The investigation into Wyelands, the retail bank of metal entrepreneur Sanjeev Gupta, involved the National Crime Agency and the Serious Fraud Office revealed by the Governor of the Bank of England.
Gupta, owner of Liberty Steel, is struggling to keep his GFG Alliance business empire alive after the collapse of Greensill Capital, the supply chain finance company that drove its acquisition.
The OFS announced two weeks ago that it had opened an investigation into suspected fraud and money laundering at GFG.
BoE Governor Andrew Bailey said Monday the OFS had started investigating Wyelands after concerns emerged in late 2018.
The Prudential Regulation Authority began investigating concerns about “networked credit in the context of ultimate beneficial owner, Mr. Gupta,” Bailey told the House of Commons Treasury Selection Committee.
As a result of this initial work, in September 2019 the PRA placed Wyelands restrictions to prevent further lending business with “certain parties” while limiting the bank’s ability to accept deposits.
These restrictions were tightened five times over the next 18 months, the governor said.
Bailey announced that further concerns regarding Wyelands emerged in October or November 2019, which led to a new phase of the investigation, with the National Crime Agency being notified of the concerns.
After various inquiries – “some were evident, others not” – the PRA raised its concerns to the SFO.
Wyelands announced earlier this month that it would be sold or liquidated after its accounts revealed that repayments on 80 percent of its loan book were overdue. The BoE asked the bank to repay customer deposits in March.
The Financial Times announced in 2019 that a large portion of Wyelands’ loan portfolio was tied to Gupta’s larger business empire.
In 2020, the FT reported that this related party lending was being channeled through a network of companies controlled by the metal magnate’s employees, who Gupta’s employees referred to as “Friends of Sanjeev.”
In the accounts filed earlier this month, Wyelands’ auditor, Mazars, pointed to “lack of control in the identification of related party transactions”. The bank reported losses of £ 69.5 million for the year ended April 2020.
Gupta advocated Wyelands’ role as an investor for small and medium-sized manufacturers after its acquisition in 2016.
The aftermath of the Greensill Capital collapse continues to be financial as the Italian Aigis Banca collapsed over the weekend due to exposure to the UK financial firm and the GFG Alliance.
Gupta had been considering buying a stake in the Italian bank last year when the Wyelands review escalated.
Officials with German regulator BaFin said they shut down Greensill’s Bremen-based Greensill Bank in March after it was “unable to provide evidence of claims on its balance sheet that it bought from the GFG Alliance”. The regulator has also filed a criminal complaint against the management of Greensill Bank.
Bailey said the PRA found in February 2020 that Wyelands had failed to meet “admission thresholds”. At this point in time, the board of directors submitted proposals for a “handling of solvents”.
The PRA accepted the board of directors’ plan to gradually inject money into the bank through loans and a subordinated loan from Gupta to bring it into line with its deposit book.
The NCA did not immediately respond to a request for comment. GFG declined to comment on the matter.