GFG routed the transactions through the Romanian bank of Sanjeev Gupta
Sanjeev Gupta has turned to a shadowy bank he owns in Romania to handle the deals, as criminal probes investigate his struggling metals empire following the collapse of its main lender Greensill Capital.
Gupta, which British retail bank Wyelands said last week had “no viable future” and is bracing for potentially crippling fines from several financial regulators, also owns Banca Romana de Credite si Investitii, based in Bucharest.
BRCI has processed a number of payments for Gupta’s GFG Alliance companies over the past year, according to people familiar with the transactions and documents seen by the Financial Times.
The documents show that Gupta’s company last year used a bank account at BRCI for a contentious carbon credits transaction, hit the month after Greensill’s collapse triggered a liquidity crunch at GFG.
In that April 2021 deal, Czech steelworks Gupta sold carbon emission allowances worth around 40 million euros to its sister plant in the Romanian city of Galati, sparking an outcry from Czech politicians.
Murali Subramanian, who oversees Gupta’s banking arm from Dubai and sits on the board of BRCI, told the FT that the bank provides “non-credit related services” to GFG Alliance companies. However, he said GFG companies made up only a “small fraction” of the bank’s customer base.
Banks must adhere to strict anti-money laundering rules and Gupta companies are under criminal investigation for suspected money laundering in the UK and France.
People familiar with the transactions said GFG had turned to BRCI to process some payments, given increased scrutiny from other financial institutions.
Subramanian however disputed this, insisting that the BRCI has “very strong AML and compliance functions”.
“The BRCI would not be obliged to carry [transactions] out,” he said. “He wouldn’t be beholden to GFG for doing everything he has to do.”
BRCI said it was “a fully independent banking institution with a fully independent board of directors”.
“BRCI is governed by the regulatory framework supervised by the National Bank of Romania (NBR) and operates in accordance with its rules and decrees, as well as those of Romanian commercial law,” the bank added.
GFG said BRCI was “one of many Romanian banks that manages collection and remittance of funds for transactions on behalf of Liberty Galati”.
While Gupta is best known for borrowing billions from Greensill to buy up steel mills around the world, the metals mogul has also sought to establish his own financial services empire ranging from banking to insurance. Wyelands Bank collected £700m from savers at its peak but was forced to return deposits last year amid growing concerns over its financial condition.
The steel baron took over Romania’s BRCI in February 2020, days after the FT revealed that Wyelands funneled money to Gupta’s wider business empire through entities his employees called often the “Friends of Sanjeev”.
BRCI appears to have previously provided GFG-related funding. Documents seen by the FT show the bank had outstanding credit facilities linked to Gupta’s Liberty Commodities trading business around the time Greensill collapsed.
So-called related party lending, when a bank’s funds are lent to businesses related to its owner, was at the heart of the Wyelands scandal. Andrew Bailey, Governor of the Bank of England, revealed last year that regulators had referred the bank to the National Crime Agency and the Serious Fraud Office after probing its “connected loans” linked to Gupta.
Subramanian told the FT that the BRCI had only given small amounts of loans linked to GFG, however, within a regulatory limit which limits the outstanding amount to 20% of its capital base.
“BRCI is well below that, it’s in the single digits – 7 or 8%,” he said, adding that these exposures were not direct loans to GFG companies but so-called letters credit and financing provided on customer invoices.
The FT reported last year that Gupta’s Liberty Commodities had raised funds from Greensill using suspicious invoices which appeared to show signs of fraud. The UK accounting regulator opened an investigation into the auditor of the commodities trading unit last week.
BRCI said it “provides limited factoring to a very small number of Romanian Liberty Galati customers”. The bank added that it was “well capitalized” and that the majority of its 65 million euros in assets was made up of “high quality liquid assets”.
GFG said: “BRCI does not provide any financing to any GFG Alliance company and has no outstanding loans or credit agreements with any GFG Alliance company.”
While Wyelands and BRCI are the only regulated banks owned by Gupta, the metals mogul has considered acquiring other lenders.
He started talks to acquire Italian Aigis Banca in 2020 but did not complete the deal. The small Italian lender then collapsed due to its exposure to Gupta companies in which it had invested through Greensill.
Gupta also considered buying a number of Greek banks that year, according to people familiar with the matter, including specialist shipping lender Aegean Baltic Bank. The bank did not respond to a request for comment.