German prosecutors have initiated criminal proceedings against three former executives of the collapsed Greensill Bank, alleging their actions directly led to the lender's failure in 2021.
Charges of Fraud and Misrepresentation
The Bremen public prosecutor's office announced on Wednesday that it had filed charges against three unnamed individuals for crimes related to bankruptcy and the deliberate misrepresentation of the bank's financial health. Two of the accused were former members of the bank's management board, with the third serving on its supervisory board.
Central to the case is a €2.2 billion (approximately £1.9 billion) refinancing deal in 2019 for steel plants owned by the Gupta Family Group Alliance (GFG). Prosecutors allege the trio circumvented vital banking regulations to facilitate this loan to the financially struggling industrial group, led by metals magnate Sanjeev Gupta.
The Deal That Broke the Bank
The prosecutors claim the accused falsely presented the high-risk loan transaction in the bank's 2019 accounting records as a "low-risk and regulatory-compliant receivables purchase programme." This alleged misrepresentation is seen as a key factor that precipitated the bank's insolvency two years later.
It is understood that Lex Greensill, the Australian founder of the wider Greensill Capital finance empire, is not among those charged in this specific German case. Greensill Bank was based in Bremen, northern Germany.
Wider Legal and Industrial Fallout
The German charges add a significant new front to the extensive legal aftermath of the Greensill collapse. Separately, the UK's Serious Fraud Office has been conducting an investigation since 2021 into suspected fraud and money laundering concerning GFG Alliance companies and their financing arrangements with Greensill Capital UK.
The prosecutors noted that GFG companies themselves are not involved in the German proceedings. However, the bank's failure caused severe turmoil for Gupta's global industrial network, which lost crucial funding. Sanjeev Gupta has since lost control of multiple metals businesses worldwide, including operations in France, Australia, and the UK.
In the UK, the High Court placed Speciality Steel UK into administration in August, leading the government to intervene to operate several steelworks in South Yorkshire. A spokesperson for GFG Alliance declined to comment on the latest German charges.
