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Bloomberg

One Credit Suisse unit blacklisted Gupta while another funded it

(Bloomberg) – Executives at Credit Suisse Group AG have ignored warnings from colleagues about ailing steel tycoon Sanjeev Gupta as they funneled $ 1.2 billion in client funds to his companies, according to reports. people familiar with the matter. Liberty Commodities Ltd. of Gupta in 2016 because they suspected some of his transactions were not legitimate, people said. When they learned about two years later that the bank was lending to its businesses through a series of investment funds, which eventually reached $ 10 billion, they reported their concerns to compliance leaders and of the division that housed the loans, one of the people said. The disclosure that Credit Suisse could have put its clients at risk despite internal concerns about Gupta’s business adds a new twist to the debacle stemming from the March implosion of Greensill Capital, the finance firm at the center of the crisis. tripartite relationship. The UK Serious Fraud Office is currently investigating Gupta’s group of companies for suspected fraud, including in its funding deals with Greensill, according to a May 14 statement. Credit Suisse has filed a lawsuit to force Gupta’s Liberty Commodities into insolvency and has since shut down the funds that made the loans and launched an internal investigation. “We are currently focusing our efforts on getting our investors’ money back,” said Will Bowen, spokesperson for Credit Suisse in London, in an emailed statement, adding that the bank’s internal investigation is ongoing. will focus on “all matters” related to funds. “We are committed to learning lessons and will share relevant lessons learned when appropriate.” Andrew Mitchell, a spokesperson for the Gupta Family Group Alliance, or GFG Alliance, a collective of Gupta-related companies including Liberty Commodities, has denied everything The Greensill saga is just one of two disasters that have rocked the Credit Suisse in the first half of 2021. Since Greensill began to collapse, the bank has announced a blow of $ 5.5 billion following the explosion of Archegos Capital Management. Shareholders and his successor Antonio Horta-Osorio, who arrived at the end of April, have promised a thorough strategic review; chief executive Thomas Gottstein, who headed the trade finance division, was unaware of the concerns internal. about Gupta who had pushed the bank to shut it down, according to a person familiar with the matter. the buying and selling of commodities, severed ties with Gupta in 2016 after becoming skeptical of its Liberty commodities, people said. They are wary of documents provided by the company, which raises doubts about its transactions, they said. In an example reported by Bloomberg, the company presented to another bank what appeared to be duplicate shipping receipts. Credit Suisse’s commodities team had stopped working with Gupta after identifying suspicious shipments while the bank’s credit structuring team lobbied against Greensill funds, the Wall Street Journal reported in April. . Switzerland as a loan guarantee in 2013, but by early 2016 all of those commitments had been extinguished, indicating that the funding relationship had ceased, according to documents filed by the UK Companies House. And while Gupta’s company cited the Swiss bank as one of its lenders in its 2014 annual report, it did not do so in the following year’s report, dated May 2016, according to the documents filed. . and Sberbank PJSC, halted trading with Liberty Commodities at around the same time due to similar concerns; Goldman Sachs Group Inc. also shut down in 2016, Bloomberg reported. Nevertheless, executives of Credit Suisse’s asset management division – which creates investment products for clients and charges fees for their supervision – have started to organize a series of supply-oriented funds. in 2017. The entities purchased securitized loans packaged by Greensill, a company created by Australian businessman Lex Greensill. Much of the debt was linked to Gupta’s operations. Warnings Commodity trade finance unit officials were concerned when they discovered the funds’ links to Gupta and expressed their fears to Thomas Grotzer, General Counsel of the Swiss Division of the Bank. They also warned Luc Mathys and Lukas Haas, the bankers who helped oversee transactions within the asset management unit. He did not respond to requests for comment. Mathys, head of fixed income in the asset management division, and Haas, portfolio manager, were put on temporary leave in March. The bank did not respond to requests for comment. The bank sued the funds and marketed them to investors as short-term debt secured on invoices, assets deemed so safe that Credit Suisse attributed to the bank. larger carries its lowest risk score. Yet some of the loans were tied to simple possible future income. Other parts of the bank also continued to work with Gupta. Credit Suisse investment bankers were due to conduct an initial public offering for Liberty’s US steel arm, which was ultimately pulled, according to a company statement. Gupta also announced that the Swiss bank would finance its plan to acquire the steel unit of Thyssenkrupp AG, which collapsed earlier this year. much of it will eventually be returned to investors. Gupta’s business loans are among a bundle of debts that are “the main sources of valuation uncertainty,” the bank said earlier this month. Liberty Commodities outside legal advisers have investigated “suspected rumors of paperwork” used in 2019, according to Mitchell, a spokesperson for the GFG Alliance. They found no evidence to back up the rumors, and the company has “never been the subject of any further complaints or proceedings,” he said. “The trade finance market has been extremely difficult for everyone except the largest commodity traders in recent years. However, no financial institution was left behind as a result of the loan of money to LCL. On the contrary, they received substantial commercial returns.



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