Gupta and Greensill investigations are not enough

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The British love a survey. Consider the number launched in the Gupta-Greensill farrago and the related lobbying spillovers that have tainted the heart of the British establishment. It is therefore all the more surprising that there is no real investigation by the British authorities into this very British scandal.

So far, a lawyer-led investigation examines supply chain finance and lobbying; a select committee is examining how the Treasury responded to David Cameron, the former prime minister who was a paid adviser to Greensill, who funded Sanjeev Gupta’s empire. The commercial department will study the impact of the Greensill collapse on Liberty Steel, which is part of Gupta’s GFG alliance.

The Serious Fraud Office, meanwhile, remains silent in the face of growing indications that an investigation is warranted into the business practices of GFG and Greensill. To state the obvious, an investigation is about probing the facts and not an indictment of criminality per se.

The questions need answers, especially when Gupta seeks government support for Liberty, with 3,000 UK employees. The Financial Times has raised issues ranging from alleged bogus invoices provided by Gupta’s company to Greensill in exchange for cash, to domain names mimicking well-known business groups registered with a Gupta employee. Gupta has denied any wrongdoing. Greensill had no obligation to verify invoices.

The Bank of England forced Gupta’s Wyelands Bank to return customers’ deposits. The rest of the Gupta-Greensill architecture lies on the periphery of UK financial regulation. With broader powers, the OFS is the UK’s staunch fighter against any large-scale economic crime – frauds under £ 100million are not investigated much in Britain, a scandal in itself.

There may be a probe on the train. There are good reasons why not all SFO probes are public, such as concern over destruction of evidence. However, the German financial watchdog was not shy and filed a criminal complaint against the management of Greensill’s bank.

Even if the OFS gets underway, there is no guarantee that much will result from an investigation: this week its lawsuits against former Serco executives collapsed in trial. The OFS ‘mismanagement of disclosure meant the judge ordered jurors to acquit. Such unforced errors are unacceptable in an OFS front page case, eight years after it began investigating prisoner tagging contracts.

The UK’s ability to prosecute corporate crimes poses broader challenges. The OFS has yet to successfully prosecute an individual from a company who signed a deferral of prosecution agreement – in which he admits wrongdoing and is fined in exchange for deferral of charges – for the same allegations. Nine companies, including Tesco and Rolls-Royce, have signed such agreements.

In the only recent example of the OFS suing a large company for alleged fraud, when it sued Barclays over deals with Qatar during the crisis, his case also collapsed and individuals were acquitted. A committee is examining whether the centuries-old rules on corporate criminal liability should be changed. Right now, in cases that go beyond bribery and tax evasion, prosecutors must prove that a company’s “mastermind” was aware of the alleged crime. This is almost impossible in companies with multiple levels of control. This means that, perversely, the law more easily encompasses small businesses than large ones.

If the UK is to tackle the mountain of fraud predictions in the wake of the pandemic and government support, the OFS must improve its game and the government should give it the legal tools it needs to overtake the buttresses.

* This editorial has been edited to remove an incorrect statement that David Cameron was a member of the Greensill Board of Directors



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