Greensill founder apologises as watchdog launches probe

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The boss of collapsed finance company Greensill has apologised and said he takes full responsibility as the City watchdog launched a probe into the firm.

Lex Greensill told the Commons Treasury Committee: “Please understand that I bear complete responsibility for the collapse of Greensill Capital.

“I am desperately saddened that more than 1,000 very hard working people have lost their jobs at Greensill. Likewise I take full responsibility for any hardship being felt by our clients and their suppliers, and indeed investors in our programmes.

He said that Covid-19 and the actions of authorities in Germany had played a role in the insurance company’s decision.

“It’s deeply regrettable that we were let down by our leading insurer whose actions assured Greensill’s collapse, and indeed some of our biggest customers.

“To all of those affected by this. I am truly sorry.”

Separately, the Financial Conduct Authority (FCA) said it is formally investigating how two Greensill companies failed, and how one of them was overseen by a company whose licence it piggybacked on to operate in the UK.

FCA boss Nikhil Rathi said that there have been a number of allegations about the circumstances in which Greensill failed, “some of which are potentially criminal in nature”.

Lex Greensill
Mr Greensill was speaking to MPs during a remote Treasury Committee hearing (House of Commons/PA)

US-based Mirabella Advisers allowed Greensill Capital Securities to sell products here using its license with the FCA.

In March Mirabella ended its relationship with Greensill which had been in place since 2017.

It made Greensill Capital Securities an appointed representative (AR) of Mirabella.

“A principal firm (in this case, Mirabella) is responsible for ensuring that, on an ongoing basis, its AR complies with the requirements, rules and regulations of the FCA,” Mr Rathi said.

Greensill collapsed earlier this year and its relationship to David Cameron, who lobbied for the firm, has been thrown into the limelight.

David Cameron
David Cameron lobbied for Greensill (David Parry/PA)

Greensill would pay suppliers directly, and then collect the money later from the customer. It made its money by charging a fee that offset the risk of the customer going bust before it could pay.

Greensill’s collapse caused shockwaves among its customers, with worries that some could fail, putting thousands of jobs on the line.

But Greensill also had a product that it wanted to run with the NHS which would – for free – offer to pay nurses and doctors their salary on a daily basis.

It would, Greensill argued, reduce their need for payday loans.

However, FCA notes released on Tuesday show that in 2019 founder Lex Greensill said that the scheme would be free for the NHS, but that it was an “add on” product as “they are already making a lot from Greensill contracts”.

Mr Greensill offered the service to 18 other employers as a “foot in the door,” the FCA notes reveal.

At the time FCA executive director strategy and competition Christopher Woolard warned that good innovative ideas can go wrong, but that there could also be upsides.

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