Accounting watchdog launches probe into the auditors of Greensill Capital and Sanjeev Gupta’s bank
The accounting watchdog has launched investigations into the auditors of collapsed lender Greensill Capital and the bank owned by troubled tycoon Sanjeev Gupta.
The Financial Reporting Council (FRC) has opened a probe into Saffery Champness, the UK’s 13th-largest accountancy firm, over work it did on Greensill Capital’s 2019 accounts.
The regulator is also investigating Big Four beancounter PwC for its audit of Gupta’s Wyelands Bank.
The Financial Reporting Council has opened a probe into Saffery Champness, the UK’s 13th-largest accountancy firm, in relation to the work it did on Greensill’s 2019 accounts
Wyelands was forced to close down earlier this year after the Bank of England raised concerns about its lending practices with the Serious Fraud Office (SFO).
As well as being owned by Gupta, Wyelands lent substantial amounts of money to companies connected to the 50-year-old businessman.
The latest FRC probes come as regulators’ nets close in on Gupta, his business associate Lex Greensill, and the web of firms connected to them.
The SFO confirmed earlier this year that it was ‘investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct’ of Gupta’s business network the GFG Alliance, of which Liberty Steel UK is a part.
Greensill Capital, founded by Australian banker Greensill, was a major lender to Gupta’s empire but collapsed earlier this year after several insurers withdrew their cover for the loans.
The implosion has left GFG Alliance teetering on the brink of administration, throwing uncertainty over thousands of jobs in Britain’s steel industry.
Greensill counted former prime minister David Cameron as an adviser, and its fall from grace has raised questions about just how much access the lender was given to the top levels of government.
The firm had agreed with Saffery Champness last year that its ballooning size and complexity meant it had outgrown the auditor’s services.
But several major accountancy firms including Deloitte, KPMG and BDO declined to take on Greensill as a client due to conflicts of interest or reputational concerns, the Financial Times reported.
Wyelands, named after the Welsh country estate which Gupta owns with his wife Nicola, was audited by PwC for the year to April 2019. But the beancounter resigned that November, blaming a potential conflict of interest.
Mazars took over, but in Wyelands’ most recent accounts for the year to April 2020, the auditor said difficulties in identifying transactions between the bank and parties related to Gupta posed a ‘significant risk’.
A Saffery Champness spokesman said the business would co-operate fully with the FRC, and added: ‘Audit quality is an absolute priority for Saffery Champness and we are committed to upholding the high professional standards our clients rightly expect.’
A PwC spokesman said: ‘It’s understandable that there is regulatory scrutiny in situations like this. We will co-operate fully with the FRC in its inquiries.’
- The boss of Liberty Steel UK will leave this week in the latest shake-up of the stricken empire of Sanjeev Gupta. Steel industry veteran Jon Ferriman only took over as UK chief executive a year ago. Since then he has been in charge of steering the firm through the pandemic. He also had to manage the fallout from the collapse in March of Greensill Capital.