Education secretary Nadhim Zahawi was allegedly “instrumental” in helping failed financial firm Greensill Capital lend £400m of Covid loans that are now subject to a fraud investigation, it has been revealed
Greensill Capital, who collapsed in March last year and counted David Cameron among its employees, lent £400m of government-backed loans to Sanjeev Gupta’s GFG Alliance.
GFG is now under investigation by the Serious Fraud Office for its “financing arrangements with Greensill Capital”, after Gupta’s firm borrowed eight-times more than the scheme was supposed to allow.
The government has also cancelled its guarantees to underwrite the loans due to the breach.
The Financial Times revealed today that Gupta in 2021 wrote to Zahawi, then a business minister, to say he had been “personally instrumental in getting the British Business Bank’s approval for Greensill Capital to provide financial assistance under the [Coronavirus Large Business Interruption Loan Scheme] programme”.
The Department for Business, Energy and Industrial Strategy (Beis) said it “does not recognise the assertion made in Mr Gupta’s letter”.
A spokesperson for Zahawi said: “GFG’s request for assistance was referred to Nadhim by their local Labour MP [John Healey] and Nadhim explained to Sanjeev Gupta that requests would need to be directed through Beis officials.
“The claim that Nadhim was instrumental in securing approval is little more than flattery from GFG in an overwritten letter from their PR team.”
David Cameron became engulfed in scandal last year when it emerged that he had unsuccessfully lobbied cabinet ministers and Whitehall officials to try and get Greensill approved to receive emergency funding through the Bank of England’s Covid Corporate Financing Facility.
The scheme saw the Bank inject hundreds of millions of pounds in investment grade firms at the start of the pandemic.
Greensill Capital was, however, chosen as an approved lender for the government’s Coronavirus Large Business Interruption Loan Scheme.