Commodity trader Credit Suisse warned last year that the bank’s supply chain funds appeared to contain a suspicious invoice from Sanjeev Gupta’s business empire, according to three people familiar with the discussions.
The collapse of the $10 billion Credit Suisse pool of funds, which collected bills linked to the failure of a supply chain finance specialist Greensell Capital, infuriated Swiss bank customers who poured billions into them.
Credit Suisse has warned of this $1.2 billion in debt Associated with mineral magnate Gupta, one of Greensell’s biggest former clients, recovery may be difficult. Grensell, once one of the UK’s most valuable financial startups, counting former Prime Minister David Cameron as an advisor, applied to management in March.
Trafigura raised the alarm with Credit Suisse in July 2020 about so-called receivables included in one of the annual accounts of supply chain finance funds, according to three people briefed on the matter. The receivables indicated that Trafigura owed money to Gupta’s Liberty Commodities, the major mineral trading company he founded nearly 30 years ago and part of the GFG alliance.
Before its March collapse, Greensell was lending money to clients, including Liberty, and taking invoices from their suppliers or customers as collateral. The loans were then pooled into investments and sold to funds managed mainly by Credit Suisse.
The fund’s accounts involved indicated that Liberty Commodities had raised funding from Greensill against a $30 million bill for Trafigura, one of the world’s largest commodity trading houses. This means that investors in Credit Suisse funds should have received a return when Trafigura paid the bill.
However, Trafigura executives told bankers at Credit Suisse they did not believe this invoice was genuine, according to people familiar with the discussions. The warning came while Credit Suisse was in the middle of internal audit of the funds.
According to two people familiar with the matter, Credit Suisse executives then contacted Lex Greensill, the founder of the eponymous finance company, who explained that he believed there was a misunderstanding about what the money deposits represented.
Credit Suisse, Trafigura, Greensill Capital and Gupta’s GFG Alliance declined to comment.
The revelations about Trafigura’s interference come at a time when Credit Suisse’s level of due diligence on funds requires further scrutiny. A growing number of class-action lawsuits are gathering dozens of wealthy investors into the funds.
Bloomberg reported last week that the bank’s commodity trade finance division shared its concerns about Gupta with compliance officials after discovering that the money was being invested in bonds linked to its business.
theft reported in April that loans to Greensill Liberty Commodities were made on the basis of suspicious invoices. The UK’s Serious Fraud Office announced last month that it had done so I started an investigation in suspected fraud and money laundering at GFG, including its “funding arrangements” with Greensill.
GFG has denied any wrongdoing and pledged to fully cooperate with the SFO investigation.
at April letter Gupta explained to the Financial Times that Greensell had allowed his company to raise funding for a “potential client of Liberty Commodities,” as facilities from Greensell allowed for “future” or “future” receivables.
However, a document sent by Credit Suisse to fund investors in April shows that Liberty Commodities did not have a so-called “future receivables” facility, meaning the funding could only be raised against existing bills.
The December 2019 document, seen by the Financial Times, from GFG also states that Liberty Commodities has a regular “accounts receivable” facility, in contrast to the “future receivables” facility Greensell has provided for some of its industrial businesses.
The Financial Times previously reported that several European metal companies billed by Liberty Commodities deny doing any business with the Gupta Group. GFG has previously denied any wrongdoing in response to the FT’s reporting.
In contrast to these companies, Trafigura in recent years has had a multi-pronged relationship with Gupta, who began his career as a commodity trader before purchasing metal mills.
Apart from buying the metal from Gupta, the Commodity Trading House also introduced Part of a $350 million loan He supported his purchase of a French aluminum smelter in 2018.