Wyelands Bank financed uninsured receivables

: Metals
21/06/29

Sanjeev Gupta's Wyelands Bank, part of the sprawling Gupta Family Group (GFG) Alliance, provided receivables financing to GFG units Liberty Steel and Liberty Commodities as well as external companies based on uninsured trades, according to multiple people with knowledge of the situation and documentation seen by Argus.

It is highly unusual for banks to use depositors' money to finance uninsured receivables; it was the loss of credit insurance that plunged GFG's primary lender, Greensill Capital, into administration in March.

Documentation shows such financing was provided during 2018, when professional services firm PwC was auditing the bank's books. The UK's Financial Reporting Council (FRC) announced yesterday its Enforcement Division would investigate PwC in relation to its audit of Wyelands Bank for the year ending 30 April 2019. "It's understandable that there is regulatory scrutiny in situations like this. We will co-operate fully with the FRC in its enquiries," a PwC spokesperson told Argus.

Wyelands provided receivables financing to Liberty for uninsured trades, as well as to other companies for uninsured sales to Liberty. The trades involved a plethora of companies, including now defunct trading firm Phoenix Commodities, UD Group, formerly Ushdev, and some known "friends of Sanjeev" — internal parlance within GFG for companies closely linked to Gupta — such as UBG Commodities. UBG is owned by Vladimir Delic, who was linked with Gupta in the leaked Panama Papers through Liberty Commodities Panama.

One of the companies Wyelands financed uninsured trades to was New Zone Intertrade, which listed a number of high-profile mining and trading companies as clients on its website, including Cargill, Stemcor and Noble. Sources at all of the companies listed as clients said they had never heard of New Zone Intertrade or done business with it. The company's website expired on 27 June and its director, Siddharth Khatwani, has removed all reference to the company on his LinkedIn profile. He has ignored multiple requests for comment.

Wyelands also financed uninsured receivables from Westford Trade Services, a trade finance organisation that has conducted a lot of business with Liberty. Emails obtained by Argus show that Liberty Commodities chief executive Paul Francis effectively arranged trades with Westford that were seemingly independent of Liberty, involving companies such as Phoenix and known "friends of Sanjeev". Liberty trades with Westford were also used to raise money from Greensill, according to public filings from bank Credit Suisse.

By Colin Richardson

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