Bloomberg
As Sanjeev Gupta Rose From Trader to Tycoon, Several Banks Backed Away
(Bloomberg) — British industrialist Sanjeev Gupta’s companies seemed to be prospering until his main lender, Greensill Capital, imploded last month. But long before Greensill collapsed, several banks had cut off the commodity trading business of Gupta’s Liberty House Group.Four banks stopped working with Gupta’s commodity trading business, starting in 2016, after they became concerned about what they perceived to be problems in bills of lading – shipping receipts that give the holder the right to take possession of a cargo – or other paperwork provided by Liberty, according to interviews with 18 people directly involved in the trades, as well as internal communications seen by Bloomberg News. The banks include Sberbank PJSC, Macquarie Group Ltd., Commonwealth Bank of Australia and ICBC Standard Bank. Goldman Sachs Group Inc. also stopped working with Gupta’s companies around that time.In 2018, Sberbank sent a team to scour the brightly colored containers stacked in the port of Rotterdam, looking for the ones full of nickel that the bank had financed on behalf of Liberty. Yet each time investigators located one of the containers, they found it had already been emptied, according to two people involved in the matter. After checking about 10 of them, they gave up, the people said. Sberbank confronted Gupta at a meeting weeks later. He promised that his company would pay back the roughly $100 million it owed, the people said.“At some point certain discrepancies were spotted within documentation and logistical data, which made Sberbank discontinue all operations with the company,” the bank said in an emailed statement. “The issue was settled in pre-trial format. Thanks to the existing control systems, we incurred no financial losses through these operations and managed to unwind all transactions in the spring of 2019.”GFG Alliance, which is made up of the companies controlled by Gupta and his family, including Liberty, said in an emailed statement sent by a spokesman that it refutes any suggestion of wrongdoing.“An internal investigation was conducted in 2019 by Liberty Commodities Limited (LCL)’s external legal advisors following enquiries regarding alleged rumours of double pledging,” GFG Alliance said in the statement. “The investigation found no evidence to substantiate the rumours, nor was LCL ever subject to further complaints or proceedings.”Double pledging is the practice of improperly raising funds more than once using the same collateral. As several banks dropped Gupta’s commodity trading unit, GFG Alliance came to rely more on Greensill Capital for loans – ultimately racking up debts of nearly $5 billion to Lex Greensill’s trade finance company by March 2021, according to a presentation seen by Bloomberg News. Gupta’s…
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