Monday, February 5, 2024

Zurich accuses Greensill administrators of fraud in new legal battle


Zurich accuses Greensill administrators of fraud in new legal battle


Switzerland-based Zurich Insurance Group Ltd. has filed a £320 million ($404 million) defense and counter-claim against the now collapsed supply chain finance firm Greensill Capital Pty Ltd., and its administrators, alleging that it was a victim of a fraud, The Guardian reported. Zurich has drawn Greensill’s founder Lex Greensill, metals magnate Sanjeev Gupta and three of his businesses, part of the Gupta Family Group Alliance, into the battle.

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 Photograph: Oli Scarff/AFP/Getty

Insurer Zurich claims it is victim of fraud involving Greensill and Sanjeev Gupta

Company draws Greensill Capital founder and Gupta’s Liberty businesses into case at high court in London

The Swiss insurer Zurich alleges it has been the victim of fraud in a counter-claim in London over the demise of the Greensill business empire, drawing the financier Lex Greensill and the metals magnate Sanjeev Gupta into a £320m court battle.

Zurich Insurance Company was last year sued in the high court by the administrators of Greensill Bank, which entered German insolvency proceedings in 2021, in a dispute over trade credit insurance.

In its defence and counter-claim, dated 26 January, Zurich alleges that the claims against it arise out of a “fraudulent scheme” involving Lex Greensill, Greensill Capital UK, Sanjeev Gupta and three of Gupta’s Liberty businesses – part of the GFG Alliance – court filings show.

A spokesperson for Lex Greensill said he “wholly rejects” allegations that were without foundation and which would be “robustly addressed” in his defence and any counterclaims.

A GFG Alliance spokesperson said: “GFG Alliance was not involved in any insurance arrangements which Greensill had in place and any attempt to link us to the Greensill insurance is misplaced.”

The 2021 collapse of Greensill, whose Australian founder received a British state honour in 2017 and which once counted David Cameron, now foreign secretary, as an adviser, sparked a raft of litigation and criminal and regulatory investigations.

Zurich alleges that deliberate or reckless misrepresentation and non-disclosures entitled it to avoid insurance policies, refuse claims and deny requests for any return of premiums paid, the court filing showed.

Its allegations include that accounts receivable purportedly being sold by Liberty to Greensill Capital were not genuine, that a Receivables Purchase Agreement was a “sham” and that it was not told that Greensill Bank was under investigation in Germany or about the “true nature” of the business between Greensill and Liberty.

“Each of the said non-disclosures was committed by Mr Greensill in deliberate or reckless breach of GBAG [Greensill Bank] and GCUK’s [Greensill Capital’s] duties of fair presentation,” Zurich alleged in the filing.

Greensill, a specialist lender, pledged to help clients manage their finances by paying the bills they owed suppliers – in effect lending them money – while taking invoices from their suppliers as collateral, known as supply chain financing. The loans were repackaged into bonds and sold to investors.

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Greensill foundered in 2021 after its main insurer stopped providing cover for billions of dollars of debt in portfolios it had created for clients including the Swiss bank Credit Suisse.

Greensill’s largest client, Gupta’s GFG Alliance, has been under criminal investigation in Britain since 2021 for suspected fraud and money laundering in an matter that includes its financing arrangements with Greensill Capital. GFG has consistently denied any wrongdoing.

Should Zurich be found liable in court under its policies, it is claiming a corresponding entitlement against Greensill, Gupta and their companies under its counter-claim.