Wragg said: “The Government charged this Committee with post-legislative scrutiny of the Lobbying Act in order to learn the lessons from the Greensill scandal. 

“Recent revelations about privileged, off-the-books meetings between Uber and ministers shine a spotlight on some of the shortcomings of our lobbying laws. It is important we are reassured that this kind of influencing operation cannot go undetected.

Gaps in current regulations have already been recognised in the Boardman inquiry and by the Committee on Standards in Public Life. Our inquiry will build on this work and look at how we ensure lobbying transparency.

“We aim to come up with robust, practical, cross-party proposals which will bolster our political system against undue influence.”