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Greensill Capital charged an “unreasonable and excessive” fee for arranging financing for NHS building projects and deliberately avoided disclosing this fact, according to the collapsed company’s main insurer.
Australian insurance agency Bond & Credit Co arranged $10bn of coverage for Greensill, which specialised in supply chain finance and collapsed into administration in 2021 after its insurance expired.
BCC, which is owned by Japanese group Tokio Marine, has targeted the “commercially unsupportable” fee in its latest filing in Australian court proceedings that bring together a series of insurance claims by Greensill investors who lost billions of dollars.
Greensill’s insurers, which include BCC’s former parent Insurance Australia Group, Tokio Marine and Zurich are refusing to pay out on the company’s credit cover.
BCC has argued that Greensill “fraudulently misrepresented” material matters and its insurance is therefore void.
In a recent filing, seen by the Financial Times, BCC argues Greensill was responsible for “misrepresentations and non-disclosures” in relation to financing for Catfoss, a company engaged in building projects at NHS hospitals in Derby, Dorset and Essex.
According to BCC, Catfoss paid Greensill a £10.4mn structuring fee for the financing, which was “in excess of any fee that would be negotiated by parties in a bona fide arms’ length relationship”.
BCC also said the “disproportionate” fee had been paid out of a lending facility that only amounted to £15.3mn.
It also alleges Lex Greensill, founder and CEO of the business, presented the facility as short-term supply-chain financing, while in reality it was working capital financing with terms of “up to two years”.
In one case, Greensill was “continuing to advance funds . . . and seeking insurance for those advances, even though the relevant NHS Foundation Trust project had been completed in January 2019”, the filing states.
The material was included in an annexe that BCC is using in multiple Greensill legal proceedings, including a case brought by investment firm White Oak, which is suing insurers in London and Australia over losses on loans arranged by Greensill.
Greensill’s involvement in a number of financing schemes linked to the NHS fuelled the political furore surrounding its collapse in 2021. Former UK prime minister David Cameron was an adviser to the business.
Catfoss is part of a network of companies connected to UK businessman Andrew Foreman. Earlier this month, Foreman finalised an individual voluntary arrangement, an individual insolvency process that allows for the repayment of creditors over time. In the past nine months, a number of his businesses have been placed in company voluntary arrangements, a form of corporate insolvency.
“Since the Greensill collapse it has been the most horrendous 2.5 years of mine and my family’s lives,” Foreman wrote in a letter to a group of his creditors this month.
“But with the support of the CVAs and IVAs this is allowing me and my family to try and recover the best possible return for all parties.”
Tokio Marine, White Oak, IAG and a spokesperson for Lex Greensill declined to comment. Foreman said he had no additional comment.