Labor demands disclosure of Covid loans to Greensill for Liberty Steel

Britain’s opposition Labor Party has called on the government to release details of larger loans made under its Covid-19 emergency programs to establish the full extent of borrowing by collapsed financial group Greensill and routed to the owner of Liberty Steel.

The Bank of England, which administers the Covid Business Finance Facility, through which the government supports investment grade rated companies, released details of its loans in June last year. However, other loans – through the Coronavirus Business Interruption Loan Program (CBILS), Coronavirus Large Business Business Interruption Loan Program (CLBILS) and loans from ” rebound ”- have not yet been disclosed by government or commercial lenders who have received state guarantees.

The loan schemes were set up under the auspices of the EU state aid regime, albeit in a post-Brexit ‘temporary framework’, so any loan over 100,000 euros will need to be disclosed in within 12 months.

Some 1.6 million installations, worth almost £ 73 billion, have been approved under the three programs, according to the latest Treasury statistics.

The Treasury and the British Business Bank, which administers the programs and accredits commercial lenders, previously have both refused to disclose details on individual borrowers, the bank citing business sensitivities and data protection laws.

Anneliese Dodds, shadow chancellor, said it was important for the government to provide greater transparency and accountability. “When public money is at stake, the fault should be to reveal where that money is going,” she told the Financial Times. “The government made a commitment to do this months ago – it should continue.”

The commercial department (Beis) has confirmed that it will notify lenders ahead of the disclosures due date and release the data on an “ongoing basis.”

“We are obliged to publish this data as part of the EU’s temporary framework for state aid, but we have made it clear that the fundamental rights of UK borrowers must come first,” Beis said.

Government bailouts to support jobs have come under close scrutiny by the National Audit Office, which warned in October that taxpayers could face £ 26bn in losses on the rebound system due to fraud and corporate defaults. The government spending watchdog, however, did not review CBILS or CLBILS.

Lord Paul Myners, former Minister of Labor City, wrote to the government on Monday to urge the release of the data and to pressure ministers for a release schedule.

Myners also called on the government to reveal the names of entities linked to steel tycoon Sanjeev Gupta, owner of Liberty Steel, who received loans under the CLBILS program.

Flight revealed last year that Greensill Capital, a recently collapsed supply chain finance company, advanced government-guaranteed loans under CLBILS to Gupta companies – some with only a few employees – using the loosely defined structure of its GFG Alliance group to borrow multiples of a ceiling of £ 50 million from each borrower.

Some of the entities that attracted funding are considered outside this group, although the FT has previously reported that they are sometimes referred to as the “Friends of Sanjeev” internally. One of the ostensibly independent business owners even witnessed a lobbying having dinner Gupta welcomed members of the Scottish Government in 2016, listing its role as a ‘strategic board member’ of the GFG Alliance.

The British Business Bank has decided to withdraw the government guarantee on Gupta’s loans, according to people familiar with the matter, although the bank has not publicly confirmed this. Two people close to the Indian businessman said they believe it could be legally contentious, given that the government agency approved the structure last year.

Dodds demanded a full investigation into how Greensill received loans under the CLBILS program and the role of former Prime Minister David Cameron in trying to push for even greater access to government funding. “The government has serious questions to answer about the process that saw Greensill accredited as a government guaranteed loan lender before it collapsed,” she said.


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About Christopher Easley

Christopher Easley

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