FT Film (2021) ¦ Greensill, Gupta and Cameron: what went wrong

Greensill, Gupta and Cameron: how hype, opaque finance and political access produced a crisis

Greensill Capital promised to transform a dull corner of finance into a high‑tech, high‑growth business. Founded by Lex Greensill, who used a compelling personal story to sell his vision, the firm marketed supply‑chain finance as a way to make working capital more accessible to small suppliers. The basic mechanics were straightforward: a supplier sells goods, a buyer delays payment, and a financier — traditionally a bank — advances cash against the invoice and charges a fee. Greensill repackaged this age‑old practice with talk of machine learning, AI and fintech, and attracted high‑profile venture capital and sovereign investment, which magnified expectations and scale. What differentiated Greensill was not the originality of the product but the force of its salesmanship and its willingness to back unconventional credit. Investors injected significant capital, treating the firm like a technology success story rather than a conservative lender. That endorsement, coupled with Greensill’s flair for access, opened doors in government and financial markets. The firm then increasingly converted invoice finance into tradable securities — notes — which it sold into funds managed by third parties, spreading risk across sophisticated investors and retail channels.

Gupta’s industrial empire and financial engineering

Sanjeev Gupta’s GFG Alliance grew rapidly by buying ageing steel and metals plants around the world and promising job preservation and greener operations. Much of that acquisition drive was financed by Greensill. Where mainstream banks hesitated, Greensill found ways to supply liquidity — sometimes structured around invoices that were routine, sometimes based on projected future receivables. That aggressive use of supply‑chain finance and complex intercompany structures sustained GFG’s expansion, producing a private group with billions in reported revenues but limited public disclosure.

Behind the growth lay opaque linkages and repeated reallocation of assets and obligations among a web of companies. Promised consolidated accounts never appeared. Investigations later found invoices that administrators could not verify and financing that, by traditional credit standards, would have been unacceptably concentrated: Bright lights and trophy purchases masked fragile funding lines. When commodity markets turned and parts of Gupta’s empire weakened, reliance on that financing model left the group exposed.

Bastian Schwind-Wagner_Follow "The Greensill episode shows how financing, concentrated exposures and privileged political access can combine to create widespread financial risk; its collapse highlights gaps in transparency, regulation and the safeguards that should protect workers, suppliers and investors."

Politics, lobbying and influence

Political access played a pivotal role. Lex Greensill secured close links with senior British civil servants and with David Cameron, who later worked with Greensill and promoted the firm’s services internationally. That access went beyond customary advisory roles: Greensill had a desk in Number 10, and former officials joined the company. Cameron moved from adviser to paid emissary, opening doors for Greensill across the world. During the pandemic, when government guarantees and emergency lending were being introduced, lobbying intensified: recorded communications show Cameron contacting Treasury officials on Greensill’s behalf.

The intersection of private lobbying and public urgency raised serious questions about norms and oversight. With senior ex‑officials championing a private firm whose business model masked concentration and complexity, regulators and procurement officials were placed under unusual pressure. The episode has cast a shadow over lobbying rules and the revolving door between government and business.

The unravelling: insurance, funds and insolvency

Greensill’s business relied heavily on insurance and the ability to sell packaged receivables into funds. Major asset managers and banks purchased Greensill‑linked securities. Those arrangements assumed that the underlying receivables were valid, diversified and insured. When insurers revisited the cover on key exposures, and when doubts about the quality and provenance of invoices emerged, institutional investors withdrew support. Fund managers began to suspend redemptions, insurers restricted cover, and banking partners pulled back.

The tipping point came when Greensill lost insurance backstops and its funds were closed or frozen, revealing concentrated exposures — several billion dollars — to Gupta’s companies. With credit lines severed and the packaged securities illiquid, Greensill entered administration. The collapse cascaded into investigations of Greensill Bank in Germany, scrutiny of asset managers that had sold Greensill products, and renewed questions about how such concentrated risks were assessed and authorised.

Lessons and consequences

This episode is a cautionary tale about hype, complexity and inadequate transparency. A routine financing technique can be magnified by leverage, securitisation and a narrative of technological transformation until risk is both misunderstood and mispriced. Political access and rapid growth supplied fuel, but without adequate disclosure and independent verification, the structures that sustained expansion can become brittle. For workers, suppliers and smaller investors, the immediate consequences are job insecurity, loss of payments and potential capital losses. For regulators and governments, the crisis underlines the need for clearer oversight of novel funding chains, stricter scrutiny of securitised corporate financing and firmer boundaries around lobbying by former ministers.