Tycoon Sanjeev Gupta reportedly restructured his business empire last year to tap into the UK government's coronavirus lending scheme. A report by The Financial Times reported that companies affiliated with Gupta applied for hundreds of millions of pounds of taxpayer-backed loans via Greensill Capital, which in turn, tapped the Coronavirus Large Business Interruption Loan Scheme.
Gupta's main lender, Greensill's March collapse has left his GFG Alliance breathing for air. It employs 35,000 people, all of whom are at risk of losing their jobs right now. So, while Greensill was authorised to provide only £50m to a single company via the scheme, GFG is not a consolidated legal entity, but a loose collection of businesses owned by the Gupta family.
Gupta incorporated new entities last year to further split up his empire, with the sole purpose of securing more taxpayer-backed loans through Greensill. The news comes a week after Chancellor Rishi Sunak confirmed all Greensill loans have been suspended, while the British Business Bank, which ran the scheme, investigated Greensill's compliance with its terms. Also, companies owned by Gupta's family members and associates also borrowed money under the scheme.
Meanwhile, Credit Suisse revealed its suspended supply-chain finance funds had $1.2bn of exposure to Liberty Steel. The Swiss lender's four supply-chain finance funds ran a total of $10bn of assets when they were frozen in March. GFG said last week that “many of Greensill's financing arrangements with its clients, including with some of the companies in the GFG Alliance, were prospective receivables programmes, sometimes described as future receivables.”