After my first run-ins with Lex and Credit Suisse, I became more methodical. Every time Credit Suisse published documents related to the supply chain finance funds, I would read through them thoroughly, call round my well-informed sources and check what other information was available to the public. And then I would call Credit Suisse with a list of questions.
Mostly, these were focused on the ‘obligors’ – what bankers call the companies to which they make supply chain finance loans. Just to be clear, Greensill would often dispute that these were loans at all – they would make the case that they had paid some invoices on behalf of a client and that the client then had to pay them back. They hadn’t directly loaned funds to the client at all, they would insist. But, in the real world, in terms that any normal human would understand, the client owed money to Greensill. Most people would understand that it was a loan. I guess ‘obligor’ is a reference to the client’s obligation to repay the funds.
At Credit Suisse, the portfolio managers had to publish – every six months – detailed information about the performance of the funds and the loans they held. This information was often delayed, so that by the time the information was public, it might be several months out of date. It wasn’t perfect, but it was a good place to start. They also published monthly summary updates about the funds. These were much timelier, although they were also less detailed. They showed who the top ten obligors were, based on the proportion of the funds loaned to each of them. You could work backwards to figure out how big the loans were. These monthly updates also showed which were the biggest insurance companies providing coverage to the funds.
Some of the obligors were huge, well-known companies that you’d expect to find in big supply chain finance programmes run by traditional banks – the likes of Coca-Cola, Vodafone or General Mills. Others were not. Some of them were start-up businesses themselves, with little to no cash flow. Some were other small trade finance businesses that offered a service similar to Greensill. Others were tiny companies that had a personal connection to Lex. Why did any of this matter? Because this wasn’t Lex’s money. It was money that Credit Suisse’s clients had entrusted to the bank, and which the bank had handed over to Greensill.
Some of these loans, I asked about time and time again.
One that drew my attention early on was the loan to Atlantic 57 Consultancy. This was the same British Virgin Islands company that I had seen in the GAM funds. It was the vehicle through which the businessman Andy Ruhan had held a disputed stake in a Manhattan skyscraper.
Ruhan himself had several links to Lex over the years, through his stake in the predecessor to Greensill Bank, for instance. Greensill had allocated about $30 million of Credit Suisse’s clients’ money to Atlantic 57. It was clear Lex had used money from Credit Suisse to buy this loan out of the GAM funds. Not long after I asked Credit Suisse about Atlantic 57, the loan disappeared out of the funds – later, when Greensill’s business had collapsed, I found documents showing it had been moved to Greensill Bank. This was a loan that never got paid back. Lex just shuffled it from one fund to the next.
Some other loans just didn’t look like supply chain finance at all.
Primevere, a subsidiary of the UK retailer Shop Direct, was loaned about £80 million out of the funds. Its published accounts, listed on Companies House, said, ‘The principal activity of the company is the ownership management of an investment property in the East Midlands that is currently under construction.’ The Credit Suisse funds were paying for the construction of a warehouse. That might be a perfectly reasonable project to lend money to, but it’s not supply chain finance. It has a different risk profile and the lender should charge a different rate for the loan.
The Food Revolution Group, a loss-making juice company in Australia, received a loan of A$9 million. Its accounts referred to a ‘working capital and term loan facility’ from Greensill which ‘has no maturity’ – in other words, it was not a supply chain finance loan.
There were other obligors that just struck me as outright odd.
Greensill loaned more than £60 million from the Credit Suisse funds to various related entities loosely aggregated under the banner of the Catfoss group, a mini conglomerate of small businesses run out of the north of England. These were the companies introduced by Neil Hobday, the former associate of Andy Ruhan. One of the Catfoss companies managed a loss-making waste-processing plant in Gateshead in the northeast of England. Others dealt in modular buildings used at NHS hospitals. Another affiliated company called CHBG Limited was loaned about £15 million just weeks after it was incorporated. I found out later that Catfoss was frequently one of the biggest sources of revenue for Greensill in any given quarterly reporting period. By 2018, Catfoss was Greensill’s third-biggest single client by revenue. Greensill recorded about $20 million in revenue from Catfoss. In practice, though, it was less clear that Catfoss was such a great client. Staff at Greensill were constantly concerned that the firm couldn’t pay back the loans Lex had made to the company. Often it seemed like when one loan came to an end, it was simply replaced with a new one. At the same time that Lex Greensill was claiming Greensill was a multibillion-dollar business with relationships with some of the biggest companies in the world, the company was in fact getting a major slice of its revenue from an obscure company called Catfoss.
Another strange borrower was R.W. Chelsea Holdings, the umbrella company for the UK- and Cyprus-based Chelsea Group, a collection of businesses that mostly provide security services in dangerous environments. The company sprang out of something called Hart, a private military-style security business started by Richard Bethell, the 6th Baron Westbury. Bethell is a former officer in the Scots Guards and the Special Air Service, the British special forces. He hit the gossip pages of UK tabloids in 2018 when the lawyer Cherie Blair, the wife of former prime minister Tony Blair, represented him in court after he was evicted from a multimillion-pound villa he was renting in Cyprus.
Chelsea Holdings had started out as a private military contractor providing protection to businesses in the Horn of Africa and other hotspots. Over the years, it had expanded into other security-related services such as crisis management for kidnap or extortion situations, or private security on board private jets. It also runs a secure accommodation camp at an airport in Mogadishu, Somalia, known euphemistically as ‘Chelsea Village’. The company also runs a similar facility at an airport in Afghanistan.
The Credit Suisse funds loaned Bethell’s business about $12 million. Like many of the other loans, this was rolled over, month after month, quarter after quarter.
Another obligor that stood out was Special Needs Group, a small company based in Chester, whose website said it provided ‘bespoke, personalised services, including digital and finance solutions for school-age students who have learning disabilities . . .’ Special Needs received about £9 million from the funds. The loans seemed strange. The company’s accounts appeared to show that it was only starting up – there was not yet much of an ongoing business to speak of. Also, some of the loans appeared to relate to a property, not supply chain finance. When I asked Lex about this loan, he responded by asking, didn’t I think it was a good thing to support a school for children with special needs? This was hardly the point – and nor did I think Lex was lending out money for charitable reasons. Bloomberg News later showed that the owner of the company, a lawyer named Barnabas Borbely, was Lex Greensill’s neighbour.
Yet another odd obligor was Kerry Leeds Investments. The Credit Suisse documents showed this company had received about £13 million pounds from the funds in late 2019 or early 2020. The documents also showed that the money didn’t have to be paid back until 2023 – that’s a much longer period than normal for supply chain finance. When I dug into it, there were further twists. Kerry Leeds had previously been called MIS Motorsport, which was a tiny specialist insurance business that offered coverage for race and rally car drivers. The company’s sole director was Dermot Hanafin – cousin of Sean Hanafin, one Greensill’s top executives. Its accounts, filed at Companies House, showed no balance sheet and no profit. Tracing Dermot Hanafin and the business links, I came across another company called Kerry Ireland Investments. Companies House documents showed that this company was only set up in 2019, and that Greensill Capital had a claim on all its assets (though there was little evidence the company had any assets to speak of).
Later, in September 2021, Credit Suisse published a document that showed the Kerry Leeds loan was still outstanding, months after the funds had collapsed. The same document showed that another company called Laidir owed about $12 million to the funds too – Laidir also deals in specialist insurance, including motorsport, and shares senior management personnel with Kerry Ireland Investments. Credit Suisse continued to refuse to talk to me about these entangled loans.
There was nothing to suggest these loans to companies like Special Needs, R.W. Chelsea and Kerry Leeds were improperly handled. It’s not uncommon for finance firms to deal with other businesses within their personal networks, especially if potential conflicts are out in the open. But even if you assumed these loans were all above board, they were a million miles away from the big business, blue-chip supply chain finance programme that Credit Suisse promoted to its clients. Some of the loans were more like small business lending, or even venture capital-style investments in start-up companies.
There were so many odd loans. At times, I’d limit my questions for Credit Suisse and Greensill to just a handful, in order to make the whole process more manageable, so they couldn’t use the volume of information I was asking about as an excuse not to respond. Often the result was disappointing, nonetheless. Greensill would say that they couldn’t comment on the funds, as that was Credit Suisse’s purview. Credit Suisse would say they couldn’t comment on individual obligors.
One group of obligors I came back to over and over were the other finance companies that seemed to operate in the same space as Greensill itself. These included Tower Trade Group – which was connected to BSi Steel – and another related company called Deal Partners. Between them, they received tens of millions of dollars of Credit Suisse’s clients’ money. This was the same group that Lex had worked with way back at the start of Greensill Capital in a series of deals that had often turned sour.
There were various links between directors and other senior management at BSi, Tower Trade and Deal Partners. These were easy to prove. Charles Reynolds, the Swiss-based South African trade finance veteran bridged Tower Trade and Deal Partners, where he sat on the board. Rob Barnes, the former PrimeRevenue chief was also there at the founding of both companies. There were other senior managers and directors who worked for Deal Partners and Tower Trade. The accounts of BSi referenced loans with Tower Trade and their various joint ventures. Though there was no indication in the Credit Suisse funds of the connection, it was clear this group of companies was very closely related.
There had been a gap of a few years when Greensill and Tower Trade didn’t do any business – the Tower Trade team felt that Lex had gone stratospheric after the injection of money from General Atlantic, and that their business was no longer a major partner. There were no Tower Trade, Deal Partners or BSi transactions funnelled through GAM and Haywood. But that changed once Lex had the Credit Suisse funds to play with. He had more money and needed more obligors. The group of people connected to Tower Trade had originated deals for Lex in the past and he returned to them again.
There had been personnel changes at Tower Trade. The CEO was now Tom de la Rue, scion of the famous money printing dynasty and formerly Prince Harry’s commanding officer in the Army Air Corps. No longer flying Apache attack helicopters, de la Rue was forging a career in working capital financing. The royal connection, the military past, the establishment heritage – de la Rue was exactly the kind of person Lex loved to have in his network. By the time I started looking at Tower Trade, the connection to Greensill clearly ran deep. On Tower Trade’s website, the articles that appeared under the heading ‘Latest News and Insights’ were all cut and pasted from news releases on Greensill’s own website. It was as though Tower Trade itself was a subsidiary of Greensill.
Tower Trade, Deal Partners and BSi combined were getting something like $80 million of financing from the Credit Suisse funds. My sources told me that the companies never had any contact with the Swiss bank and there was no documentation linking them to Credit Suisse either. Their relationship was with Greensill Capital.
When I got in touch with the CEO of BSi, William Battershill, he replied that Greensill had been a ‘valued and trusted funder’ for the past ten years, and that all the financing went through the Tower Trade platform. I was able to find out that Tower Trade itself worked with a variety of obligors in places like Singapore, the Middle East and Monte Carlo.
At Deal Partners, the picture was even murkier.
When I first tried to contact executives there, one of them responded by email in a way that was highly unusual in my experience as a journalist. The source wrote back saying: ‘You’re asking a lot of questions and we have not met, if you want to win a Pulitzer prize, it does not come for free!’
The source said they knew Lex, Tower Trade and Deal Partners, and said they could tell me a lot about how it all fitted together. But they added, ‘I trust you understand, there are no free lunches in the world of financial services.’
It wasn’t the last time someone I contacted for this story asked for money in return for information. It would have been a huge breach of ethics to have gone along with a request like that and I immediately declined. Still, there was plenty of information to be gleaned if you kept digging.
Deal Partners was set up in 2011 as an Enterprise Investment Scheme (EIS) – a type of tax-efficient investment vehicle typically sold to wealthy people in the UK. Investors in EISs benefit from tax breaks because the schemes take their money and provide financing to sectors that the government wants to boost, such as small businesses. The tax relief is available on investments up to £1 million per year and the investors typically must leave their money in the scheme for several years.
A minimum stake in the Deal Partners EIS was £50,000, and the money had to be parked there for a minimum of three years. Investors were told they’d make upwards of 6 per cent a year. By 2018, Deal Partners accounts showed it had raised about £8 million from a few dozen investors.
Deal Partners’ management said they used the funds to finance trade between small and medium businesses. In more candid moments, though, the management team at Deal Partners told colleagues and acquaintances that the company operated as a kind of safety net for underperforming assets in Tower Trade – loans that were not getting paid back on time could be shifted into Deal Partners where they would, in theory, be restructured into longer-term borrowings. But Deal Partners had failed to return anything like what was promised. Defaults were much higher than expected. A lot of the investors were deeply unhappy. At a shareholder meeting, Reynolds promised they could wind up the company and return their funds in 2019.
But that’s only a part of the picture. The Credit Suisse fund documents showed that Greensill had loaned Deal Partners more than $50 million in financing – as much as ten times its annual revenue. It was an extraordinary sum, especially as the company’s auditors had issued a qualified audit report citing concerns about £2.9 million in debts that were overdue and might not ever be collected.
Greensill had registered a charge over all of Deal Partners assets, meaning Greensill would own Deal Partners if it defaulted on the loan payments. The Deal Partners charge document also linked the Greensill funding to a separate transaction altogether, a 2018 supply chain finance deal that Greensill had arranged involving the sale of tens of millions of dollars’ worth of mobile phone handsets from Chinese telecoms companies Huawei Technologies and ZTE to a Malaysian business called UMobile. The two Chinese firms are quite well known, not least because they operate under sanctions by US authorities, who allege that both represent a national security threat.
When I asked Credit Suisse about this obligor, they rebuffed my questions as usual. Greensill said in an email that ‘the involvement of Deal Partners in this transaction was because they are well placed to manage contracts where tangible inventory is involved’ and noted that UMobile had met all payments.
But there was more to it. My sources told me that Deal Partners had provided a way for Greensill to repackage the Chinese-Malaysian deals so that they could be stuffed into the Credit Suisse funds. The underlying SCF loans with the Asia-based companies were for several years. But Greensill reprocessed the loans through one of its own special purpose vehicles (SPVs) and through Deal Partners to make the debt look like short-term financing. In return, Deal Partners was paid a service fee by Greensill. There was no way investors in Credit Suisse’s funds could have been expected to know this. None of this ever appeared in Deal Partners’ accounts – their shareholders were oblivious to the notion that documentation at Credit Suisse showed their company had borrowed $50 million from the Swiss bank’s funds.
Deal Partners eventually filed for administration in 2021. A report produced by the company’s administrators said that several of the companies that had been loaned money by Deal Partners were unlikely to repay their debts, including a Spanish clothing company and a South African shoe manufacturer. Each had borrowed millions of pounds and both were now out of business. The administrators estimated that only about 10 per cent of the total amount Deal Partners had loaned out could be recovered, and that would be swallowed up by fees associated with the winding up, outstanding tax bills, staff costs, and paying off other creditors to the company – including Tower Trade, which was owed more than £400,000.
Tellingly, the administrators’ report also included several years of balance sheets. At no point was there a loan from Greensill or Credit Suisse of $50 million, or anything like it. The administrators also noted that Greensill Capital had registered a charge over Deal Partners’ assets, but that they didn’t believe Greensill was owed any funds.
The whole Tower Trade/Deal Partners set-up was dizzying. It was also completely at odds with the super-safe, steady investments that Credit Suisse pitched to its clients. It represented layer upon layer of complex transactions, which ended up with loans to sanctioned companies or tiny offshore entities that didn’t pay back what they had borrowed. There was also nothing in the Credit Suisse fund documents to show that Tower Trade, Deal Partners and BSi were all entangled with one another.
One of the biggest black holes of all was in the so-called ‘multi-obligor programmes’. These were described as packages of financing to different obligors. In all cases, they were named after areas or streets in or around Bundaberg, where Lex grew up – a reflection of how much Lex was still involved in the details of the business. There was Rasmussen, Seaview, Rehbein, Fairymead and Bingera – all of them would be known to the Bundaberg townsfolk. At Credit Suisse, they added up to hundreds of millions of dollars of additional financing. And though the documentation suggested it was for a varied group of obligors, in fact the lending in these programmes was often tied to a single business – most of those businesses were part of the Gupta Family Group (GFG) Alliance.
I was building a clearer picture of Lex’s business. While Lex claimed to have relationships with massive global businesses, in fact he was making dozens of loans to a collection of friends, family and assorted acquaintances. Many of them were much riskier businesses than the supply chain finance funds that he purported to lend to. And many of the loans were long term, not short term. Some of the loans were more like equity investments that the recipient was never expected to pay back.
IN SEPTEMBER 2019, I flew to Zurich to meet with Credit Suisse’s head of fixed income, Luc Mathys, and the portfolio manager running the Greensill funds, Lukas Haas. It was a warm, sunny day on Paradeplatz, the small square where the bastions of Swiss banking are headquartered. Compared to the giant, monolithic offices of the big banks in New York or London, the Swiss banking headquarters seem incredibly parochial and far less busy. It’s a cosy, hushed world.
Inside the lobby of the bank’s offices, I was met by a media relations person I had talked to many times before. My footsteps echoed down the marble corridors as we made our way to a meeting room. In addition to coffee, there was a bowl full of tiny Swiss chocolates.
Mathys and Haas arrived a few moments later. It was clear they didn’t want to be there and couldn’t seem to understand why they should spend any time explaining themselves to a lowly reporter. Mathys huffed and puffed through our meeting. I found out later that they had wanted the bank to sue us to try to stop us writing any stories about the funds.
As soon as we sat down, they asked that we treat certain answers to my questions as off the record, meaning I couldn’t attribute what they said to them in any stories. It is a standard though annoying practice among big corporations, especially for difficult interviews. Typically, the executives and PR people say it helps them talk more freely without worrying about getting minor details wrong or breaking any promises of client confidentiality. Often, they’re just trying to avoid being held accountable for what they tell us.
In this case, Haas and Mathys hardly gave me any answers to a series of questions. I asked why they had bought assets from the collapsed GAM funds and I pointed to the Atlantic 57 loan to Andy Ruhan, which was right there in the Credit Suisse documents. I asked why the funds invested in a series of small businesses with very little money, or none at all, that were personally connected to Lex Greensill. I asked about the loans to Gupta and to Catfoss and to Baron Westbury and his bunch of ex-UK Special Forces operatives and former mercenaries. I asked about the loans to Tower Trade and Deal Partners.
I also asked why so much of the trade credit insurance that protected the funds from defaults was provided by a relatively small Australian insurer called Insurance Australia Group (IAG). About 40 per cent of the insurance came from a unit of IAG known as The Bond and Credit Company (TBCC). Again, they declined to comment, although I was able to write a story a little later saying the bank’s executives planned to implement a new policy that would limit the amount of coverage provided by a single insurer to just 20 per cent.
Still, I quickly realized the interview was pointless. There was nothing to report even off the record, as the two bankers essentially refused to engage with my questions. Mathys looked as if he might explode with rage, and Haas, who was more nervous, smirked and mostly ‘no commented’ his way through the interview. My sense was that I may have known more about what was in the funds than they did.
There was plenty of evidence that the bank wasn’t really managing the funds at all. Credit Suisse hardly even hid that fact – a presentation to investors said all the loans met certain predetermined requirements for eligibility, but that the Swiss bank’s portfolio managers did not ‘exercise full discretionary investment management duties’ in respect of the loans.
Fund documents were frequently strewn with errors. At one point, I asked a Credit Suisse spokesperson why all the loans mentioned in an investor update document appeared to mature on the same date. The bank promptly yanked the document off its website and told me the dates were wrong. I took this to indicate a really sloppy attitude from the bank’s managers, who were supposed to be running the funds but in fact were delegating almost all that work to Greensill.
Crucially, Haas and Mathys returned time and again to the idea that the steady performance of the funds and the money flowing in was sufficient evidence that there was nothing wrong. But this was a flawed explanation. Money was flowing in because Credit Suisse’s bankers encouraged it to flow in. Performance was steady because the funds didn’t have to recognize when loans went bad – instead, they could just roll the loan over. It was a kind of ‘extend and pretend’ approach.
More than one Credit Suisse executive later told me it was the definition of a Ponzi scheme.
The only way the funds would be forced to show their true performance was if investors withdrew so much money, so quickly, that Greensill would have to liquidate its assets, revealing which loans had gone bad or could not be repaid in a hurry. Under any other circumstances, so long as money kept rolling in, Lex could write up whatever performance he wanted.
So long as the money kept rolling in.